May 5th Market Overview

Happy Monday.

Our big run may be coming to an end today but near flat is much better than deep red. I'm in South Florida visiting my parents and I gotta say, this environment w/ palm trees and exotic foliage make watching the market go red a lot easier.

Markets acting as if a trade deal with China has happened. I'm remaining very cautious into this rally but love the positive and bullish sentiment.

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Let's dig in...

Executive Summary

• Markets at turning point as historic S&P rally meets expanding tariff landscape
  

• Corporate leadership shift at Berkshire marks end of an era while Buffett cautions against trade weaponization
  

• Hollywood joins tariff spotlight, expanding White House trade strategy beyond traditional manufacturing sectors
  

• Currency markets signal trade negotiation progress as Taiwan dollar spikes to three-year highs
  

• S&P 500 earnings tracking 12.5% growth this quarter—double initial expectations despite recession mentions reaching highest level since 2023

Market Overview

Key Market Drivers

1. Trade deals imminent: Treasury Secretary Bessent told CNBC deals could emerge “as early as this week,” with India proposing zero tariffs on steel, auto components and pharmaceuticals up to certain thresholds.
   

2. Economy shows resilience: April ISM Services Index beat expectations, reaching 51.6 despite tariff concerns. Service sector expansion continues despite manufacturing contraction reported last week.
   

3. Oil pressured by OPEC+ decision: The cartel and allies agreed to boost June output by 411,000 barrels per day, their second consecutive monthly increase.
   

4. Fed decision approaches: Markets anticipate rates remaining unchanged on Wednesday despite Trump’s calls for cuts. Reports indicate potential new chip tariffs may coincide with FOMC announcement.

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Stock Spotlight

Skechers ($SKX ( ▲ 0.2% )) agreed to go private in a $9 billion deal with 3G Capital at $63 per share.

Howard Hughes Holdings ($HHH ( ▲ 0.15% )) saw Pershing Square invest $900 million for a 47% stake. Ackman becomes executive chairman with plans to transform the real estate developer into a “modern-day Berkshire Hathaway.”

Netflix ($NFLX ( ▲ 1.56% )) fell following Trump’s foreign film tariff announcement. Warner Bros. Discovery also declined, with “A Minecraft Movie” (filmed partly in New Zealand and Canada) potentially affected.

Berkshire Hathaway ($BRK.B ( ▲ 1.09% )) retreated from Friday’s record highs after Buffett’s succession announcement. Greg Abel becomes CEO January 1, 2026, with Buffett remaining as chairman.

Sunoco ($SUN ( ▲ 5.23% )) declined after announcing plans to acquire Parkland in a $9.1 billion cash and stock deal.

Big Name Updates

Warren Buffett delivered a forceful defense of global trade at Berkshire’s annual meeting, stating “trade should not be a weapon” and “we should be looking to trade with the rest of the world.” The 94-year-old will transition CEO duties to Greg Abel while maintaining his chairman role.

Tesla ($TSLA ( ▲ 0.32% )) faces headwinds in Europe with Spanish new registrations falling 16.6% year-over-year January through April, despite overall EV registrations rising 54%.

MicroStrategy ($MSTR ( ▲ 1.78% )) purchased 1,895 additional Bitcoins between April 28-May 4 at $95,167 average price, totaling $180.30 million.

Nvidia ($NVDA ( ▲ 0.25% )) maintains Overweight rating at Piper Sandler despite analysis showing approximately $9.8 billion in annual data center revenue potentially at risk in worst-case CAPEX slowdown scenario.

Other Notable Company News

Palantir ($PLTR ( ▲ 0.97% )) reports after close, testing all-time highs around $125.

Hims & Hers Health ($HIMS ( ▲ 5.82% )) announces results after market hours.

PDD Holdings ($PDD ( ▼ 1.55% )) saw Temu cut U.S. digital ad spending by 31% over two weeks according to NY Times.

Reddit ($RDDT ( ▼ 5.52% )) upgraded to Buy from Neutral at Seaport Research with $165 price target.

AppLovin ($APP ( ▼ 0.38% )) maintained Buy rating at Jefferies, citing gaming ad vertical resilience and e-commerce advertiser success ahead of Q1 results.

Wendy’s ($WEN ( ▼ 0.93% )) upgraded to Overweight from Neutral at JPMorgan, noting “store economics stabilize and start to improve.”

Sector Watch

Bond Market

• 10-year Treasury yield reached 4.345% as investors position ahead of Wednesday’s Fed meeting
• Markets price minimal chance (3.2%) of rate cut despite Trump’s continued pressure

Policy Watch

• Taiwan dollar surged 5.77% to three-year highs, triggering emergency central bank meeting
• WSJ reports China discontinued hundreds of economic data points, complicating tariff impact assessment
• Investor Bill Ackman called for “180-day tariff pause” to reduce business uncertainty
• India proposes zero tariffs on steel, auto components and pharmaceuticals up to certain thresholds

What to Watch

1. Federal Reserve meeting (May 7-8): FOMC decision comes amid increasing pressure for rate cuts. Watch for shifts in language signaling potential policy changes.
   • Powell’s press conference will address rising trade tensions impact
   • Market reaction could affect Treasury yields and bank stocks
   

2. Ford and Palantir earnings: Both report after today’s close with implications for consumer spending and enterprise tech demand.
   • Ford ($F ( ▼ 1.58% ) ) results indicate auto market health amid economic uncertainty
   • Palantir ($PLTR ( ▲ 0.97% ) ) government contract trends signal future growth trajectory
   

3. Trade deal announcements: With Bessent suggesting imminent agreements, official announcements could significantly move markets.
   • India negotiations appear most advanced
   • Taiwan currency movements suggest potential progress
   

4. Entertainment industry response: Studios and streamers must evaluate production strategies following Trump’s 100% foreign film tariff.
   • Industry meetings with administration could modify policy
   • Production location decisions will impact content economics

   
   
   Thanks for reading 🙂
   
   - John