Eurozone economic sentiment increased notably in June. The indicator stood at 95, with an increase of 1.3 points. Additionally, the consumer confidence indicator continued its recovery, also rising 1.3 points to stand at -17.7. Nevertheless, it remains well below its long-term average.

Our Take

The increase in the economic sentiment indicator marks the second consecutive increase, though moderate. Additionally, the majority of the sampling was conducted before the agreement between the United States and Iran was reached. If the agreement holds, we can expect further improvements in the next report.

The US and Iran were again involved in various confrontations this weekend that put peace negotiations at risk once more. Both parties agreed on Sunday to halt hostilities and resume the flow of commercial vessels through the Strait of Hormuz, following an exchange of attacks that raised tensions to their highest point. Negotiations under the memorandum of understanding are likely to resume this same week.

Our Take

After the concerning weekend news due to the conflict's escalation, everything pointed to a complicated start to the week for markets. However, the scenario changed quickly. The announcement of the cessation of hostilities by both countries restored calm to investors, while the impact of this temporary surge in tensions on oil prices turned out to be much more moderate than one might have expected.

Japan's retail sales increased 5.3% annually in May (+2.8% in April), surpassing analyst consensus expectations that pointed to growth of 3.2%. This is the third consecutive month of expansion and the highest growth pace since November 2023, supported by the sharp rise in wages and government measures including a stimulus package aimed at boosting consumption and easing price pressures. Compared to April, sales in May grew 1.9%.

Our Take

The data constitutes a positive surprise of relevant magnitude. The sectoral breadth of the result is what gives it greater analytical solidity, as it points to genuine consumer demand beyond the mechanical effect of government subsidies on essential goods.

Corporate News

The South Korean government announced an investment plan of close to US$880 billion in semiconductors and data centers, with Samsung and SK Hynix committing to the construction of two semiconductor plants. The country aims to double its memory production capacity in five years, according to Bloomberg reports. Despite the announcement, Samsung shares fell 5% and SK Hynix 1.7% at Monday's close in Seoul.

Comcast announced plans to spin off NBCUniversal and Sky into an independent publicly listed company. The separation is expected to be completed in one year, subject to regulatory and board approvals. Mike Cavanagh, current co-CEO of Comcast, will be CEO of NBCUniversal; Michael Angelakis, former CFO of the company, will be CEO of the resulting Comcast. The Roberts family will maintain voting control in both entities. Comcast shares rise 23% in pre-market trading.

Our Take

The Comcast spinoff is the most relevant corporate move in the media sector since the Paramount-Warner merger approved last month. The broadband business grows and generates predictable cash flow, while the content business faces pressure from streaming competition, declining cable TV demand, and AI disruption in content creation. Separating both allows each business to be valued on its own fundamentals.

Verizon and BT Group agreed to create a joint venture combining their international businesses with combined revenues of close to US$4 billion annually. Verizon will make a compensation payment of US$625 million to BT; both companies will have equal voting rights in the joint venture, subject to regulatory approval. The transaction allows BT to focus on the UK market under new CEO Allison Kirkby, and Verizon, which is cutting 20% of its workforce under new CEO Dan Schulman, to shed low-margin international assets.

The to-do list

  • Follow the Sintra Forum from today: it begins with Lagarde's speech and the most relevant event of the week will be Wednesday's panel with Warsh, Bailey, and Macklem, where markets will read every word of the Fed chair in search of signals about the pace of rate hikes.

  • Monitor oil and the US-Iran negotiations: both parties clashed again over the weekend but agreed on Sunday to halt hostilities and resume traffic through the Strait of Hormuz, with memorandum negotiations expected to be reactivated this week.

  • It's Monday, start the week with order: define the two or three priorities for the next five days before the day's news noise changes them.

  • Tonight, prepare tlayudas with black beans, tasajo, and quesillo, an Oaxacan classic that deserves a quiet Monday evening.

  • Dedicate 30 minutes to a rowing session at the gym or at home with resistance bands, one of the most complete exercises for working the back, arms, and core simultaneously.

Today's quote…

"What doesn't challenge you, doesn't change you."

— Fred DeVito