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Good morning.
Western Europe is wilting under a heat dome intense enough to close schools and spur reductions in train service. Temperatures in Paris are forecast to reach as high as 102 degrees Fahrenheit today and tomorrow, and Berlin is bracing for a potential 104 degrees on Sunday. A recent report by Allianz Trade warned that extreme heat events, now seven times more common than in the 1980s, could result in cumulative GDP losses of 5% to 7% for European economies through 2030.
To make matters worse, the continent’s traditionally milder summers mean most European households don’t have air conditioning: only 15% in Germany, 28% in France, 37% in Spain and 49% in Italy, according to an EU survey last year. At least Italy, where Milan and Rome are among the 16 cities under the highest level of heat warning, has some timeless advice: The country’s Ministry of Health encourages those under heat warnings to eat a light diet of pasta and fish while avoiding processed foods. In other words: Keep calm and carry on being Italian.
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Mix up almost any macro cocktail you want, and the equities desks at Wall Street’s big banks will tell you it went down as smooth as an Aperol Spritz.
Bloomberg News reported Tuesday that the equities trading desk at Goldman Sachs is on pace to generate over $5 billion in revenue in the second quarter, and could even set a record for the third quarter in a row by besting last quarter’s $5.3 billion haul.
Turmoil and Tailwinds
Last year, stock traders surfed high volumes (from volatility caused by the Trump administration’s tariffs) to record revenues. In the first quarter of this year, they raked in higher profits as trading volumes swelled amid the Iran war.
The latest tailwind has been the trading boom in Asia, according to Bloomberg. That tracks with the bull market runs in South Korea, where the Kospi Composite Index is up 94% in 2026, and Japan, where the Nikkei 225 is up 38%. As well, the Mega Taiwan Blue Chip 30 ETF, which tracks the island country’s leading firms, is up 88%. Investors have been quick to capitalize on companies benefiting from the artificial intelligence boom, like Korean memory giants Samsung and SK Hynix, or Taiwan Semiconductor, that trade at a discount relative to major US firms. “Eighty percent of Taiwan’s market is tech-oriented, in some way touching AI,” Tim Moe, the chief Asia Pacific equity strategist and co-head of macro research in Asia at Goldman Sachs Research, said during a podcast last month. “For Korea, that number is about 50% to 60% of the index. Japan is a little bit lower, maybe 30%.” Goldman’s equities desk will walk away from the quarter having made a mint off the trend, which suffered a slight dent Tuesday:
- Earlier this month, Moe’s team lifted its 12-month target for the Kospi to 12,000, implying a 45% upside from its 8,200 close yesterday. But speaking of yesterday, the Kospi suffered what the daily newspaper Chosun Ilbo dubbed a “Black Tuesday,” with the index cratering 10% as Samsung and SK Hynix each fell more than 12% (it rose 3.3% on Wednesday, in a testament to the benchmark’s tech-fueled volatility).
- Yesterday’s drop was fueled by concerns about the US Federal Reserve raising interest rates and a warning from South Korean regulators to retail investors against borrowing to buy into the market. Foreign investors dumped roughly $2.6 billion worth of Kospi shares.
  Posting Proud: The equities desk isn’t the only unit at 200 West Street with bragging rights. Last week, Goldman said on LinkedIn — because where better to boast than between reminders to play Queens and Pinpoint — that it has advised on $1 trillion in mergers and acquisitions as of June 15, a record half-year pace for any investment bank. Being the lead underwriter on SpaceX’s megacap IPO didn’t hurt, nor did Goldman’s role as a financial advisor on the $67 billion Dominion Energy-NextEra Energy deal.
Written by Sean Craig
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While Wall Street crowds into the record-breaking SpaceX IPO, The Motley Fool is quietly backing a stock most investors can’t name.
It’s an under-the-radar California company building the full-stack space business of design, manufacture, launch and monitoring. Still about 1/100th the size of Nvidia, in an industry projected to reach $1.8 trillion by 2035.
According to the Fool, its founder-CEO has more than $2.6 billion of his personal fortune riding on it. The Motley Fool calls it one of their highest-conviction picks.
And that conviction has a track record. In December 2009, the Fool flashed a similar signal on Nvidia, mid-crisis. A $5,000 stake then would be worth $2,693,103 today. The same signal later flagged Netflix, Amazon and Tesla.
It’s back, and it’s pointing at this space play.
See the stock.
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Photo via IBM
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That’s one big slip for Big Chip, one quantum leap for IBM.
