I’m not going to go as far as to say we preferred the days when Trump was firing off social media posts every five minutes, but there’s definitely a middle ground. A balance between total market madness and days like yesterday where we spend most of our time twiddling our thumbs, waiting for the Fed, and reminiscing about Warren Buffett’s career. Volatility keeps falling, and the famous “Greed and Fear” investor sentiment indicator is leaning more and more toward “greed.” Just a month ago, on April 2, we were terrified, and now confidence has come roaring back. Investors have this incredible ability to change their minds in an instant—it’s astounding.
The Day’s Big Thought
First, let’s note that U.S. markets ended their streak of consecutive gains yesterday—capping it at nine straight sessions. Monday, May 5 wasn’t exactly a “sell-off” day either, but it was clearly a time for some profit-taking ahead of the Fed’s upcoming decision. Most economists and strategists from Wall Street came out of the woodwork trying to put into words what we’re expecting from the Fed—and especially from Jerome Powell. So let’s give it a shot and break things down.
Right now, we’re facing two major scenarios. The first one is Donald Trump’s vision. The controversial and often-contested White House boss has his own unique view of the economy. No one really knows where he gets his information from, but according to him, inflation doesn’t exist—it’s all in our heads. BLS data? Fake. PCE data? Also fake. And honestly, on that note, I don’t totally blame him—since I’ve long thought the clowns at the BLS are… well, the word’s right there in the name. So, Trump believes there’s no inflation and that the economy is slowing because of the trade war (a bit) and what Biden left behind (a lot, if you ask Trump). His only viable strategy: slash interest rates drastically to revive the economy. Problem solved.
Except That…
The second scenario is the one grounded a little more in reality—Jerome Powell’s perspective. The Fed Chair knows that inflation isn’t dead. It’s been temporarily put into a sort of artificial coma, but a wild reawakening isn’t off the table, and that could really hurt consumers. Historically, Powell has always believed it’s easier to restart a recession-hit economy than to contain runaway inflation. And based on current economic numbers—which show some undeniable deterioration, although we’re not in panic mode yet—he’s holding back. Tariffs haven’t fully hit consumer prices yet, and Powell prefers a “wait and see” approach over rushing into a decision.
Here’s what we do know:
The April jobs report was deemed “solid,” which doesn’t confirm the fears from Q1’s slowdown. I don’t totally agree with that take, but it’s enough for Powell to feel there’s no urgent need to act.
The Fed is in “wait-and-see” mode facing a complex picture: inflation that may be rising, slowing growth, and a shaky job market. Economists call that stagflation. It’s a real headache.
The Fed should not cut rates until inflation—possibly driven by tariffs—hits a clear peak. Ideally, we’d also need to see weakness in the labor market before the Fed considers moving, because a premature rate cut could make stagflation worse instead of solving it. Jerome Powell will speak on Wednesday right after the Fed meeting. He’ll likely repeat the key points from his April 16 speech:
“No rush. Inflation remains our top priority.”
The issue, of course, is that Trump doesn’t agree with this approach. And he won’t hesitate to say so during Wednesday night’s speech. That’s where market uncertainty is really coming from—it’s not about the Fed’s decision per se, but rather how angry Trump might get and what kind of outburst he’ll unleash. That’s what’s making traders a little skittish and taking some money off the table ahead of the Fed announcement.
Still, it’s hard to call this true uncertainty when 98.7% of respondents believe Powell won’t move rates. At best, he might start doing something by July—and even that’s up in the air. So it looks like we’ll stay in this limbo of indecision, waiting for Powell’s speech and Trump’s fireworks.
In Europe
Back in Europe, the picture was mixed. Switzerland and France slipped, dragged down by pre-Fed jitters, while Germany rose again—chasing new records set in March. Apparently, Frankfurt is in a mood of pure optimism, and nothing seems capable of stopping the DAX now that hopes are up for a diplomatic resolution on tariffs. Meanwhile, rumors were flying that Shell might be buying BP, and UBS just struck a deal with U.S. authorities over old tax evasion issues dating back to Credit Suisse. Final price tag: $511 million.
All in all, markets didn’t pick a clear direction, as everyone’s waiting to see what kind of drama will unfold between the Fed and Trump. Let’s be honest—we don’t really care what the Fed will do or say. What everyone wants to know is: how mad will Trump get, and what might he say or do live on stage? One final note: there was surprisingly little talk about tariffs and China trade talks—probably because of a public holiday over there. Still, it’s strange how markets have totally priced in the tariff situation since that 90-day moratorium was announced. No one seems to believe that the talks might fail or that a real trade war could break out. Peace has returned to the markets—for now. Let’s hope it lasts.
