🌐 Market Report.
📈 Federal Reserve Chair Jerome Powell said longer-term interest rates are likely to be higher going forward as the economy and policy environment have changed significantly over the past five years. Powell noted the era of near-zero interest rates is not likely to return anytime soon, as the Fed may be entering a period of more frequent and persistent supply shocks that will be challenging for the economy and central banks.
⚙️ And in reality, supply is changing in the US. Trump’s aggressive policies undoubtedly have two possible outcomes: either a contraction in supply due to a recession or a boom in supply due to a surge in investment and production, as we have already explained in previous reports.
📱 Here is an example of supply pressures: President Trump said he told Apple CEO Tim Cook that he does not want the company to build its products in India, and instead wants Apple to increase production in the United States. Trump referenced Apple’s $500 billion investment commitment in the U.S. announced in February, and told Cook that the U.S. had treated Apple well by allowing them to build plants in China for years. Trump said he told Cook “we want you to build here” in the U.S., and that Apple will be “upping” its production in the United States, though he did not provide further details.
🇮🇳 Trump criticized India’s high tariffs, saying the country has offered a deal to the U.S. where they are willing to charge no tariffs. At the moment, the 26% reciprocal tariff suspension postponed until July remains in place.
✈️ Trump continues to sell Boeing aircraft in the Middle East. New agreements have been added to the historic deals we announced yesterday: President Trump announced deals totaling more than $200 billion between the United States and the United Arab Emirates, including a $14.5 billion commitment between Boeing, GE Aerospace, and Etihad Airways. Etihad confirmed it is ordering 28 wide-body Boeing aircraft with GE engines, with the planes expected to join the fleet starting in 2028.
🌍 Etihad, which is owned by Abu Dhabi’s wealth fund, has been going through a restructuring and aims to expand its fleet to over 170 planes by 2030 as part of Abu Dhabi’s economic diversification strategy.
🇨🇳 China has temporarily paused export restrictions targeting 28 American companies, as part of the trade truce reached with the Trump administration over the weekend in Switzerland. However, China is continuing to block exports of 7 rare earth metals to the U.S., which are critical for the defense, energy, and automotive industries. China has emphasized the need for “comprehensive control of strategic minerals” like rare earths, viewing them as leverage in trade negotiations with the U.S. The 28 American companies that had been targeted with export restrictions are common targets for sanctions due to their activity in the defense sector. China also temporarily removed 17 companies from its “unreliable entity list”, including several drone manufacturers, as part of the trade truce.
📉 Alibaba reported quarterly revenue that missed analysts’ estimates, as the e-commerce giant works on new strategies to keep consumers spending amid economic weakness in China and uncertainty over tariff impacts. Alibaba’s U.S.-listed shares fell nearly 7% in early trading, though they have risen about 58% so far this year. Alibaba’s domestic e-commerce business saw revenue growth of nearly 9%, attributed to strong momentum in new consumer growth and increased orders. Alibaba is “investing aggressively” in the instant retail business, targeting a potential market of 1 billion consumers going forward. The company acknowledging “uncertainties in global trade regulations” as a potential headwind.
🛒 Its American competitor is also unhappy with the trade war. Walmart, the world’s largest retailer, says it will have to start raising prices later this month due to the high cost of tariffs imposed by the Trump administration. Walmart’s CFO said U.S. shoppers will see prices rise at the end of May and in June, as the company is heavily exposed to tariffs even though the U.S. and China reached a truce that lowered levies. Despite efforts to mitigate the tariff impact, Walmart said it would not be able to absorb all the costs due to narrow retail margins, though it is committed to ensuring tariffs don’t drive up food prices. Walmart kept its annual sales and profit forecast intact but withheld second-quarter operating income and earnings per share forecasts, citing the “fluid operating environment” and difficulty forecasting the speed at which tariffs could escalate.
🇫🇷 Meanwhile, France’s unemployment rate experienced an uptick in the first quarter, reaching 7.4%, signaling potential challenges for the nation’s labor market. But according to European bureaucrats, the economy is doing just fine.
🤝 The European Union is revising its proposals for a potential trade deal with the U.S. as a first step toward opening serious negotiations, even as the Trump administration continues to provide little clarity and make demands that negotiators see as unrealistic. The new EU proposal would provide more details on ways to lower trade and non-tariff barriers, as well as boost European investments in the U.S. and purchases of U.S. goods like LNG and semiconductors. In parallel, the EU is moving forward with countermeasures to hit back at Trump’s tariffs should the talks fail to produce a satisfactory outcome.
