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Weekly Analysis, May 11th, 2025
Macrosynthesis
TLDR:
- Tariff deals offset bearish Fed Comments
- Commodities rise on inflation fears, growth drivers
- Home ownership is twice the cost of rent
- Uber & Lyft see no signs of consumer slowdown
- UK stocks rise on US-UK trade deal
- Google losing its search monopoly
Wall Street wrapped up Friday with a slight dip, leaving investors with a mixed bag of emotions after a rollercoaster week. The Federal Reserve played it cool, holding interest rates steady as expected, but their hawkish tone hinted at stagflation risks, leaving markets a bit uneasy. Fed Chair Jerome Powell shrugged, saying they’re in a “wait-and-see” mode on tariffs, keeping everyone on edge.
But it wasn’t all gloom—trade news brought a spark of optimism. President Trump dropped a bombshell, announcing a “breakthrough” deal with the UK that’ll open doors for billions in U.S. exports. He also teased progress with China, as Treasury Secretary Scott Bessent gears up for talks with the Asian powerhouse, fueling hopes of smoother global trade waters. On Sunday, the White House announced a trade deal with China after two days of negotiations, stating a full briefing is forthcoming Monday morning. Stocks will likely rally on the news.
Meanwhile, earnings season kept the buzz alive. Disney stole the spotlight, not just with a solid quarterly beat but with dazzling plans to launch its first Middle East theme park in Abu Dhabi.
Still, the numbers told a tale of caution: the S&P 500 slipped -0.5%, the Nasdaq dropped -0.3%, and the Dow edged down -0.2%.
Commodities Rise on Inflation Fears
Commodities shone last week, with Crude Oil WTI up 4.7% to $61.02/bbl, Gold rallying 3.1% to $3,344/oz, and Natural Gas jumping 4.6% to 3.795. Cryptos soared, led by Ethereum’s 27.8% surge, followed by Litecoin (+18.8%), Bitcoin (+7.4%), and XRP (+7.9%). The 10-year bond yield barely moved, down 0.2 bps to 4.381, while forex saw the EUR/USD weaken 0.42%.
S&P 500 sectors were a mixed bag: Healthcare tanked -4.3%, Telecom fell -2.4%, and Consumer Staples dropped -1.1%, but Industrials rose 1.1%, Consumer Discretionary gained 0.8%, and Utilities added 0.5%.
This Week Brings Trade Talks, Earnings, and Hedge Fund Filings Into Focus
Markets were buzzing with anticipation as U.S.-China trade talks kicked off in Switzerland last week, following Trump’s announcement of a fresh U.S.-UK trade deal—the first since his broad tariff moves in April. On Sunday, Trump added fuel to the fire, touting “major progress” in the China negotiations, raising hopes of a breakthrough that could ease global trade tensions and end concerns the trade war would trigger a global economic meltdown.
The U.S.-UK trade agreement unveiled on Thursday had investors leaping for joy, with Trump himself cheering, “Buy stocks now!” As part of the deal, the U.S. will ease levies on British steel and autos, while the U.K. will open its markets to American farm products. Shares of major British firms, BAE Systems, AstraZeneca, and Rolls Royce, all rose on the deal news. The S&P 500 is clawing its way back, nearly hitting its pre-tariff “Liberation Day” levels from April 2.
The UK deal isn’t exactly a game-changer on its own. It’s a modest pact, leaving the 10% baseline tariff on U.S. exports intact, which is a head-scratcher since the U.S. enjoys a trade surplus with Britain. U.S. automated felt the deal allowed too much foreign competition from the UK. If a U.S.-China deal lands, stocks could be off to the races, potentially smashing their February all-time highs.
This coming week the economic calendar is packed: April’s consumer price index will shed light on inflation, and Fed Chair Powell’s upcoming remarks in Washington, D.C., are in focus after last week’s rate pause and stagflation warning. Earnings season also heats up with big names like Cisco (CSCO) and Walmart (WMT) reporting, alongside SEC filings that’ll reveal major hedge funds’ latest equity moves.
Home Ownership Dreams Fleeting for Many
The income required to buy a home is nearly double that needed to rent one, making the economics of home ownership upside down. If Congress does away with the ability to write off interest and tax payments, the benefits of home ownership will slip even further.
The Fed faces a difficult task in balancing the need for lower interest rates to encourage home ownership and affordability against the need to avoid sticky inflation set off by the Biden administration's historic debt spending.
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Company News
LevelFields AI Stock Alerts Last Week
SunOpta Inc. (STKL): On May 8, the stock surged 28.70% after a stock buyback announcement and after strong earnings results, reflecting investor confidence in its financial health and growth prospects in the plant-based food sector.
