The State of Markets: “US Equities: Momentum Fading?”
Despite progress in tariff negotiations, US markets continued to trade sideways this week. With that, the S&P500 has so far remained rangebound this month, between ~5,600 and 5,741. Those levels were last seen from late-March to early April (see key chart below). Of note, the top end of this month’s range was reached on Thursday’s announcement of the US-UK trade deal, aided by Trump’s positive comments at that time about China (i.e. “if China talks go well, tariffs could be lowered” source: Trump Thursday). Those gains, though, faded quickly, with the S&P500 moving back into its range for the week. All of which highlights that lots of good tariff news is already in the price (as markets anticipate outcomes). In that sense, opening discussions (with the emphasis on ‘de-escalation’) this weekend between China and the US in Switzerland will be watched closely (and could set the tone for which way the S&P500 breaks out of its trading range next week).
We updated our ‘tactical’ (1 – 4 month) views on the S&P500 earlier this month (available for subscribers – see HERE to check out the product). Separately, our ‘1 – 2’ week views on the S&P500 (whether to be SHORT or LONG on that time horizon) are updated each day in the ‘Daily Risk Appetite Gauge’ – available HERE).
Next week all eyes will be on Tuesday’s US CPI release for April (which will reflect the initial implementation of many of the tariffs). That will be watched closely given the Fed’s concerns about ‘tariff induced’ inflation (as noted in Wednesday’s press conference). Other key US data points include the NFIB small business survey (also on Tuesday); retail sales and the NAHB index (Thursday); followed by housing starts, building permits, and the University of Michigan sentiment index (all on Friday). In Europe, German & Eurozone ZEW survey is due on Tuesday and the first estimate of UK Q1 GDP is due on Thursday (expected to be +0.3% Q-o-Q). The first estimate of Japanese Q1 GDP is due on Friday. Please see below for a full list of upcoming macro data, earnings, and events.
Key chart: S&P500 June 25 futures candlestick shown with 50 & 200 day moving averages
Upcoming important data/events this week:
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Events: |
The Fed’s Powell gives opening remarks at the Thomas Laubach research conference (Thurs, 1:40pm). |
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Monday: |
N/A |
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Tuesday: |
US NFIB small business optimism (Apr, 11am); US headline & core CPI (Apr, 1:30pm). |
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Wednesday: |
N/A |
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Thursday: |
UK GDP (Q1 first estimate, 7am); US retail sales (Apr, 1:30pm). |
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Friday: |
Japanese GDP (Q1 first estimate, 12:50am); US Michigan sentiment (May first estimate, 3pm). |
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Key earnings: |
Walmart (Thurs). |
Key Research
Commodity Fundamentals Report No. 187, 8th May 2025:
“OIL: How Low Does It Go? a.k.a Politics, Price Wars, & The (Coming) Supply Response”
OPEC’s strategy is increasingly driven by geopolitics, rather than balancing global supply & demand (i.e. the usual considerations). That’s creating a de facto price war with high cost producers (most importantly US shale), as well as non-compliant OPEC+ members.
Some technical factors suggest that the drawdown in oil prices is advanced (sentiment, for example, is washed out, and positioning is bearish). The contrarian set up for oil therefore supports the case for a rally.