🛡️ The Digital Services ministers of France, Spain, and Greece are collaborating on a proposal to implement mandatory age verification for social media platforms such as Facebook and X, planning to present this initiative at an upcoming EU ministers’ meeting on June 6. This would conceal a more sinister purpose, namely to establish online identification for citizens, with the consequent and feared control of opinion on the internet. Another measure that could have Orwellian characteristics.
🚗 Chinese electric vehicle giant BYD expects to establish a new European center in Hungary, according to CEO and President Wang Chuanfu. This will be in addition to BYD’s existing electric bus assembly plant in Komarom, Hungary, which opened in 2016, as well as a new factory under construction that will produce electric vehicles. Hungary, under the “evil” Prime Minister Viktor Orban, so criticised by the European Commission, has become an important trade and investment partner for China, in contrast with some other EU nations considering reducing their dependence on the Chinese economy.
🚢 China has urged parties involved in Hong Kong conglomerate CK Hutchison’s sale of Panama Canal ports to exercise “caution”, warning of legal consequences if they proceed without clearance from Beijing. CK Hutchison had announced plans to sell most of its port operations to a U.S.-led consortium, which was first revealed after pressure from former U.S. President Donald Trump. Trump had refused to rule out military intervention to “take back” the Panama Canal, which was handed over to Panama in 1999, from alleged Chinese control. Beijing has criticized the sale and opened an investigation to ensure it is handled lawfully, with a commerce ministry spokesperson warning that no deal may be implemented without prior approval.
🌍 Geopolitics:
🇺🇦 Ukrainian President Volodymyr Zelensky arrived in Turkey to meet with Turkish President Erdogan, underscoring his commitment to ending the war with Russia. Trump hinted he may travel to Turkey if Putin also attended, but the Russian leader declined, sending the junior delegation instead. Putin may be wary of meeting Zelensky without having the details of any potential agreement worked out in advance, to avoid being seen as the aggressor if a deal is not reached. The global community appears to be approaching an era where Western concepts of world order are losing their dominance and legitimacy, but there remains a notable absence of willingness or readiness among nations to propose an alternative framework.
☢️ President Trump said the U.S. is getting very close to securing a nuclear deal with Iran, and that Tehran has “sort of” agreed to the terms. However, an Iranian source said there are still gaps to bridge in the negotiations between Iran and the U.S. While both sides have said they prefer diplomacy, they remain divided on several “red lines” that negotiators will have to work around to reach a new deal. Iran has indicated it is willing to agree to not make nuclear weapons, get rid of highly enriched uranium stockpiles, and allow inspections – but in exchange for the lifting of crippling economic sanctions. Oil prices fell on Thursday on expectations of a nuclear deal that could result in sanctions relief.
📊 Market View:
📈 Yesterday, after all, there were not many interruptions in the market’s course, and the mini S&P 500 futures remain relatively optimistic but without much progress, currently standing at 5,935 points. The Nasdaq 100 futures, meanwhile, show very similar behavior and are at 21,400 points.
💵 The DXY dollar index did not seem to respond to Powell’s remarks, who warned that we face times ahead with higher interest rates, leaving the index at 100.55 points at the moment, below the levels reached on Monday when it approached 102 points. The EURUSD, for its part, has managed to stabilize above 1.12, currently trading at 1.1216. Similarly, the GBPUSD has also recovered some of the levels lost on Monday, standing at 1.3328.
📈 In Europe, DAX 40 futures are stabilizing and advancing again, approaching the historical highs reached on Monday, currently standing at 23,855 points. Eurostoxx futures are also moving slightly higher, standing at 5,415 points at the moment.
🛢️ Crude oil has dropped again as the United States and Iran make progress in their negotiations, which could end with the lifting of Iran’s trade restrictions, increasing supply. Brent crude is currently at $64.35 per barrel.
🪙 Gold recovered much of the losses it experienced earlier this week. During yesterday’s session, it rose 4%, currently standing at $3,225 per ounce.
💻 Bitcoin remains strong within the ranges of $101,650 and $105,150. At the moment, it is trading at $104,085.
