TABLE OF CONTENTS
MARKET RECAP: Crisis Over?: U.S. & China Reach Deal, Cut Tariffs By 115%
ECONOMY: Twin Deficit Crisis: ‘This Is How You End Empires', Recession Imminent?
ECONOMY: Buckle Up For ‘Tough 2025’ Warns Moody’s Chief Economist: Markets Not Pricing In What’s Next
CRYPTO: 'Brink Of Sovereign Debt Crisis': Why Jack Mallers Is Launching A 42,000 Bitcoin Company
MARKETS: Bombshell Report: Economy Shrinks In Q1, Markets Tank; 'Worse Things Are Coming'
TECH: Why Big Tech Is Bleeding: Fund Manager Reveals Best Stocks During ‘Bubble’
ECONOMY: Did The Fed Just Make Critical Mistake? It May Be ‘Too Late’ Now
WHAT TO WATCH
MARKET RECAP
Latest News. A trade agreement announced today paused the escalating trade war between the US and China for 90 days. The deal reduced US tariffs on Chinese goods from 145% to 30%, while China lowered its tariffs on American products from 125% to 10%.
Markets responded positively in the AM. The S&P rose 2.5%, NASDAQ jumped 3.5%, while gold fell 3%.
S&P 500 bullish momentum stalled last week after a bullish run-up (April 28–May 9). The SPX index fell 0.47% for the week ending May 9, snapping its two-week winning streak.
The Nasdaq fully recovered from its April slump. The Nasdaq Composite ended the previous week virtually flat at 17,928.92. The Dow Jones Industrial Average showed volatility throughout the period, ending slightly lower on May 9 despite showing strength earlier in the period. Despite recent market activity, the S&P 500 remains approximately 4.5% below its January 2025 high.
Last week, the Federal Reserve kept interest rates unchanged at the target range of 4.25%-4.5% during its May 7th meeting, noting that "uncertainty surrounding the economic outlook has increased further" since the previous meeting. Chair Jerome Powell addressed tariff concerns during his press briefing, emphasizing that the Fed remains vigilant regarding rising risks to both unemployment and inflation.
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China Market Research Group founder Shaun Rein characterized the agreement as a Chinese victory. "It’s very clear to the Chinese that they beat Trump," he explained. "Xi Jinping and the CPC didn’t blink, they didn’t fold."
Rein said domestic pressure forced Trump's hand: "You had companies like Apple saying that they would not be able to sell iPhones unless they had an exemption. Farmers were demanding subsidies."
Despite reduced tensions, Rein predicted continued economic competition: "The United States 100% needs China. Otherwise, we do not get rare earths, we do not get antibiotics, we do not get iPhones."
He suggested both nations benefit from cooperation. "Trade between both countries helps each other," Rein said.
Market Movements
From April 28 – May 9, the following assets experienced dramatic swings in price. Data are up-to-date as of May 9 at approximately 4pm EST.
1. Uber Technologies ($UBER) – up 5.93%
2. Hims & Hers Health ($HIMS) – up 72.94%
3. Meta Platforms ($META) – up 6.57%
4. Duolingo ($DUOL) - up 33.40%
5. Block ($XYZ) - down 14.18%
6. Super Micro Computer ($SMCI) – down 12.45%
DXY - up .79%
Bitcoin - up 9.27%
Gold - down .13%
10-year Treasury Yield - up 4.03%
S&P 500 [SPX] - up 2.36%
Russell 2000 [RUT] - up 3.23%
ECONOMY: Twin Deficit Crisis: ‘This Is How You End Empires', Recession Imminent?
Darius Dale of 42 Macro predicted continuing market volatility and economic challenges ahead. Dale explained that the U.S. faces significant structural issues, particularly its twin deficits (budget deficit of 7% and current account deficit of 4%), totaling 11% of GDP.
"This is why we think we are early innings of a secular dollar bear market," Dale said.
Dale warned that current market conditions resemble a "W-shaped market in a U-shaped economy," with further downturns possible before recovery. He predicted the economy might experience a "technical recession" with multiple quarters of negative growth, though not necessarily a full-blown recession.
His firm maintained defensive positioning with 65% cash allocation and no equity exposure. Dale expressed particular optimism about gold and Bitcoin, which he explained are "diverging from the stock market" with defensive properties.
Dale criticized the Trump administration's tariff approach as economically unsound. "You cannot force a closure of the current account deficit without having capital account ramifications," he said.
He argued fiscal austerity represents the only viable path forward, warning that foreign investors might reduce their U.S. investment exposure if policies alienate them. "That is how you end empires," Dale explained.
ECONOMY: Buckle Up For ‘Tough 2025’ Warns Moody’s Chief Economist: Markets Not Pricing In What’s Next
Mark Zandi, chief economist at Moody's Analytics, expressed concern about economic prospects amid escalating trade tensions. He placed the odds of a global recession starting this year at "over 50%."
"The market has another leg down to go. If we get a recession, we're going down another 10-15%," Zandi said.
The economist identified manufacturing, transportation, and agriculture as sectors most vulnerable to tariff impacts. He explained that "trade between US and China is coming to a complete standstill given 45% tariffs on Chinese goods."
