Morning Brew May 23 2025

Good morning,

Heading into the weekend, traders remain unsure what to focus on and what the next big driver will be. Equities had a slow day with most indexes red but only slightly.

Yields remain elevated and the USD gained a little ground after the higher-than-expected PMI and the tax bill passing.

On the single stock level we saw some strong moves with Solar energy down (Sunrun lost 37%) Snowflake gained 13% on good numbers

Bitcoin is trading at all time highs at above 110k, Gold and Silver took a beating yesterday but could recover to 3322 and 33.18, Platinum is 1088 even as Oil fell to the lowest close in two years. The USD Index remains below 100 with EURUSD at 1.1325, GBPUSD 1.3455, USDJPY 143.40 and USDCHF 0.8260.

US 10 year Yields receded but remain above the uncomfortable 4.50 and the 30 above 5. The Japanese 30 year halted it`s ascent but remains at a very high 3.11 after the high CPI

Politics remain the driver, and it will be very interesting to see if there is any fallout from the fight between the US administration and Harvard University. The Trump administration blocked Harvard from enrolling foreign students meaning foreign students will have to change university or leave. There could be interesting backlash from alumni.

The large looming question remains the impact of the tariffs. It is estimated that it will take approximately 3 months until the impact is really felt, meaning that until July, we may need to keep in mind that the economic data we are looking at does not  reflect the new “normal” yet – this may lead to complacency.

At the end of the day, the US has introduced tariffs of at least 10% across the globe with equities actually trading higher than before “Liberation Day”– I am not sure that is very logical and is worth considering. This does not mean that we are expecting an immediate sell-off, but caution and proper risk management are in order.

If you are using Autoinvest, remember that the next investment round is coming up.

Charu analysed the Tax Bill: The “One Big, Beautiful Bill” is here: Who wins and who loses?

• Trump’s tax bill passes House, heads to Senate: The $3.8 trillion “One Big Beautiful Bill” includes sweeping tax cuts, social spending rollbacks, and over $3 trillion in added deficits. A Senate vote is expected before the July 4 recess.
• Potential winners: defense, cybersecurity, and select consumers: Major boosts could come to defense and homeland security funding benefit contractors like Lockheed Martin and CrowdStrike, while tax breaks for overtime and tips support service-sector consumption.
• Potential losers: renewables, EVs, and healthcare: Clean energy tax credits are scrapped, EV incentives eliminated, and Medicaid cut by $800 billion — potentially hitting stocks like Sunrun, Tesla, and Humana

Friday, May 23

- Economic:

- Japan CPI 

- Germany GDP

- US: New Home Sales (Apr)

  - Canada: Retail Sales (Mar)

  - UK: Retail Sales (Apr)[2][5][7]

- Earnings:

  - Booz Allen Hamilton (BAH)