Asian Markets Wearing a Forced Smile
This Tuesday morning, Asian stock markets were generally up, led by China, which seems to have found a bit of optimism—or at least a grim smile—thanks to renewed hopes of restarting trade talks with the U.S. Again.
Nothing concrete yet, but at this point, just talking about talking is considered bullish. Investors are also digesting the latest Chinese service sector data, kind of like how you choke down fried rice after three days of monetary junk food—you’re not sure it’s good, but you pretend it is. China’s up nearly 1%, and Hong Kong is following with a 0.65% rise. Worth noting: Japan and South Korea were closed for public holidays. The result? Extremely low trading volumes and a hushed atmosphere—like the morning after yesterday, before anyone’s had coffee.
On the Gold Side
Gold is back on the rise, trading at $3,368, while Bitcoin is at $94,400. As for oil, after the OPEC announcement, prices ticked up slightly and WTI is back above $58. It’s also worth noting that the recent drop in oil prices has been welcomed by airlines, who have seen their costs drop significantly in recent times.
Companies, News, and Everything Else
Aside from our thoughts on interest rates, the Fed, and the future of the U.S. economy — with or without tariffs — it’s important to note that we spent a good amount of time focused on quarterly earnings from several companies. These gave us a better sense of the economy’s current state and the businesses that drive it. One thing is now certain (if there was still any doubt): nobody knows where we’re heading, and uncertainty is at an all-time high. Two companies made that very clear yesterday — one making toys for kids, and the other for adults. Yes, Mattel released its quarterly numbers, and so did Ford. Both were extremely cautious about the future, as they have no idea what direction tariffs will take us in.
At Ford, financial forecasts for 2025 have been suspended, citing significant short-term risks — including an estimated $1.5 billion in tariffs this year.
The company mentioned four major threats:
New supply chain disruptions
Increases or extensions of tariffs
Risk of commercial retaliation (cross tariffs, restrictions)
Political uncertainty over taxes and emissions regulations
Ford said the level of uncertainty is too high to offer any reliable forecast at this point. An update is expected mid-summer, during the Q2 earnings report. Otherwise, Ford announced revenue of $40.7 billion vs. the expected $38.2 billion, and a profit of $0.14 per share versus the forecasted $0.00. All in all, not bad numbers, but the lack of forward guidance and uncertainty about the future pushed the stock down 2.4% after hours.
And Barbie and Ken?
Mattel still wants kids to play — without being crushed by tariffs. The Barbie company announced potential price hikes “if necessary,” and is relocating production outside China — targeting less than 10% “Made in China” by 2027. It also suspended its 2025 forecast, as the trade war makes visibility impossible. The company is clearly trying to appeal to Trump, even publicly calling for zero tariffs on toys to ensure children can “grow up in harmony.” And hey, that way you can hand them an iPhone at age three so they leave you alone at restaurants… The stock dropped 0.6%.
Then there was Palantir, which reported earnings last night. The CEO said the company was “ON FIRE.” Indeed, the numbers were strong, but the market didn’t bite and the stock dropped 9% after hours — despite strong earnings and an upgraded full-year guidance. Why the drop? Well, the market had already priced it in: the stock was up 65% since January, near all-time highs. Too much optimism. The valuation was insane — Palantir was trading at 189x estimated earnings, compared to a historical average of 98. In short: Palantir is doing great, but the stock was too expensive and too hyped.
And furthermore
Skechers jumped 24% following news of a $9.42 billion acquisition by 3G Capital, or $63 per share. On Semiconductor beat expectations but dropped 8.4% due to weak demand across all segments. Berkshire Hathaway shares plunged 5.1% following Warren Buffett’s departure.
Today will likely feel a lot like yesterday, given that we still don’t know more about the Fed’s plans — and the PMI data in Europe or the U.S. Trade Balance won’t change that.
On the earnings front today, we’ll hear from Ferrari, AXA, Geberit, Super Micro, AMD, Rivian, and Lucid. For now, futures are down 0.24%, and we’ll keep waiting — as always — with the same old mantra: the Fed meeting could change everything…
Have an excellent day — and don’t forget to subscribe to the FREE Investir.ch Newsletter. I’ll see you tomorrow to tell you ONCE AGAIN that we’re still waiting to see what the Fed will do… and that if they do nothing, Trump won’t be happy!
Enjoy this lovely crappy fall day, everyone!
