“buy on the sound of cannons, sell on the sound of trumpets” — Nathan Rothschild

1. US Retail Sales Drop for Second Month as Tariff Anxiety Sets In — The value of retail purchases, not adjusted for inflation, decreased 0.9%, the most since the start of the year and restrained by autos, Commerce Department data showed Tuesday. That followed a downwardly revised 0.1% drop in April, marking the first back-to-back decline since the end of 2023. In the retail sales report, seven of the 13 categories posted drops, dragged down by building materials, gasoline and motor vehicles — which came after a buying spree in anticipation of tariffs. Spending at restaurants and bars, the only service-sector category in the retail report, fell by the most since early 2023.
2. Fed’s Forecast Sees Fewer Rate Cuts in 2026 and 2027 — The Federal Reserve kept a steady hand on interest rates, maintaining them at their target range of 4.25% to 4.5%. The central bank is calling for two rate cuts this year, but policymakers see higher inflation. They have also cut their outlook for gross domestic product. The Federal Reserve’s meeting had a dovish tone, with expectations for two rate cuts still in place for this year despite upward revisions to near-term inflation forecasts, said Simon Dangoor, head of fixed income macro strategies at Goldman Sachs Asset Management. “Implicitly FOMC members continue to expect stronger near-term inflation to prove largely transitory and their tolerance to upward moves in unemployment remains low,” he said. “We expect the Fed to remain on hold at next month’s meeting but think a path could open up to a resumption of its easing cycle later this year should the labor market weaken.”
3. Trump Delays TikTok Ban for a Third Time — The TikTok ban was set to take effect on Jan. 19, but Trump has issued a series of extensions that have allowed the app to continue operating. The most recent extension expired Thursday. The 2024 statute authorizes the president to issue a one-time enforcement extension of up to 90 days if he certifies to Congress that “binding legal agreements” are in place that will lead to TikTok’s sale. It is unclear whether that certification has been made or if other laws permit additional enforcement delays. At Thursday’s press briefing, White House press secretary Karoline Leavitt said that “the White House Counsel’s Office and the Department of Justice strongly believe in the legal rationale” for the third extension, but didn’t provide further details. Trump came to TikTok’s defense last year after recognizing the addictive social-media platform was an effective way to reach young voters. In his first term, however, Trump had unsuccessfully sought to close down the app or transfer control of certain features after national-security officials concluded TikTok harvests sensitive data from tens of millions of Americans and can use its algorithm to manipulate content to further Chinese political objectives.
4. U.S. Prepares Action Targeting Allies’ Chip Plants in China — Currently, South Korea’s Samsung Electronics 005930 0.51%increase; green up pointing triangle and SK Hynix 000660 4.47%increase; green up pointing triangle as well as Taiwan Semiconductor Manufacturing 2330 1.93%increase; green up pointing triangle enjoy blanket waivers that allow them to ship American chip-making equipment to their factories in China without applying for a separate license each time. Jeffrey Kessler, head of the Commerce Department unit in charge of export controls, told the three companies this week he wanted to cancel those waivers, according to people familiar with the meetings. They said Kessler described the action as part of the Trump administration’s crackdown on critical U.S. technology going to China.

The week ahead — Economic data from Econoday.com:

“If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money.” – Bill Lipschutz

1. India, US to Expedite Trade Talks Ahead of Trump’s Tariff Deadline — Trade officials from India and the US met in New Delhi for about a week to discuss issues including greater market access, digital trade, customs rules and technical barriers to trade, the official told reporters in New Delhi, asking not to be identified as the information isn’t public. The US trade team arrived in New Delhi last week to advance trade negotiations. India and the US are working on a phased trade deal with an early agreement targeted for July, the deadline for implementation of the Trump administration’s so-called reciprocal tariffs. Those tariffs — which target Indian exports with 26% levies — are facing legal challenges in Washington.
2. US Core Inflation Rises Less Than Forecast for Fourth Month — The consumer price index, excluding the often volatile food and energy categories, increased 0.1% from April, according to Bureau of Labor Statistics data out Wednesday. From a year ago, it rose 2.8%. Goods prices, excluding food and energy commodities, were unchanged. New and used-car prices both declined, as did apparel. Meanwhile, services prices minus energy rose 0.2%, a deceleration from the prior month and reflecting a decline in airfares and hotel stays.
The string of below-forecast inflation readings adds to evidence that consumers have yet to feel the pinch of President Donald Trump’s tariffs — perhaps because the most punitive levies have temporarily been on pause, or thanks to companies so far absorbing the extra costs or boosting inventory ahead of tariffs.
3. Muted US Producer Prices Add to String of Tame Inflation Reports — The producer price index rose 0.1% from a month earlier, according to a Bureau of Labor Statistics report released Thursday. The median forecast in a Bloomberg survey of economists called for a 0.2% increase. Excluding food and energy, the PPI also increased 0.1%. The PPI report follows May consumer price data that showed a fourth month of tame inflation. While the impact of higher tariffs has so far been modest for Americans, economists see price pressures building in the second half of the year as companies look to pass costs on to their customers.
4. Israel Attacks Iran’s Nuclear Sites and Kills Senior Commanders — Israel launched strikes across Iran on Friday morning, targeting nuclear facilities and killing top military commanders in a major escalation against its chief adversary that risks sparking a broad war in the Middle East. The strikes were far more extensive than those Israel carried out against Iran last year and underscored the country’s growing assertiveness, as well as its military and intelligence capabilities. Israel said it struck around 100 targets across Iranian cities on Friday morning, using 200 planes. The attacks caused oil to surge as much as 13%, though it later pared its gains, and investors to buy havens such as gold and US Treasuries.

The week ahead — Economic data from Econoday.com:

“I’m not better than the next trader, just quicker at admitting my mistakes and moving on to the next opportunity”. — George Soros

1. OECD Warns That World Growth to Slow Amid Trade Turmoil — The world economy will lose pace this year, hamstrung by uncertainty stemming from a whipsawing U.S. trade policy, according to new forecasts from the Organization for Economic Cooperation and Development. Collectively, the global economy is now set to grow by 2.9% this year and next, the OECD said in its quarterly report released Tuesday. That marks a downgrade to the group’s previous forecasts, which saw growth at 3.1% in 2025 and 3% in 2026, and suggests the world economy is set to slow from the 3.3% expansion it booked last year.
2. U.S. Hiring Slows Again, ADP Report Shows — Just 37,000 jobs were created last month, down from 62,000 in April, according to the ADP National Employment report released Wednesday. Economists polled by The Wall Street Journal had expected hiring to pick up pace to 110,000 new jobs on the month. The downturn means jobs growth was its weakest in more than two years. Signs of weakness in hiring in the private sector contrast to other indications of a robust jobs market. There has been little sign elsewhere that gloomier economic sentiment is leading to an uptick in unemployment.
3. US Trade Deficit Narrows by Most on Record as Imports Plunge — The gap in goods and services trade shrank 55.5% from the prior month, to $61.6 billion, the smallest since 2023 and more than completely reversing the sharp widening that occurred in the first quarter, Commerce Department data showed Thursday. The median estimate in a Bloomberg survey of economists was for a $66 billion deficit. Imports of goods and services declined a record 16.3% in April, while exports increased 3%. The sharp narrowing in April puts trade on track for a large contribution to gross domestic product in the second quarter after being largely responsible for a 0.2% annualized decline in first-quarter GDP. Higher US reciprocal duties on most imported goods that went into effect early in the month helps explain the huge slowdown in inbound shipments from overseas producers.
4. US Jobs Report Points to Gradual Moderation in Labor Market — Nonfarm payrolls increased 139,000 last month after a combined 95,000 in downward revisions to the prior two months, according to Bureau of Labor Statistics data out Friday. The unemployment rate held at 4.2%, while wage growth accelerated. The payrolls figure, which was slightly better than expectations, helps alleviate concerns of a rapid deterioration in labor demand as companies contend with higher costs related to tariffs and prospects of slower economic activity. President Donald Trump’s decision to pause some of the more punitive import duties, including those on China, has helped lift sentiment among businesses as well as consumers. The labor market report wraps up a week of disappointing economic data that included a further increase in applications for jobless benefits and weaker services activity.

The week ahead — Economic data from Econoday.com:

“There will not be any posting for the week of May 30th, 2025. We are away for some needed R&R.” — Have a good week.