Today's Update 05-09-2025
Key Points and Metrics
Key Points and Metrics:
Economic Events and Data Releases:
President Trump's Tariff Comments:
Tariff on China: President Trump stated that an 80% tariff on China "seems right." This comment led to a weakening of the U.S. Dollar and U.S. indexes.
Impact on Markets: The announcement has increased market uncertainty, affecting currencies and equities linked to trade relations with China.
U.S.-China Trade Talks:
WTO Involvement: The World Trade Organization spokesperson welcomed upcoming trade talks in Geneva, viewing them as a positive step toward de-escalation.
Chinese Commerce Minister Wang: Stated that decisions on U.S. trade talks will be based on a full assessment.
White House Senior Adviser Hassett: Expressed optimism about the Geneva meeting, indicating it is promising for the U.S.
Federal Reserve Insights:
Fed's Williams:
Noted that monetary policy is modestly restrictive.
Emphasized the importance of anchoring inflation expectations.
Pointed out uncertainties due to trade policies.
Fed's Barkin:
Voiced concerns that tariffs may lead to higher inflation and lower growth both domestically and internationally.
Mentioned that consumer confidence isn't fully translating to spending.
Fed's Barr:
Highlighted that data indicates a strong economy with low unemployment.
Acknowledged the uncertainty around tariffs impacting economic forecasts.
Fed's Kugler:
Stressed the need to consider various economic scenarios amid uncertainties.
Observed that the labor market remains stable and close to maximum employment.
Bank of England (BoE) Updates:
Governor Bailey:
Asserted that domestic inflation justified limiting the BoE rate cut to 25 basis points.
Believes the UK is on course to overcome the inflation surge.
Emphasized relying on forward-looking surveys that indicate easing wage inflation.
Canadian Employment Data (April 2025):
Employment Change: Actual increase of 7.4k jobs (Forecast: 5k; Previous: -32.6k).
Unemployment Rate: Rose to 6.9% (Forecast: 6.8%; Previous: 6.7%).
Average Hourly Earnings YoY: Held steady at 3.5% (Forecast: 3.33%; Previous: 3.5%).
Participation Rate: Increased to 65.3% (Forecast: 65.3%; Previous: 65.2%).
Market Reaction: The Canadian swaps market now sees a 52% chance of a June rate cut, up from 46% before the jobs data release.
U.S.-UK Trade Developments:
Economic Prosperity Deal: The White House released terms of a new trade agreement between the U.S. and the UK.
Trade Adviser Hassett: Indicated the deal sets a framework for future agreements and will benefit U.S. agricultural sectors.
UK Government: Clarified that there is no U.S. veto over Chinese investment in the UK.
Global Trade and Relations:
India-U.S. Trade Talks:
India seeks exemption from all current and future U.S. tariffs.
Offered to reduce the tariff gap with the U.S. under a potential trade pact.
European Union:
EU officials, including President von der Leyen, expressed intentions to address trade issues with the U.S.
Germany's Chancellor Merz emphasized concerns over rising global public debt and the need for efficient defense spending.
Market Sentiment and Economic Outlook:
Economic Uncertainty: Ongoing trade tensions and tariff policies contribute to market volatility.
Federal Reserve's Position: Policymakers indicate readiness to adjust monetary policy as conditions evolve, with a focus on inflation and employment stability.
Impact of Tariffs: Anticipated to put upward pressure on inflation and potentially slow economic growth.
Upcoming Earnings Estimates:
May 14th:
Cisco Systems (CSCO):
Earnings Release Time: 16:05 ET
Expected EPS: $0.91
Expected Revenue: $14.05B
May 15th:
Alibaba Group (BABA):
Earnings Release Time: 05:35 ET
Expected EPS: $1.70
Expected Revenue: $32.93B
Walmart (WMT):
Earnings Release Time: 06:55 ET
Expected EPS: $0.59
Expected Revenue: $165.94B
Market Impact:
US Dollar & Indexes: Weakened following Trump's tariff comments
Interest Rates: Fed officials positioning monetary policy as "moderately restrictive" with room to adjust
Inflation Outlook: Multiple Fed officials expressing concern about tariff-driven inflation pressures
Growth Concerns: Fed's Barkin called Trump tariffs "without modern precedent" with potential to increase unemployment
Upcoming Events:
Earnings Watch: CSCO (May 14), BABA and WMT (May 15)
Chinese Economic Data: CPI and PPI data due May 10
Fed Speakers: Williams, Waller, Musalem speaking later today
Final Thoughts
Markets are ending the week cautiously positive despite escalating trade tensions. The weekend US-China trade talks in Geneva represent a critical juncture that could determine market direction next week. Fed officials are clearly concerned about the inflationary impact of tariffs while positioning monetary policy as flexible enough to respond to changing conditions. The 80% China tariff comment from Trump represents a significant escalation in rhetoric just as negotiations begin. Investors should prepare for continued volatility as trade policies remain in flux, with potential ripple effects across global supply chains, inflation readings, and central bank policy decisions.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.
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Harry