- The tariff saga continued as the Court of International Trade ruled that the tariffs imposed by President Trump under emergency powers were illegal. However, the Trump administration immediately filed plans to appeal while at the same time requesting a stay in the decision, which was granted. Following the trade court decision, the Administration noted that it would be able to impose tariffs under different rules if necessary. Separately, President Trump announced plans for 50% tariffs on steel and aluminum. Meanwhile, the tax bill championed by Trump passed the House and now moves to the Senate for its version to be agreed upon, with the President indicating that he would like a bill to sign by Independence Day.
- Markets continue to grapple with the volatility in tariff policy, with both bonds and equities opening lower off this week, after moving higher last week following Nvidia’s earnings. For the year-to-date, U.S. equities are flattish, while Treasuries are mostly higher, except on the long end. Oil and the dollar are down, while gold is up.
- The next Fed meeting is in two weeks, with markets now pricing in a 99% chance of a hold, and two -25 bps cuts by the end of the year. Based on recent comments from officials, the Fed appears content to stay on the sidelines until there is more clarity in economic implications from tariff and fiscal policy. The PCE print last week gives the Fed ability to stand pat, although now markets will be looking towards the monthly jobs report for its next big macro signpost.
- Strong Nvidia results justified tech optimism and prospects for AI. Nvidia (NVDA) beat on revenues by 2% and EPS by 3%, albeit a smaller magnitude than previous quarters, while guiding for $44-46bn in revenues for the upcoming quarter (vs. $45.4 bn consensus), while noting that chip restrictions to China limit what could have been an additional $8 bn in revenues from unaddressed demand. Elsewhere, Salesforce (CRM) was met with disappointment by investors with an in-line result across the board and a modest beat in revenue guidance for the upcoming quarter. Although its new AI-centric product lines are contributing to top-line annual growth, it is not at a magnitude to harness excitement. Salesforce (CRM) also announced an acquisition of Informatica (INFA) for $8 bn.
- In macro news last week, PCE for April was in-line with estimates and continues to gradually decline. Headline PCE was up 2.2% YoY, compared to 2.3% in March, while core PCE rose by 2.5%, vs. 2.6% in March. On a MoM basis, both core and headline PCE rose by 0.1%, as expected.
- Personal Income for April was higher than expected while Spending was in-line and down MoM, showing that consumers hit the brakes on spending during the tariff turmoil. Earnings from several retail stocks disappointed as Burlington (BURL), Best Buy (BBY) and The Gap (GAP) all struggled, blaming tariffs for their woes, although Costco (COST) proved resilient.
The Week Ahead
- It’s a relatively quiet week ahead for earnings as 1Q25 earnings season winds down. Broadcom (AVGO), Crowdstrike (CRWD), Dollar Tree (DLTR), Dollar General (DG), HP Enterprises (HPE), MDB Mongo (MDB), Samsara (IOT) and Docusign (DOCU) all among companies set to report.
- In macro news, the first macro data from May will be released, starting with ISM manufacturing and services data. On Friday, the May jobs report is expected to show that the unemployment rate held steady at 4.2%, while nonfarm payrolls rose by 125,000, compared to 177,000 in April.
Market Summary – Returns and Yields
For additional insights, be sure to check out last week’s blog post.
Definitions, sources, and disclaimers
This content is being published by Amerant Investments, Inc (Amerant Investments), a dually registered broker-dealer and investment adviser registered with the Securities and Exchange Commission (SEC) and member of FINRA/SIPC. Registration does not imply a certain level of skill, endorsement, or approval. Amerant Investments is an affiliate of Amerant Bank.
Definitions:
- Gross Domestic Product (GDP): A comprehensive measure of U.S. economic activity. GDP is the value of the goods and services produced in the United States. The growth rate of GDP is the most popular indicator of the nation’s overall economic health. Source: Bureau of Economic Analysis (BEA).
- GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 and social mobility beyond their impact on GDP source data and relevant economic reports that have already been released. It does not anticipate their impact on forthcoming economic reports beyond the standard internal dynamics of the model.
- The Current Employment Statistics (CES) program produces detailed industry estimates of nonfarm employment, hours, and earnings of workers on payrolls. CES National Estimates produces data for the nation, and CES State and Metro Area produces estimates for all 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and about 450 metropolitan areas and divisions. Each month, CES surveys approximately 142,000 businesses and government agencies, representing approximately 689,000 individual worksites. Source: Bureau of Labor Statistics (BLS).
