The State of Markets: “US Equities: Where Next?”
Global markets were pushed around by changing newsflow this week. On Wednesday evening, Trump’s ‘Liberation Day’ tariffs were found to be illegal (by the US Court of International Trade). The next day that decision was overturned by a federal appeals court (which effectively reversed the decision, at least for now).
Having rallied on the first ruling, most risk assets then gave back their gains when it was reversed. Several US indices therefore closed broadly unchanged on the week, with the S&P500 still trading at/around its 10 day moving average (i.e. on a closing price basis, see chart below).
The key question, therefore, is: Will the uptrend resume in the near term? Or, having lost momentum (since early last week), are US equities about to roll over? Is the 50 day moving average the next short term target? We outline our views on those questions in recent research (see both recent ‘Daily Risk Appetite’ publications, and ‘Tactical Equity Asset Allocation’ research).
This coming week’s US macro data includes ISM manufacturing & services (on Monday and Wednesday respectively). There’s also a strong job market theme this week, with job openings on Tuesday; ADP employment (Wednesday); Challenger job cuts (Thursday) and nonfarm payrolls on Friday. In Europe the ECB makes its policy decision on Thursday, while Eurozone CPI for May is due on Tuesday. Please see below for a full list of upcoming macro data, earnings reports and events.
Key chart: S&P500 futures shown with 10 & 50 day moving averages
Upcoming important data/events this week:
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Events: |
Bank of Canada Policy Decision (Wed, 2:45pm); Fed releases Beige Book (Wed, 7pm); ECB policy decision (Thurs, 1:15pm). |
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Monday: |
US ISM manufacturing PMI (May, 3pm). |
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Tuesday: |
US JOLTS job openings (Apr, 3pm); EZ headline & core CPI (May first estimate, 10am); Chinese Caixin manufacturing sector PMI (May, 2:45am). |
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Wednesday: |
US ADP employment (May, 1:15pm); US ISM services PMI (May, 3pm). |
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Thursday: |
US Challenger job cuts (May, 12:30pm); Eurozone PPI (Apr, 10am).Chinese Caixin service sector PMI (May, 1:45am). |
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Friday: |
US nonfarm payrolls, hourly earnings & unemployment data (May, 1:30pm); Eurozone retail sales (Apr, 10am); Japanese ESRI leading index (April first estimate, 6am). |
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Key earnings: |
Broadcom (Thurs). |
Key Research
US Quarterly Asset Allocation No. 62, 29th May 2025:
“Mid-Cycle Soft Patch Ongoing”
“The White House says the House GOP’s tax cuts will usher in an economic boom. Top economists say the upside is negligible….
….estimates of how the bill’s policies will impact GDP are far more muted. The nonpartisan Joint Committee on Taxation on Thursday said the measure would increase annual growth by just 0.03 percentage points — from 1.83 percent to 1.86 percent. Penn Wharton’s May 19 report on the legislation’s economic effects estimated that GDP would climb by 0.5 percent by 2034 — but that assumes Trump drops tariffs back to pre-April 2 levels, Smetters said.…”
Source: 23rd May 2025, Politico
The debate surrounding the outlook for the US economy is mired in high levels of uncertainty. In particular: i) What will be the effects of tariffs (assuming Trump successfully appeals yesterday’s ruling7)?; ii) What’s the message of higher US 10 and 30 year bond yields?; iii) How strong is the underlying US economy?; iv) What is the extent of fiscal tightening in 2025 (i.e. the DOGE effect), versus; v) the extent of the fiscal loosening in the ‘One Big Beautiful Bill’?; and v) How much is inflation lingering in the US? Will tariffs push up inflation? & is the spike in US inflation expectations a concern? Added to which, what does the divergent message of the main US consumer confidence indices mean (fig 7)?