Regarding President Trump's suggestion that tariff revenue could eliminate income taxes, Zandi noted the mathematical impossibility. "The tariff revenue would not come close to paying for all the tax cuts being considered," he explained.
The interview highlighted unusual dollar weakness despite trade tensions. "Global investors are nervous about that safe haven status," Zandi said, noting the euro, yen, and pound have strengthened against the dollar.
When asked about investment opportunities, Zandi predicted European markets might outperform. "Europe in times like these, when there's a lot of crises and pressure, comes together and takes another step towards a stronger union."
CRYPTO: 'Brink Of Sovereign Debt Crisis': Why Jack Mallers Is Launching A 42,000 Bitcoin Company
Jack Mallers, CEO of Strike and co-founder of 21 Capital, discussed his new Bitcoin-focused investment vehicle backed by major players, including SoftBank and Tether.
"We're on the brink of a sovereign debt crisis," Mallers explained, describing the global trade imbalance where China runs a trillion-dollar trade surplus. At the same time, the US has accumulated over $35 trillion in debt.
Mallers presented Bitcoin as a solution to failing fiat systems, estimating that humans own roughly $900 trillion worth of assets, half of which are used as savings vehicles. "Bitcoin is the ultimate vehicle for humans to store and then later exchange the value we create," he said.
The newly announced 21 Capital will launch with 42,000 BTC and aims to become a public company under ticker $XXI. Unlike Bitcoin ETFs that offer static exposure, Mallers emphasized that 21 Capital would grow "Bitcoin per share" through operations and investments.
"Our mandate to our shareholders is that by owning a share in the company, we intend to grow your access to Bitcoin just by being an investor," Mallers said.
Mallers distinguished volatility from risk by saying, "Volatility is a prerequisite to performance... Risk is the idea that the Bitcoin network can outright fail as a technology."
MARKETS: Bombshell Report: Economy Shrinks In Q1, Markets Tank; 'Worse Things Are Coming'
Chris Vermeulen, chief market strategist at technicaltraders.com, offered a bearish outlook following the first U.S. GDP contraction since 2022. The interview came after markets reacted to news that first-quarter GDP decreased at an annualized 0.3% rate, below economists' expectations.
"Obviously, I think I've been expecting poor economic data for a while," Vermeulen said, noting that stock markets typically decline before economic data weakens.
Vermeulen warned investors against the current market sentiment. "[People are] buying leverage and expecting a huge move up. You have to be very cautious when people have this complacency," he explained.
He predicted substantial further downside for equities. "We're looking at potentially a 15% to another 23-24% drop to the downside," Vermeulen said, suggesting the S&P 500 could fall to between 417-460.
Regarding gold's recent rally to record highs, Vermeulen predicted a correction. "We are in a bubble phase in gold. Everybody wants it and has piled in, and I think it is about to deflate and pull back with the overall stock market."
On Bitcoin, Vermeulen identified a potential target of $135,000, though he cautioned it remains "stuck under resistance" and could still sell off alongside stocks.
TECH: Why Big Tech Is Bleeding: Fund Manager Reveals Best Stocks During ‘Bubble’
Stephen Yiu, CIO and co-founder of Blue Whale Growth Fund, shared insights on the fund's portfolio adjustments amid market volatility and tariff concerns.
Yiu explained the fund's decision to increase its stake in Nvidia while divesting from Meta and Microsoft. "Nvidia's product GPU is very mission-critical in terms of where this AI war is heading," Yiu said, noting the company was trading at an attractive valuation despite recent declines.
Yiu highlighted how Trump's tariffs affect tech companies differently. "From a tariff perspective, because tariffs are imposed on physical goods so far, most tech companies are relatively immune especially if they're not making physical goods," he explained.
The fund exited Meta due to concerns about advertising revenue during a potential economic slowdown. Similarly, they sold Microsoft after seven years, expressing fears about AI investments and potential margin compression.
Yiu rejected comparisons to the dot-com bubble, pointing to fundamental differences. "The big tech company in the digital world has become very much entrenched into our day-to-day," he said, noting most major tech stocks trade at reasonable valuations of 20-25 times earnings.
ECONOMY: Did The Fed Just Make Critical Mistake? It May Be ‘Too Late’ Now
Following the Federal Reserve's decision to hold interest rates steady on May 7, Adrian Day, president of Adrian Day Asset Management, criticized the Fed for being reactive rather than proactive.
"They are reacting rather than being proactive and getting ahead of anything," Day explained regarding Fed Chair Jerome Powell's approach.
Day noted Powell admitted the Fed might have been late with their last rate cut in September, suggesting they are "very late cutting now," given economic indicators pointing to a slowdown.
Despite Powell citing uncertainty about tariffs and their potential effects, Day said many businesses were already cutting spending and pausing capital expenditure projects, evidence that the economy is cooling.
Day said that gold's rise to $3,300 per ounce reflects global uncertainty. "Gold is the one asset that is not so volatile these days. For someone wanting some stability... gold is offering that stability right now."
Day disagreed that gold mining stocks are overbought despite their 40% year-to-date gain compared to gold's 28% increase. "The valuations on the gold stocks are still very, very low," he said, pointing to expanding margins as gold prices rise faster than mining costs.
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WHAT TO WATCH
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