- Initial Claims: An initial claim is a claim filed by an unemployed individual after a separation from an employer. The claimant requests a determination of basic eligibility for the UI program. When an initial claim is filed with a state, certain programmatic activities take place and these result in activity counts including the count of initial claims. The count of U.S. initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country. However, these are weekly administrative data which are difficult to seasonally adjust, making the series subject to some volatility. Source: US Department of Labor (DOL).
- The Consumer Price Index (CPI): Is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. Source: Bureau of Labor Statistics (BLS).
- The national unemployment rate: Perhaps the most widely known labor market indicator, this statistic reflects the number of unemployed people as a percentage of the labor force. Source: Bureau of Labor Statistics (BLS).
- The number of people in the labor force. This measure is the sum of the employed and the unemployed. In other words, the labor force level is the number of people who are either working or actively seeking work.Source: Bureau of Labor Statistics (BLS).
- Advance Monthly Sales for Retail and Food Services: Estimated monthly sales for retail and food services, adjusted and unadjusted for seasonal variations. Source: United States Census Bureau.
- Federal Open Market Committee (FOMC): Responsible for implementing Open market Operations (OMOs)–the purchase and sale of securities in the open market by a central bank—which are a key tool used by the US Federal Reserve in the implementation of monetary policy. Source: Federal Reserve.
- The Federal Funds Rate: Is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight. When a depository institution has surplus balances in its reserve account, it lends to other banks in need of larger balances. In simpler terms, a bank with excess cash, which is often referred to as liquidity, will lend to another bank that needs to quickly raise liquidity. Source: Federal Reserve Bank of St. Louis.
- The “core” PCE price index: Is defined as personal consumption expenditures (PCE) prices excluding food and energy prices. The core PCE price index measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices to reveal underlying inflation trends. Source: Bureau of Economic Analysis (BEA).
Sources: U.S. Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS), U.S. Department of Labor (DOL), Federal Reserve, Federal Reserve Economic Database (FRED), Federal Reserve Bank of Atlanta, U.S. Census Bureau, Department of Housing and Human Development (HUD), U.S. Department of Agriculture, U.S. Energy Information Administration (EIA), U..S Department of the Treasury, Office of the United States Trade Representative (USTR), U.S. Department of Commerce, data.gov, investor.gov, usa.gov, congress.gov, whitehouse.gov, U.S. Securities and Exchange Commission (SEC), Morningstar, The International Monetary Funds (IMF), The World Bank (WB), European Central bank (ECB), Bank of Japan (BOJ), European Parliament, Eurostats, Organization for Economic Co-operation and Development (OECD), National Bureau of Statistics of the People’s Republic of China, Organization of the Petroleum Exporting Countries (OPEC), World health organization (WHO).
Financial Markets – Recent Prices and Yields, and Weekly, Monthly, and YTD (Table): Bloomberg, Weekly Market Data is in USD and refers to the following indices: Macro & Market Indicators: Volatility (VIX); Oil (WTI); Dollar Index (DXA); Inflation (CPI YoY); Fixed Income: All U.S. Bonds (Bloomberg Aggregate Index); Investment Grade Corporates (Bloomberg US Corporate Index); US High Yield (Bloomberg High Yield Index), Treasuries (ICE BofA Treasury Indices); Equities: U.S. Industrials (Dow Jones Industrial Average); U.S. Large Caps (S&P 500); U.S Tech Equities (Nasdaq Composite); European (MSCI Euope), Asia Pacific (MSCI AP), and Latin America Equities (MSCI LA); Sectors (S&P 500 GICS Sectors) Source: Bloomberg. Fed Funds Rate probabilities, Source: CME FedWatch Tool.
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The information provided here is for general informational purposes only and should not be considered a customized recommendation, personalized investment advice offer, or solicitation for the purchase or sale of any security or investment strategy. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own situation before making any investment decision.
This information is obtained by AMTI from third-party providers from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. All expressions of opinion are subject to change without notice in reaction to changes in market conditions. By using such information, you release and exonerate AMTI from any responsibility for damages, direct or indirect, that may result from such use. Consult the issuer of any investment for the most up-to-date and accurate information.
All references to performance refer to historical data. There could be benchmarks used that do not reflect the performance of funds or other products with similar objectives
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Additional Risks:
- Past performance is no guarantee of future returns.
- There is no assurance the Fund will pay distributions in any particular amount, if at all. Any distributions the Fund makes will be at the discretion of the Fund’s Board of Trustees
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- The value of the investments varies and therefore the amount received at the time of sale might be higher or lower than was originally invested. Actual returns might be better or worse than the ones shown in this informative material.
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