[Macro Matters] 5/17 Weekly Briefing

 

1. Economic Data


Inflation Cooled in April; CPI Up 2.3% on Year - WSJ

CPI(YoY): 2.3% in April. A four year low. Core CPI: 2.8%, matched forecasts. Markets remained silent, which might indicate investors think it's too early to gauge the full impacts of Trump’s tariff policies. 

The reporters stated that the front-loading of inventories would delay the impact of duties, citing quotes from Goldman Sachs.


China’s New Loans Plunged 61% as Trade War With US Intensified - Bloomberg

China's new loans in April declined sharply. Both household and corporate loans remain weak, which may imply that economic sentiment in China has deteriorated due to trade tensions with the U.S.

China’s Riskier Short-Term Corporate Bond Spreads Hit Record Low - Bloomberg


Risk premiums of Chinese corporate bonds reached lowest since 2022, suggesting that the recent monetary easing by the PBOC actually worked. 

 

Comment: Although tensions between the U.S and China eased and several stimulus measures took place, I do not expect that China can recover dramatically since Chinese property market and inflation still remain weak.

 

 

US producer prices unexpectedly fall in April | Reuters

U.S. producer prices unexpectedly fell in April as the cost of services declined by the most since 2009.

 

US weekly jobless claims unchanged amid stable labor market | Reuters

US Homebuilder Sentiment Slides to Lowest Level Since 2023 - Bloomberg



US Factory Output Declines for the First Time in Six Months - Bloomberg


Still, overall industrial production was unchanged.

 

Japan’s Economy Shrinks in First Quarter Before Trump Tariff Jolt - Bloomberg

The decline in GDP was larger than a 0.3% contraction forecast by economists.



U.S. Loses Last Triple-A Credit Rating - WSJ

Moody’s Ratings downgraded the U.S. government on Friday, citing large fiscal deficits and rising interest costs. It was the last AAA credit for the U.S.

Comment: One of the most important news for this week. Maybe we have to rewrite all the books about finance and economy. Where do we go now..? Where should we rely on?

Worried About the Economy, America’s Small Businesses Are Reducing Investment and Hiring, Survey Shows - WSJ


 

A gauge of sentiment among small firms, fell to 95.8 in April from 97.4 in March, keeping the index below the 98 mark that represents the long-term average for confidence among small companies.

 

Consumer Sentiment Darkens Further With Inflation Worries Rising - WSJ

 

Comment: In general, soft data like consumer sentiment are not very reliable, as people tend to assume that current conditions will persist, ignoring early signs of a turnaround as a result. However, this time may be different as the weakened sentiment could become self-fulfilling. The confidence of the Main Street deteriorated not because of a temporary dip, but due to a long-lasting threat: the Trump risk. By the way, I do not expect 'recessions'.




2. Central Bank


ECB’s Nagel Says US Tariff News Almost Caused Financial Meltdown - Bloomberg

 

Nagel said that markets were close to a 'meltdown' after the announcement of 'reciprocal tariffs'. Although markets recovered after successful negotiations, Nagel noted that the uncertainty is still ongoing.


BOJ upbeat on wages despite US tariffs, sees scope to resume rate hikes | Reuters


BOJ's deputy governor said that he expects wages and prices to climb despite the uncertainty of the U.S. tariff policy. He reiterated its stance of raising interest rates gradually.

 

 

Fed’s Jefferson Sees Lower Growth, Says Inflation Could Rise - Bloomberg

 

 

Despite the recent inflation data, Jefferson said that the goal on inflation has not yet been reached.

 

 

Fed's Goolsbee: Data still noisy as Fed waits to understand tariff impacts | Reuters

 

In short: even dovish members say 'Not Yet'

 

 

Fed’s Daly Says US Economy Still Solid, Officials Can Be Patient


Daly said that the Fed would 'wait and see' as the U.S. economy remains solid.

 

 

Fed’s Jerome Powell Steers New Strategy for a World Where Very Low Interest Rates Are No Sure 

Thing - WSJ


The Fed reviews its policy-setting framework every five years. Accordingly, it has begun a new review. Chairman Powell announced that the Fed could complete the review and unveil the results by August or September.

In 2020, Fed officials decided to keep interest rates somewhat lower than model-based recommendations, allowing inflation to run above the 2% target. 

 

Nick Timiraos noted that changes to the Fed’s rate-setting framework are unlikely to influence current decisions. On the other hand, he pointed out that we should be aware that the ‘lower-for-longer’ interest rate era may be coming to an end.

 

Comment: This is the most important news for this week. Prepare for the new regime.

Fed's Barr Says Supply Chain Disruptions Could Boost Inflation - Bloomberg


ECB’s Guindos Warns Financial System Still Facing Trade Risk - Bloomberg

ECB to Propose Capital Neutral Regulation Changes by Year End - Bloomberg

The approach is to simplify Europe’s banking rulebook by the end of the year.

Comment: One of the most important news for this week

 

Fed’s Bostic Says He Sees One Rate Cut This Year, No Recession - Bloomberg

Bostic expects the US economy to slow this year but not fall into recession. “I have one cut for the year,” Bostic said.



3. Politics / World 

Trump Seeks to Align US Drug Costs With Cheapest Ones Abroad - Bloomberg 

 

Comment: Even worse than communists.

Hamas says it will release Israeli-American hostage Edan Alexander | Reuters

Hamas officials will release the last surviving American hostage without specifying for the release.

Kurdish PKK disbands and ends 40-year Turkey insurgency | Reuters

The Kurdistan Workers Party (PKK) militant group, which has been locked in bloody conflict with the Turkish state for more than four decades, decided to disband and end its armed struggle.

Brazil seeks China trade boost amid Trump tariff chaos as Lula meets Xi | Reuters

Brazil’s president visits China this week to tighten relations between the two nations amid tradet ensions.

 Japan PM Ishiba reiterates call to eliminate all tariffs with US | Reuters

Ishiba reiterated on Sunday that he will aim for the elimination of all tariffs in trade negotiations with the United States.

Surprise U.S.-China Trade Deal Gives Global Economy a Big Reprieve - WSJ 

Chinese imports into the U.S. will face a 30% tariff overall(10% + fentanyl 20%) and U.S. goods imported in China will face a 10% tariff. Bessent said that neither side wants to decouple.

 Zelenskiy says he will meet Putin after Trump tells him not to await truce | Reuters

Putin proposed direct negotiations on a ceasefire without any preconditions and Zelensky agreed to meet him this Thursday.

Indian army says talks with Pakistan's military operations chief delayed | Reuters 

US Says Trump Visit Secured $600 Billion in Investments From Saudi Arabia - Bloomberg 

President Donald Trump said Saudi Arabia would commit to investing $1 trillion in the US.

Israel’s Netanyahu Vows to ‘Finish the Job’ of Destroying Hamas - Bloomberg

Netanyahu reiterates his ultimate goal is to eliminate Hamas from Gaza entirely.

India Trade Minister to Visit US This Week to Discuss Tariffs

India’s Trade Minister visits the U.S. this week to discuss tariffs, according to people familiar with the matter.

China Removes Ban on Boeing Deliveries After US Trade Truce - Bloomberg


Officials in Beijing have started to tell domestic carriers and government agencies this week that deliveries of US-made aircraft can resume, according to people familiar with the matter.

Ukraine's Zelenskiy insists on face-to-face talks with Putin in Istanbul | Reuters

Zelenskiy said that he would start direct ceasfire negotiations only if Putin is also there for talk. Kremlin did not answer back whether the president would attend.