Key North American macro data & events:
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Events: |
Speeches by the Fed’s Kugler in Dublin (Mon, 3:25pm) & Daly in a fireside chat (Wed, 10:40pm) & Powell gives opening remarks at the Thomas Laubach research conference (Thurs, 1:40pm). |
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Monday: |
US Federal budget balance (Apr, 7pm). |
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Tuesday: |
US NFIB small business optimism (Apr, 11am); US headline & core CPI (Apr, 1:30pm). |
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Wednesday: |
Canadian building permits (Mar, 1:30pm). |
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Thursday: |
Canadian manufacturing & wholesale sales (Mar, 12:30pm); US retail sales (Apr, 1:30pm); US headline & core PPI (Apr, 1:30pm); US Empire manufacturing (Apr, 1:30pm); Canadian existing home sales (Apr, 2pm); US weekly jobless claims (1:30pm); US industrial & manufacturing production & capacity utilisation (Apr, 2:15pm); US NAHB homebuilders index (May, 3pm); US business inventories (Mar, 3pm). |
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Friday: |
US housing starts & building permits (Apr, 12:30pm); US imports and exports price index (Apr, 1:30pm); US New York Fed service sector business activity (May, 1:30pm); US Michigan sentiment (May first estimate, 3pm); US total TIC flows (Mar, 8pm). |
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Key earnings: |
Simon Property (Mon); Cisco, Copart (Wed); Walmart, Deere&Company, Applied Materials (Thurs). |
Fig B: US Michigan sentiment (index)
Key European macro data & events
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Events: |
Speeches by the ECB’s Makhlouf in Dublin (Tues, 9am), Holzmann in Vienna (Wed, 3pm) & Guindos in Amsterdam (Thurs, 11:15am). |
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Monday: |
N/A |
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Tuesday: |
German current account balance (Feb, 8:45am); German & Eurozone ZEW survey – expectations & current situation (May, 10am). |
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Wednesday: |
German headline & core CPI (April final estimate, 7am); Spanish headline & core CPI (April final estimate, 8am); |
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Thursday: |
French headline & core CPI (April final estimate, 7:45am); Italian current account balance (Mar, 9:30am); Eurozone GDP & employment (Q1 second estimate, 10am); Eurozone industrial production (Mar, 10am). |
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Friday: |
French ILO unemployment rate (Q1, 6:30am); Spanish home sales (Mar, 8am); Italian headline CPI (April final estimate, 9am); Eurozone trade balance (Mar, 10am). |
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Key earnings: |
Engie (Thurs). |
Fig C: Eurozone industrial production (Y-o-Y %)
Key UK macro data & events
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Events: |
Speeches by the Bank of England’s Lombardelli, Greene, Mann & Taylor at the BoE ‘Watchers’ conference’ (Mon, 9am-5pm), Bailey & Knot in Amsterdam (Tues, 4pm), Breeden in Amsterdam (Wed, 8:05am) & Dhingra in Brussels (Thurs, 3pm). |
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Monday: |
N/A |
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Tuesday: |
BRC retail sales (Apr, 12:01am); employment, jobless claims & average weekly earnings (Apr/Mar, 7am). |
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Wednesday: |
N/A |
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Thursday: |
GDP (Q1 first estimate, 7am), monthly GDP estimate, industrial & manufacturing production, goods trade balance & construction output (Mar, 7am). |
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Friday: |
N/A |
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Key earnings: |
National Grid, 3I Group (Thurs). |
Fig D: UK GDP growth (Q-o-Q%)
Key Asia-Pacific macro data & events
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Events: |
Speech by the BOJ’s Nakamura at a conference (Fri, 5am). |
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Monday: |
N/A |
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Tuesday: |
Japanese M2 & M3 money supply (Apr, 12:50am); Australian Westpac consumer confidence (May, 1:30am); Australian NAB business confidence (Apr, 2:30am). |
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Wednesday: |
Japanese PPI (Apr, 12:50am); Australian wages (Q1, 2:30am). |
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Thursday: |
Australian consumer inflation expectations (May, 2am); Australian employment data (Apr, 2:30am); Japanese machine tool orders (April first estimate, 7am). |
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Friday: |
Japanese GDP (Q1 first estimate, 12:50am); Japanese industrial production & capacity utilisation (March final estimate, 5:30am). |
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Key earnings: |
SoftBank Group, Honda Motor (Tues); Sony, Sumitomo Mitsui Financial, KDDI (Wed); Mitsubishi UFJ Financial Group, Mizuho Financial (Thurs). |
Fig E: Japanese GDP growth (Q-o-Q%)
This week:
Longview on Friday, 9th May 2025:
“Global Macro - In the 'Foothills of Sunlit Uplands'”
Commodity Fundamentals Report No. 187, 8th May 2025:
“OIL: How Low Does It Go? a.k.a Politics, Price Wars, & The (Coming) Supply Response”
Prior week:
Longview on Friday, 2nd May 2025:
“Tariffs: What's Priced In?”
Tactical Equity Asset Allocation No. 256, 1st May 2025 :
“Bearishness Abounds’ a.k.a. Stay Tactically LONG –> Trim Position Size”
Longview Letter No. 148, 30th April 2025:
“UK: Boom First -> IMF Bailout Later? a.k.a. How to Fix the Economy, Part III”
Monthly Global Asset Allocation No. 63 29th April 2025:
“Strategic Portfolio: (continue to) ADD Risk”
Recommended Global Macro Trade, 28th April 2025:
“Move SHORT Gold (BUY a Put Spread)”