Lyft, Inc. (LYFT): Lyft soared 28.08% on May 9, driven by a stock buyback program of $750 million, signaling robust optimism following its Q1 earnings beat, as previously detailed.
Fastly, Inc. (FSLY): Gained 26.37% on May 7 after earnings results, boosted by solid growth in its edge computing services amid rising demand for fast, secure digital infrastructure.
Encore Capital Group, Inc. (ECPG): Rose 23.85% on May 7 post-earnings, due to strong performance in its debt recovery business, appealing to investors in the financial services sector.
LOBO EV Technologies Ltd. (LOBO): Increased 23.31% on May 6 after earnings, reflecting growth in the electric vehicle tech space, though the small stock price ($0.71) suggests volatility.
Cricut, Inc. (CRCT): Climbed 20.32% on May 6 following a stock buyback announcement, indicating management’s belief in undervaluation and boosting investor sentiment.
Uber, Lyft Say They See No Signs of Consumer Distress
Last week, Uber and Lyft reported their Q1 2025 earnings, offering insights into their financial performance and the state of the rideshare market.
Uber Earnings Recap: Uber delivered a solid beat on earnings per share at $0.51, surpassing Wall Street’s $0.50 estimate, though revenue of $11.5 billion slightly missed the $11.7 billion forecast. Gross bookings hit $42.8 billion, up 14% year-over-year, but marked the first decline since the pandemic, raising some eyebrows. Free cash flow soared 66% to $2.25 billion, and adjusted EBITDA reached a record $1.9 billion, up 35%. Trips grew 18% to 2.8 billion, with monthly active users rising 14% to 170 million. However, the stock dipped post-earnings, likely due to concerns over slowing gross bookings and competitive pressures from Lyft, alongside rising insurance costs and robotaxi uncertainties as Tesla is set to enter the market next month.
Lyft Earnings Recap: Lyft reported also, beating expectations with an adjusted EPS of $0.01 against an anticipated $0.02 loss. Revenue was $1.45 billion, just shy of the $1.46 billion estimate, but up 14% year-over-year. Gross bookings rose 16% to $4.0 billion, driven by a record 218.4 million rides (up 16%) and 24.2 million active riders (up 11%). Adjusted EBITDA nearly doubled to $106.5 million, and Lyft announced a beefy $750 million share repurchase plan, signaling confidence. Shares popped 20% after the report, reflecting investor enthusiasm for the growth and profitability surprise.
Consumer Distress Comments: Both companies struck an optimistic tone about the consumer. Uber’s CFO, Prashant Mahendra Raja, noted, “We’re not seeing trade downs in terms of the kinds of restaurants our eaters are eating at,” suggesting no signs of consumer pullback in their delivery business. Lyft echoed this sentiment in its Q1 call, with CEO David Risher stating they’re “not seeing anything in our data” indicating consumer weakening, a point highlighted in posts on X where users noted Lyft’s CEO saying there are “no signs of worry in the consumer.”
Boeing, Airbus Set to Get Tens of Billions in New Orders from British Airways Parent
On May 9, 2025, British Airways owner IAG announced a major fleet expansion, ordering 71 long-haul aircraft from Airbus and Boeing, including 32 Boeing 787-10s for British Airways and 21 Airbus A330-900neos, with options for six Airbus A350-900s, six A350-1000s, and six Boeing 777-9s, to be delivered between 2027 and 2033, following a U.S.-UK trade deal that reduced tariffs on aerospace parts. The order, part of a long-term strategy to modernize IAG’s fleet amid strong Q1 profits, aims to replace aging planes and support growth, despite industry challenges like supply chain delays and Boeing’s production struggles after a tough 2024. The Airbus jets will use Rolls-Royce engines, while the Boeing planes will feature General Electric engines.
Airbus also signed deals to sell airplanes to the Saudis and Helicopters to Brazil and Greece. The company reported a strong Q1 2025 with revenues climbing 6% year-over-year to €13.5 billion and net income surging 33% to €793 million, despite delivering fewer aircraft (136 vs. 142 in Q1 2024) due to supply chain challenges. The company maintained its 2025 guidance, targeting 820 aircraft deliveries and €7 billion in adjusted EBIT, while navigating tariff uncertainties and production ramp-ups for the A320 and A220 lines.
Google's Search Monopoly Is Showing Signs of Cracking
In testimony this week in an anti-trust case against Google, Apple executive Eddy Cue said Google searches through Apple devices declined for the first time ever in April.
Cue blamed AI chatbots like Perplexity and ChatGPT for the decline. Google pays Apple $20 billion a year to be the default search provider on Apple devices - a deal that pays off for Google, which captures 50% of its traffic from those devices. Google denies its losing users and traffic to Google.com has actually increased 30% in the past quarter, per data from ahrefs. Most of the new traffic is coming from India and Brazil.
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