Markets continue to be driven by abundant liquidity, with global money supply fueling another leg higher in equities despite an increasingly hawkish Federal Reserve. While earnings growth remains broad and valuations across both Big Tech and European equities still leave room for further upside, history reminds investors that strong fundamentals alone may not be enough if tighter monetary policy begins to take hold. 

This week's report breaks down these evolving market dynamics with 14 detailed charts covering the relationship between global liquidity and equity markets, why Big Tech and European stocks may still offer attractive value, the growing importance of the Federal Reserve's policy path, and whether Bitcoin, Ethereum, and Solana can build on their recent technical reclaims despite weakening ETF demand.

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Money is still the engine behind this rally. Global liquidity and the Nasdaq 100 have tracked each other closely since 2010, and that link held even through March's sharp selloff and the 33% rebound that followed to new records above 30,600. The catch: the Fed under new Chair Kevin Warsh turned hawkish in June, with several officials now eyeing a hike this year, a real test for whether cheap money keeps fueling stocks.

That pressure helps explain why Big Tech looks unusually cheap right now. The Magnificent Seven's valuation premium over the rest of the S&P 500 has shrunk to just 10%, the lowest in over a decade, as money rotated into chipmakers instead. With Mag 7 earnings still growing 45% faster than the rest of the index, this looks less like a warning sign and more like an opportunity investors are underpricing.

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But broad strength alone isn't a guarantee. Back in 2021, every S&P 500 sector was posting solid earnings, and that didn't stop the 2022 bear market once the Fed tightened aggressively. It's a reminder that strong fundamentals can support a rally, but they can't override a genuine shift in monetary policy.

Europe offers a cleaner version of the same AI story. UBS just raised its Stoxx 600 target to 690 from 630, the highest on Wall Street, citing earnings strength spreading beyond chips into banks, luxury, and industrials. With valuations still below their US counterparts, Europe looks like a cheaper way to ride the same trend.

Put simply: liquidity is still driving markets, earnings are broadening in a healthy way, and valuations in both Big Tech and Europe leave room to run. The real risk isn't fundamentals, it's the Fed. If Warsh's Fed follows through on a hike, this is the kind of environment history says can turn quickly.

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Bitcoin is trading volatile between the $60,700 and $65,500 technical levels after reclaiming $60,700 on July 2. In order to break the bearish market structure and potentially form a higher high, BTC would need to break above $67,250 in the current extension. Otherwise, the bearish trend remains intact.