Key North American macro data & events:
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Events: |
Bank of Canada Policy Decision (Wed, 2:45pm); Fed releases Beige Book (Wed, 7pm); speeches by the Fed’s Waller on economic outlook (Mon, 1am), Logan & Goolsbee in moderated Q&A’s (Mon, 3:15pm), Powell gives opening remarks at the Federal Reserve Board’s International Finance Division 75th Anniversary Conference (Mon, 6pm), Kugler at the Economic Club of NY (Thurs, 5pm) & Harker on economic outlook (Thurs, 6:30pm). |
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Monday: |
US S&P manufacturing sector PMIs (May final estimate, 2:45pm); US ISM manufacturing PMI (May, 3pm); US construction spending (Apr, 3pm). |
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Tuesday: |
US JOLTS job openings (Apr, 3pm); US vehicle sales (May, 3pm); US durable goods orders (April final estimate, 3pm). |
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Wednesday: |
US ADP employment (May, 1:15pm); Canada S&P service sector PMI (May final estimate, 2:30pm); US S&P service sector PMIs (May final estimate, 2:45pm); US ISM services PMI (May, 3pm). |
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Thursday: |
US Challenger job cuts (May, 12:30pm); US nonfarm productivity & unit labour costs (Q1 final estimate, 1:30pm); US weekly jobless claims (1:30pm); US trade balance (Apr, 1:30pm). |
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Friday: |
Canadian employment data (change in employment, unemployment rate & participation rate, for May, 1:30pm); US nonfarm payrolls, hourly earnings & unemployment data (May, 1:30pm); US consumer credit (Apr, 8pm). |
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Key earnings: |
CrowdStrike Holdings (Tues); Broadcom (Thurs). |
Fig B: US ISM manufacturing PMI
Key European macro data & events
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Events: |
ECB policy decision (Thurs, 1:15pm) followed by Lagarde press conference (1:45pm); speeches by the ECB’s Holzmann in Vienna (Fri, 9am) & Centeno in Lisbon (Fri, 12pm). |
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Monday: |
HCOB manufacturing sector PMIs for Spain (8:15am), Italy (8:45am), France (8:50am), Germany (8:55am) & Eurozone (9am) – all May final estimates apart from Spain & Italy. |
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Tuesday: |
Spanish unemployment rate (May, 8am); Italian unemployment rate (Apr, 9am); EZ headline & core CPI (May first estimate, 10am); Eurozone unemployment rate (Apr, 10am). |
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Wednesday: |
Spanish industrial production (Apr, 8am); HCOB services sector PMIs for Spain (8:15am), Italy (8:45am), France (8:50am), Germany (8:55am) & Eurozone (9am) – all May final estimates apart from Spain & Italy. |
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Thursday: |
German factory orders (Apr, 7am); German imports/exports, & trade balance (Apr, 7am); HCOB construction sector PMI for Germany (May, 8:30am); Italian retail sales (Jan, 10am); Eurozone PPI (Apr, 10am). |
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Friday: |
German industrial production (Apr, 7am); French trade balance (Apr, 7:45am); French industrial & manufacturing production (Apr, 7:45am); Eurozone retail sales (Apr, 10am); Eurozone GDP (Q1 third estimate, 10am). |
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Key earnings: |
N/A |
Fig C: German industrial production (Y-o-Y %)
Key UK macro data & events
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Events: |
Speeches by the Bank of England’s Mann in Washington (Mon, 10:30pm) & Greene at ECONDAT conference 2025 (Thurs, 8:45am). |
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Monday: |
Nationwide house prices (May, 7am); Net consumer credit, mortgage approvals & M4 money supply (Apr, 9:30am); S&P manufacturing sector PMI (May final estimate, 9:30am). |
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Tuesday: |
N/A |
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Wednesday: |
S&P service sector PMI (May final estimate, 9:30am). |
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Thursday: |
New car sales (May, 9am); S&P construction sector PMI (May, 9:30am). |
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Friday: |
N/A |
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Key earnings: |
N/A |
Fig D: UK Nationwide house prices (Y-o-Y %)
Key Asia-Pacific macro data & events
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Events: |
Market holiday in China on account of Dragon Boat Festival (Mon); RBA releases minutes of May policy meeting (Tues, 2:30am); speech by the RBA’s Hunter (Tues, 4:05am); speech by the BOJ governor Ueda (Tues, 8:50am). |
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Monday: |
Australian S&P manufacturing PMI (May final estimate, 12am); Japanese capital spending & company sales (Q1, 12:50am); Japanese Jibun Bank manufacturing sector PMI (May final estimate, 1:30am); Australian headline CPI (May, 2am); Australian ANZ-Indeed job advertisements (May, 2:30am). |
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Tuesday: |
Japanese monetary base (May, 12:50am); Australian inventories & company profits (Q1, 2:30am); Chinese Caixin manufacturing sector PMI (May, 2:45am). |
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Wednesday: |
Australian S&P services sector PMI (May final estimate, 12am); Japanese Jibun Bank services sector PMI (May final estimate, 1:30am); Australian GDP (Q1, 2:30am). |
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Thursday: |
Chinese Caixin service sector PMI (May, 1:45am); Australian imports/exports, & trade balance (Apr, 2:30am); Australian household spending (Apr, 2:30am). |
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Friday: |
Japanese household spending (Apr, 12:30am); Japanese ESRI leading index (April first estimate, 6am). |
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Key earnings: |
N/A |
Fig E: Japanese ESRI leading index shown with recession bands
This week:
Longview on Friday, 30th May 2025:
“The ‘OW Europe’ Theme & How Much Inflation Is There…. Really?” – see email attached
US Quarterly Asset Allocation No. 62, 29th May 2025:
“Mid-Cycle Soft Patch Ongoing”
Recommended Global Macro Trade, 28th May 2025:
“Start Re-BUILDing SHORT Gold Exposure”
Prior week:
Longview on Friday, 23rd May 2025:
“Bond Shenanigans & the 'Gold-Silver' Ratio - What Does it all Mean?'”
Global Macro Report, 22nd May 2025:
“UK Economy: Poised to Accelerate”
Monthly Global Asset Allocation No. 64, 20th May 2025:
“China: Mini-Cycles in a Balance Sheet Recession”
Longview ‘Tactical’ Alert No. 91, 19th May 2025:
“Move Tactically NEUTRAL Equities (from OW) a.k.a. Pullback, or Consolidation Phase, Expected. Retest Debate Ambiguous”