Morning Brew May 2 2025

Good morning,

We had an interesting start to May: Stocks and USD began strong, supported by Meta and Microsoft. Microsoft is once again the most valuable company in the world. Indexes traded positively, but it may be too soon for complacency, as Charu points out: Markets have recovered — but are investors missing the bigger risk? Has the tariff pain peaked?

FX saw wild moves in the USD, the Yen, Gold, and Silver: The USD Index rose to 100 as USDJPY surged to 145.22 on the Bank of Japan's actions, EURUSD fell to 1.1310, and Gold and Silver stabilised at 3250 and 32.65 after falling to 3200 and 31.70 yesterday.

We are anticipating a busy day in the markets with Purchasing Manager Indexes throughout the day, as well as the Non-Farm Payroll in terms of scheduled events. The political front also holds lots of potential for volatility. Tomorrow, Berkshire Hathaway will report earnings, and it will be very interesting to hear if there has been a major shift in positioning – Does Warren Buffet see any real value?

• There seems to be some movement in the tariff discussion between the US and China.
• Ukraine and the US signed an agreement on commodity sales.
• Tim Waltz is the first major departure from the US Cabinet if we don’t count Elon Musk.
• The EU is suggesting purchasing more US goods to the tune of Bio 50.
• Qualcomm falls on a disappointing outlook.
• McDonald's reports declining sales, a sign of worry globally.
• Crude oil trades higher after a week-long slump was met with fresh buying amid a broader bounce in market risk sentiment, US-China trade talk hopes, and fresh US sanctions threat against Iran. Developments are offsetting the risk of another OPEC+ production boost, led by Saudi Arabia as they seek to regain market shares.

Apple, Down in late Trading (Jacob)

• Solid numbers, shaky China: Apple’s earnings beat expectations slightly, but weakness in China raises red flags about future growth.
• Tariff threats escalating: Apple faces a hefty USD 900 million cost increase from tariffs next quarter, posing serious risks to margins and pricing strategies.
• Regulatory and innovation risks loom: App Store and Google search-deal scrutiny, plus limited recent innovation, place pressure on Apple's growth engines, requiring close investor attention.

Amazon Also Lower in Extended trading :(Jacob)

• Strong earnings, cautious outlook: Amazon beat expectations, but tariffs and slowing cloud growth pose near-term risks.
• Tariffs are crucial: Trade tensions could significantly impact profitability, making tariff news essential to monitor closely.
• Strategic long-term bets: Heavy investment in advertising and AI offers promising long-term opportunities despite short-term volatility.

Gold corrects sharply from record highs as Chinese demand pauses (Ole)

• Gold’s correction from last month’s record high at USD 3,500 continues to unfold, gathering pace as global risk sentiment shows tentative signs of improvement.

• While the short-term correction has been driven by improved market sentiment, the structural drivers underpinning gold's strength remain firmly in place
• One key dynamic we continue to watch is Chinese investors which have emerged as a dominant source of demand, particularly through local gold-backed ETFs
• With Chinese markets closed for the Labour Day holiday through May 5, this bid has temporarily evaporated, exposing gold to additional downside pressure

Q1 is behind us — and while Big Tech earnings delivered on the surface, the real story lies in what companies are signaling about the road ahead.

We’ve put together a concise summary of what stood out across the tech giants — from strong AI momentum and resilient ad revenue to growing risks around tariffs, AI export rules, and a potential pullback in consumer and corporate spending.

Big tech earnings: Key macro takeaways beyond the numbers (Charu) 

• Who’s leading the AI race — and what’s fueling their growth
• Why Apple and Amazon are flashing early signs of pressure
• Key risks to watch, including AI diffusion rules and policy volatility
• Positioning themes emerging from the earnings season

Friday, May 2:

• Global PMI
• US: Non-Farm Payrolls

Earnings:

• Friday: ExxonMobil
• Saturday: Berkshire Hathaway
• Monday: Palantir, Vertex Pharmaceuticals, CRH
• Tuesday: AMD, Ferrari, Arista Networks, Duke Energy, Intesa Sanpaolo, Constellation Energy
• Wednesday: Novo Nordisk, Uber, Disney, Applovin, Unicredit, Doordash, Fortinet
• Thursday: Toyota, Shopify, Mercado Libre, ConocoPhillips, Nintendo, McKesson, Enel, Rheinmetall, Siemens Energy
• Friday: Enbridge