Crude climbs, crypto stalls, stock futures flutter ahead of today’s big Fed report

Good morning.

The oil markets are again calling the shots—in Europe, at least where energy stocks are gaining. U.S. futures are mixed, meanwhile, ahead of the FOMC meeting minutes, to be released before the bell.

Now, to another potent liquid. England fans are expected to buy a combined 50,000 pints of beer per minute during tonight’s huge clash against Denmark. In case you couldn’t tell, in soccer-mad Europe, the footy is dominating the news. Whether it will do much to help the region’s battered restaurants and bars—or brewers—is the big question.

Okay, enough football. For now.

Let’s see what’s moving the markets.

Markets update

Asia

• The major Asia indexes are mixed in afternoon trading with the Hang Seng, the best of the bunch, up nearly 0.7%.
• Chinese stocks were all the rage in 2020. This year not so much. As the Wall Street Journal calculates, the MSCI China index finished the first half up 1.1%, far underperforming just about every major index and exchange. The S&P 500, for example, closed out 1H up more than 15%.
• Shares in Didi Global crashed nearly 20% on the NYSE yesterday. The collapse wiped $1.5 billion from the co-founders’ net worth mere days after its stateside IPO. Rough debut.
• Didi was hardly alone. It was a bad day for U.S.-listed Chinese stocks yesterday.

Europe

• The European bourses were higher out of the gates with the Stoxx Europe 600 up 0.6% in early trading. Basic resources, energy and autos were leading the way higher.
• Italy managed to squeak out a penalty-kick thriller over Spain in the Euro Cup last night (not sure the best team won; there, I said it) to move onto the finals on Sunday. Tonight, England plays Denmark. There’s more than pride on the line for the English, but don’t expect a huge boost to GDP were they to win, and, ultimately, take home the trophy. Spoiler: they’re not taking home the trophy.
• The European Commission this morning released its summer forecast showing the eurozone economy will bounce back quicker than expected. Alas, inflation clouds are swirling.

U.S.

• U.S. futures have been up and down all morning. Tech stocks were one of the few bright spots yesterday, lifting the Nasdaq to a meager gain.
• Shares in Microsoft were flat in pre-market trading. That’s after the Pentagon pulled the plug on JEDI, the $10 billion cloud-computing contract it awarded the tech giant in 2019, creating a mighty squabble with rival Amazon.

Elsewhere

• Gold is up, trading above $1,800/ounce.
• The dollar is flat.
• Crude is rallying again with Brent above $75/barrel.
• Bitcoin too has barely budged in the past 24 hours, trading below $35,000.

***

Earnings season: what to watch

Earnings season kicks off next week, with, as usual, the banks reporting the first batch.

This may be the most consequential quarter in recent memory as investors take a hard look at how supply-chain bottlenecks, rising commodity and input-material prices, plus wage pressures are impacting companies’ operations. To wit, listen closely for details on how CEOs plan to deal with inflationary pressures. Will they eat the cost, or pass them on to customers?

As we move into earnings season, companies are pretty bullish—even historically so. According to FactSet, the number of S&P 500 companies that have guided higher on earnings growth and EPS estimates is at a 12-year and 15-year high, respectively. Big beats on revenues, too, are widely expected.

The chart below, furnished by FactSet, gives a snapshot of that bullishness.

That number—66—at the bottom right of the chart is a big deal. It represents the number of S&P firms that have issued positive EPS guidance for the upcoming quarter, the highest number for a quarter since 2006 when FactSet began tracking this guidance.

I wrote yesterday how Goldman Sachs refused, for now, to change its full-year S&P forecast, nor its full-year EPS forecast for the group as a whole. That’s a fairly uncommon take.

“Analysts have not only increased EPS estimates for the second quarter, but also for the full year,” John Butters, FactSet senior equity analyst, writes in a July 2 research note. “The CY 2021 bottom-up EPS estimate… increased by 8.6% (to $191.31 from $176.13) during the second quarter (from March 31 to June 30). This increase marked the largest increase in the annual bottom-up EPS estimate for the index during the calendar second quarter since FactSet began tracking the annual bottom-up EPS estimate in 1996.”

The reason is that, yes, the economic recovery is occurring at a brisker clip and companies are banking on growth. It’s also true that analysts had been too pessimistic about the companies they follow, and that they had to revise upwards their 2021 forecasts after Q1.

All told, Corporate America is getting its swagger back. Whether that alone is enough to nudge stocks higher amid all the uncertainties I mentioned above—inflation, supply chain woes, a tightening labor market—is the giant question hanging over this earnings season.

***

Have a nice day, everyone. I’ll see you here tomorrow… Until then, there’s more news below.

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.

Today's read

June... to the moon. Last month was a banner month for retail trading. According to Vanda Research data, as cited by the Wall Street Journal, retail investors purchased nearly $28 billion in stocks and ETFs, a level that even eclipsed January's meme-stock mania. To say retail investors have become a force in the markets is a significant understatement, a development that bodes well for Robinhood's IPO.

Crude awakening. Crude prices are on the rise again this morning as—gasp—I see the occasional predictions for $100/barrel Brent. Oil is not the only commodity booming, Fortune's Katherine Dunn reports, and that sudden movement is inflating inflation fears, and doubts about the global recovery.

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Market candy

Quiz time

Which S&P 500-listed company has generated the highest return for shareholders, year-to-date. Is it:

• A. Nvidia
• B. Amazon
• C. Marathon Oil Corp.
• D. Ford Motor Co.

The answer is C. Marathon (MRO) has ridden soaring crude prices to a return of 99% YTD. That's even after yesterday's slide. Through the June 30 close, five of the top 10 S&P performers were energy companies.