US slashes 'de minimis' tariff on small China parcels to 54% | Reuters

 

Trump cuts duties on China low-value commercial shipments to 30%-experts 

 

Germany's Merz: EU to tighten sanctions on Russia if no progress on Ukraine this week | Reuters


Merz said that EU leaders agreed to impose tougher sanctions on Russia if no progress on ceasefire talks.

 

China says fentanyl issue is responsibility of the United States | Reuters


China has repeatedly said the fentanyl crisis is a U.S. issue.

US to Boost Saudi AI Chip Access Even as China Issues Linger - Bloomberg


Bloomberg reports that the White House might allow Saudi to access more chips.


US, Qatar deals to generate $1.2 trillion in 'economic exchange', White House says | Reuters

 

Israel's Netanyahu accuses Macron of standing with Hamas | Reuters

???

 

Putin, Trump to skip Ukraine's peace talks that Russian leader proposed | Reuters


Trump and Putin didn't attend the peace talks on Russia-Ukraine war in person.


Trump says US close to a nuclear deal with Iran | Reuters


Trump said there had been significant progress on a nuclear deal with Iran. However, several Iranian officials told Reuters that considerable gaps still remain between the two countries.


Trump: India has offered US a trade deal with no tariffs | Reuters

 

Trump said on Thursday that India had offered a trade deal that proposed "no tariffs" for American goods, while expressing his dissatisfaction with Apple's plans to invest in India.

Pakistan Says Ceasefire With India to Be Extended to May 18 as Truce Holds


US considers more Chinese companies for 'entity list,' source says | Reuters

The U.S. is considering placing more Chinese companies, including ChangXin Memory, SMIC, Yangtze Memory Tech. on its restricted export list, a person familiar with the matter said.

France's Macron: Gaza conditions are 'intolerable,' hopes to discuss it with Netanyahu and Trump | Reuters 

Trump says we need to help starving Palestinians in Gaza | Reuters

Comment: So True. we MUST help them.

China-US 90-day tariff truce should be extended, Global Times says | Reuters

Stop-gap deals do not mean Donald Trump’s trade war is over


Comment: True. The tariffs and barriers toward each other are still high. Well, just wait and see. And, as John Bogle would say, stay the course.


Why India is annoyed by its ceasefire with Pakistan


Indian officials are clearly irked by comments from Mr Trump. By allowing America to intervene, India sacrificed the “strategic autonomy”, Indian officials complained.

 

Violent crime is falling rapidly across America


The article from The Economist points out that giving therapy and job training to young men who co-operate has been a critical breakthrough in reducing violence across America.

 

4. Business / Market

Aramco’s Earnings Narrowly Beat Expectations - WSJ

Although the average price for crude oil fell to $76.3 a barrel from $83.0 a barrel, Aramco's earnings narrowly beat expectations.

China's CATL to raise at least $4 billion in Hong Kong listing | Reuters

Apple is developing specialized chips for smart glasses and AI servers, Bloomberg News reports | Reuters

Bloomberg reports that Apple aims to manufacture specialized chips for AI servers and smart glasses by 2027.



Coinbase quarterly profit falls as expenses climb, shares down | Reuters 

 

How to Think About the Stock Market When Earnings Guidance Becomes Meaningless - WSJ

The reporter points out that U.S. stocks seem too expensive based on backward-looking valuations and the trendline of P/E ratio.

 

Swiss Outlook Cut at UBS With Warning on Trump’s Pharma Push - Bloomberg

Economosits at UBS expect Switzerland's GDP to grow by 1% in 2025, lower than a prior outlook of 1.5% due to Trump's pressure on trade and drugmakers.


Chinese Stocks Slide as Trade Truce Seen Dashing Stimulus Hopes - Bloomberg


Chinese stocks reversed initial gains from eased tariff tensions as investors kept eye on  still-higher tariffs and concerns that the Chinese government might hold back stimulus after the truce.

