“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: