Cockroach hunting, Bolton charged, Apple considers F1 and more in Morning Squawk

Here are five key points investors should know to kick off their trading day.

Wall Street saw a drop in stocks yesterday amid heightened concerns. Investors are especially worried about the rise of non-performing loans and the implications for local banks, prompting a search for potential trouble within financial institutions.

Let’s break that down:

• JP Morgan’s CEO Jamie Dimon recently highlighted that more issues could surface, referencing the bankruptcies of First Brands and Tricolor Holdings.
• Dimon’s remarks relate to the “cockroach theory,” which suggests that bad news in one company can lead to further negative revelations elsewhere.
• Shares of Jefferies, tied to First Brands, plunged over 10%. Meanwhile, Zions Bank’s stock slumped 13% after announcing it would incur substantial charges for bad debts. Western Alliance also faced an 11% drop due to reported borrower fraud.
• The fallout led to a steep decline in local bank stocks, causing widespread market downturns. These banking concerns also impacted European markets today.
• On another note, the yield on the closely watched 10-year U.S. Treasury fell to levels not seen since early April, a time marked by significant tariff announcements.
• In broader news, ongoing U.S.-China trade tensions are being followed closely. China has accused the U.S. of inciting panic over export restrictions of rare earth materials while expressing openness to trade discussions.
• This morning, U.S. stock futures declined but have improved slightly since initial lows.

John Bolton, who served as national security adviser under President Trump, was indicted by a federal grand jury for mishandling confidential information. He becomes the third Trump opponent facing legal charges recently, joining figures like former FBI Director James Comey and New York Attorney General Letitia James.

In the meantime, a military funding bill failed to pass in the Senate amid a government shutdown, marking the 10th time it was rejected. Also, United Airlines’ CEO Scott Kirby discussed potential impacts on bookings should the government remain closed for much longer.

According to analysis from S&P Global, the economic effects of President Trump’s tariffs are becoming apparent.

This year’s tariff levies could cost around $1.2 trillion globally, with an estimated two-thirds of that burden likely falling on consumers. Interestingly, despite this, the U.S. budget deficit in 2025 saw a slight reduction of over 2% compared to the previous fiscal year, partly due to revenue generated from tariffs that eased some government spending, even though the overall shortfall remains at $1.78 trillion.

Reports suggest an upcoming $140 million annual deal for F1 media rights in the U.S. will be announced soon, enhancing Apple’s sports streaming offerings alongside its existing content from other sports.

Eddie Cue, Apple’s SVP of services, expressed a fondness for F1 and noted that the current sports viewing landscape is regressing due to the multitude of streaming options available.

Essilor Luxottica, the parent company of Ray-Ban, has seen a boost thanks to notable collaborations with major tech firms in developing smart glasses. Its finance director remarked that sales from these partnerships significantly contributed to a rise in third-quarter revenue.

Meta’s new AI glasses also played a crucial role in this growth while Oracle’s stock rebounded following a cloud agreement with Meta.