While Big Blue has long wished to trade like some high-flying semiconductor peers, on Tuesday, it was happy not to: A broader tech pileup in the markets sent the likes of Nvidia, Qualcomm and Micron down 4%, 8% and 13%, respectively. But shares of IBM defied the dip, rising 5%, largely thanks to a pair of executive orders from President Donald Trump late Monday that helped steer it toward a quantum-fueled future.
Tell Me What You Quant
The 20th century’s hardware king may have missed out on this century’s smartphone, AI and semiconductor booms, but it has a finely honed competitive edge with the tech world’s next innovation: quantum computing. Shares of the company scored their best week in roughly a quarter-century in May after the US government directed $2 billion from the 2022 CHIPS and Science Act to key quantum players; IBM received half that sum. One executive order on Monday directed federal agencies to fast-track work with private players to deploy a quantum computer by 2028, at least a year ahead of most existing timelines. The other focused on developing security systems to combat quantum-powered cyber attacks.
IBM wasn’t alone in scoring an EO bump Tuesday; shares of Infleqtion jumped more than 12%, and shares of D-Wave Quantum rose 2.2%. “IBM is well positioned as a quantum leader,” JPMorgan analyst Brian Essex wrote in a note to clients on Tuesday that upgraded IBM shares to overweight from neutral.
Even better news for IBM? Essex says that its core business is humming nicely, too:
- IBM “has spent the better part of a decade repositioning itself from a hardware and services business into a software-led platform anchored by hybrid cloud and AI,” Essex wrote.
- In its first-quarter earnings call in April, IBM reported that its software business accounted for about 45% of its $15.9 billion revenue, and more than 60% of its profit.
Quantum Competition: The second round of executive orders in as many months isn’t exactly surprising: In fact, it probably reflects a new sense of urgency to make significant advancements in the quantum space. LineShine, a Chinese supercomputer built at the National Supercomputing Center in Shenzhen, was named the world’s fastest computer at the International Supercomputer Conference in Hamburg, Germany, this week. It’s the first time the nation’s computer scientists have secured the top spot since 2017, and a sign they’re making progress on quantum.
Written by Brian Boyle
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Photo via CME Group
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After spending years on the waiting list for access to the private credit market, retail investors now keep running for the exits.
Apollo Global Management is capping withdrawals from its Apollo Debt Solutions private credit fund at 5% after investors asked to yank 16.8% of their shares, according to a recent shareholder letter filed with the Securities and Exchange Commission. That’s up from around 11% that investors asked to withdraw in the previous quarter. The firm estimates that gross outflows from Apollo Debt Solutions, which has around $25 billion in assets, will be roughly $700 million for the quarter, compared with just $300 million of inflows.
Redemption Caps Continue
It’s not Apollo’s first redemption-capping rodeo. Last quarter, it also curbed redemptions at 5%. The spike in redemptions for Apollo is just the latest sign that investors are stressed out about the quality of semi-liquid private debt products, which promise everyday investors access to a slice of the market long reserved for pensions and other institutional investors. A main concern is that private credit markets are lending too much to software companies, which are ripe for AI disruption.
Apollo is far from the only firm trying to stop investors from walking out:
- Earlier this month, Cliffwater limited redemptions from its private credit fund to 5% of outstanding shares after investors requested to withdraw 17%. Switzerland’s Partners Group did the same at its flagship private equity fund as redemption requests hit 9.8%.
- BlackRock also set a 5% redemption cap this month after investors attempted to pull 13% from its HPS Corporate Lending Fund.
No SVB Here: The Apollo Debt Solutions fund has still returned 8.13% since its launch in 2022. At a conference earlier this month, John Zito, co-president of Apollo Asset Management, said that retail-focused private credit market funds were performing as designed, according to the Financial Times. “The nice thing is, is no matter how much you’ve attacked the private debt business, there’s been no run. There’s been no SVB,” he said, referring to the 2023 collapse of Silicon Valley Bank. “There’s been no financial institution failing. The structure is right.”
Written by Mallika Mitra
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- Vape Escape: Shopify is set to ban the sale of vapes in response to pressure from US officials working to reduce the online market for illegal e-cigarettes.
- End of Shift: S&P Global said its flash Purchasing Managers’ Index shows US factory job cuts at the highest level since 2009, excluding the unique COVID pandemic shutdowns.
- Good Credit Card Perks Rarely Travel Together. A $200 bonus. Up to 6% cash back in the category you choose. A lengthy intro APR offer. No annual fee. Usually, one of those gets left behind. See the card.*
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