 

Xiaomi Shares Drop as Consumers Complain About Marketing of EVs - Bloomberg

Samsung Debuts $1,099 S25 Edge, Kicking Off Wave of Thin Phones 

Chinese Weapons Gain Credibility After Pakistan-India Conflict - Bloomberg

The reported success of Chinese J-10Cs might bolster Beijing's arms exports. 

AI Startup Perplexity’s Valuation Surges to $14 Billion in New Funding Round - WSJ

Perplexity is in advanced talks for a new funding round that would value it at $14 billion, a more than 50% increase from late last year, according to people familiar with the matter.

Iron Ore Bounces Back to Six-Week High on US Trade Truce Hopes - Bloomberg

Dollar Drops as Korea Talks Fuel Bets Trump Wants Weaker Currency

 

The US currency declined after a report that South Korea and US officials discussed exchange rate policies.

 

Microsoft to lay off around 3% of workforce in organization-wide cuts | Reuters

 

So-called 'Big-tech' companies invest heavily on AI while reducing costs by laying off staffs to maintain their profitability. Although profits among AI companies remain robust, investors are concerned about the costs of scaling.

Intel has limited customer commitments for latest chip manufacturing tech, CFO says | Reuters 

AMD announces new $6 billion share buyback plan | Reuters


Nvidia supplier Foxconn cuts outlook due to currency appreciation | Reuters


Foxconn lowered its outlook due to the recent appreciation of the Taiwan dollar. Also it showed concerns over uncertainty of U.S tariff policies.

 

China says to accelerate financial support for sci-tech innovation | Reuters


Comment: No specific approaches announced. I do not count on their political rhetoric.


Exclusive: Tesla to resume shipping Chinese parts for Cybercab, Semi production in the US, source says | Reuters


Exclusive | 401(k) Giant to Allow Private Markets Investments in Its Retirement Portfolios

The 401(k) giant Empower will start allowing private credit, equity and real estate in some of the accounts it administers later this year.

 

UnitedHealth (UNH) Said to Be Under Investigation for Medicare Fraud - Bloomberg


WSJ reported that UnitedHealth is under criminal investigation for Medical fraud. 


Microsoft Layoffs Hit Coders Hardest With AI Costs on the Rise


According to the sources reviewed by Bloomberg, Microsoft's layoffs mainly target software engineers. 

 

Comment: Recently, I mentioned that 30% of recent projects of Microsoft are written by AI. For now, professionals including software engineers should focus on "what to do" with AI tools, not "how to build" AI models. This does not imply that students should 'not study' AI. Rather, I would say it is more imporatant to understand AI algorithms to use AI tools in an efficent way.

Coinbase (COIN) Looks to Make More Acquisitions After Deribit Purchase - Bloomberg

US close to letting UAE import millions of Nvidia's AI chips, sources say | Reuters


The U.S. has a preliminary agreement with UAE to allow it to import 500,000 of Nvidia's most advanced AI chips per year, according to two people familiar with the matter.

 



Alibaba missed its revenue estimates as competition in the e-commerce market intensified and Chinese consumer sentiment deteriorated amid escalating trade tensions.

Walmart warns of higher prices as Trump tariffs start to bite | Reuters


Walmart explictily stated that it would start raising prices later this month due to the high costs from tariffs. Although the levies on Chinese imports were reduced to 30%, Walmart's executives said that it's still high to bear.

 

Comment: It's fun to see Walmart CEO's sugarcoating on the trade truce. Otherwise, Walmart will also be labeled as 'a communist party' LMAO. 


Coinbase Global Says Customer Data Stolen, Held for Ransom - WSJ

Crypto has become the ultimate swamp asset


Coinbase said an unknown party has stolen customer data and is demanding money in exchange, but it hasn't paid.


This might have a short-term negative impact on crypto prices. While I agree with The Economist’s point, I’d add: “Who really cares?” Nobody seriously considers cryptocurrencies to be safe havens—neither as 'digital gold' nor as a guarantee of user privacy. People signed up for extremely risky assets with no safeguards or regulations. Supply just followed demand. That’s all.

