Morning Brew May 16 2025

Good morning,

Yesterday, stocks were mixed; S&P 500 +0.41%, Nasdaq -0.18%, Dow +0.65%. Volume on U.S. exchanges was relatively heavy, with 17.9 billion shares traded. Walmart announced it would raise prices to reflect tariffs, shares fell 0.5%, dragging Amazon lower by 2.4%. In contrast, Cisco rose 5% on expected AI Datacenter demand. UnitedHealth Group lost a further 11% to a five-year low on reports of a fraud investigation. Dax had a good day yesterday and is near all-time highs again, at 23,700. US Yields seem to have topped for now and are 12 basis points lower than yesterday's peak. The USD Index is in a tight range between 101 and 100, EURUSD is 1.1211, GBPUSD 1.3325, USDJPY 145.25. Gold and Silver are 3217 and 32.44. Bitcoin is trading in a tight range above 100k. FX looks a little like a coiled spring that could spring at any point in time to me.

Jerome Powell spoke, stating he expects expenditures price inflation to have fallen to 2.2% -- a tepid reading but still likely not reflecting coming tariff-driven price increases. He also stated worries on supply issues: "We may be entering a period of more frequent, and potentially more persistent, supply shocks—a difficult challenge for the economy and for central banks."

The United Arab Emirates and the United States have signed an agreement for the Gulf country to build the largest artificial intelligence campus outside the United States. Charu took a look at Charu took a look at Trump’s Middle East dealmaking blitz

Key points:

• Trump’s Middle East tour unlocked over $2.8 trillion in deals, spanning aviation, AI, defense, and energy—putting U.S. firms at the center of Gulf ambitions to modernize and diversify.
• Boeing, Nvidia, GE, and Raytheon emerged as major winners, securing multi-billion-dollar orders across Qatar, Saudi Arabia, and the UAE, while tech giants like Microsoft, Oracle, and Amazon gained cloud and AI infrastructure footholds.
• While the opportunity is massive, risks around AI chip export controls, execution delays, and geopolitical instability remain, requiring investors to stay selective and focused on policy-driven sectors with strategic tailwinds.

The Japanese GDP came lower than expected at -0.8% vs -0.6% expected.

Today’s agenda includes only the EU Trade balance and the US Housing starts & University of sentiment. The EU trade balance is normally ignored but given DJT's focus on the trade deficit, it may be watched. Negotiations on Ukraine and US announcements are likely to drive markets today. It has the potential for a calm day or one of those explosive ones, so avoid complacency.

Trade safely