Nvidia to Set Up Research Center in Shanghai, Maintaining Foothold in China - WSJ

Comment: I agree with Hwang that the U.S should make China rely on tools and environments of the U.S. The hegemony comes from exporting global standards, not threatening other countries by power.


Novo Nordisk ousts CEO after falling behind in weight loss market | Reuters

Comment: I do not think that kicking off CEO was necessary for a breakthrough. It only reflects panic among the company, which only make investors doubt the company's future.

OpenAI to help UAE develop one of world's biggest data centers, Bloomberg News reports | Reuters

OpenAI Takes on Google, Anthropic With New AI Agent for Coders - Bloomberg

OpenAI is introducing a new AI agent called Codex, designed to help with software development.

Comment: Have mercy upon coders like me...

Nvidia’s original customers are feeling unloved and grumpy


In February, Nvidia reported that quarterly revenue at its gaming division was down 11%(YoY) due to the high prices and failures in QC.

 

Comment: In my case, I did not buy new GPUs for 6 years not because I was disappointed with the new lineups. Rather, I didn't need to buy them as my PC is still runs the games I enjoy. Maybe the decline in Nvidia’s gaming revenue has more to do with customers like me than with pricing or quality control alone.

 

Young Chinese are turning to AI chatbots for friendship and love


 

5. Indices & Commodities

Relief on trade tensions prompted investors to shift toward riskier assets rather than treasuries. Treasuries plunged even further after Powell's comment that convinced maket participants not to expect earlier rate cuts. Weak sentiment among consumers and lower-than-expected inflation data renewed bets on earlier rate cuts. At last, Treasuries and DXY plummeted after U.S. Loses Last Triple-A Credit Rating - WSJ




Coinbase (COIN) Looks to Make More Acquisitions After Deribit Purchase - Bloomberg

Coinbase quarterly profit falls as expenses climb, shares down | Reuters 

Coinbase Global Says Customer Data Stolen, Held for Ransom - WSJ

Relief on trade tensions prompted investors to shift toward riskier assets including BTC and equities. Weak sentiment data from consumers & small business and concerns over high valuations on stocks slowed the rally. 

BTC underperformed compared to the NASDAQ, as it had not fallen much during the bear market and was weighed down by several negative news events.

Gold failed to rally even despite inflation concerns as investors preferred riskier assets over safe havens after the trade truce between U.S. and China.


Oil Prices Rise 3% on U.S.-China Deal But Downside Risks Remain - WSJ

Brent climbs 3.8% to $66.35 a barrel, while WTI jumps 4.1% to $63.50 a barrel after eased concerns over a trade war.

U.S. Crude Oil Supplies Rise Unexpectedly - WSJ


Oil Prices Fall on Weaker Demand, Possible U.S.-Iran Deal - WSJ

Oil prices plunged as unexpected increase of U.S crude inventories, along with concerns over U.S. Iran deal and weaker demand.

Hedge Funds Boost Bullish Bets on Brent on US-China Trade Truce - Bloomberg


 

→Despite oversupply concerns, easing trade tensions were enough to support weekly gains in oil prices.

6. Opinion

I left my comments and opinions on several articles. I will end up with restating them.

  • China's new loans in April declined sharply. Both household and corporate loans remain weak, which may imply that economic sentiment in China has deteriorated. 

 

  • China did not announce specific approaches or implement strong stimulus despite the weakened economy. I am sick of their political rhetorics. That's the reason why I sold part of my Chinese stocks. 

 

  • We should be aware that the ‘lower-for-longer’ interest rate era may be coming to an end. → No 'blind rally' anymore. I would reconsider my framework on investing decision.

 

  • The tariffs and barriers against each other still remain high compared to good-old days. Well, just wait and see. And, as John Bogle would say, stay the course. 

 

  • Bank deregulation would be the most critical factor to fuel a market rally if it comes true. Keep an eye on regulators.



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