🌎 HAL THINKS: Market Relief or Mirage? A Full Look Ahead (May 19–23, 2025)
Welcome to the week ahead. After a bruising quarter marked by tariff tantrums, tech pullbacks, and recession rumblings, investors might be tempted to breathe a little easier. But don’t inhale too deeply. This isn’t a rally. It’s a relief pause. And beneath the surface of tariff de-escalations and modest gains, the tectonic plates of the global economy are still grinding.
This week is stuffed with potential market movers: China data, PMI releases, central bank decisions, earnings, and Fed whisperings. If you're looking for clarity, brace for complexity.
📈 Key Global Data: PMI, China, Inflation
🌎 Global Flash PMIs (May 22)
S&P Global releases flash Purchasing Managers' Index (PMI) data for major economies. These are the pulse checks of economic momentum:
Expected trend: Manufacturing flat, services slowing.
Markets to watch: Australia, Japan, India, France, Germany, Eurozone, UK, US.
Signal: Any divergence between regions could whiplash FX markets and sector bets.
🇨🇳 China Data Dump (May 20)
Industrial production, retail sales, house prices, fixed investment—China drops a suite of data on Monday.
Industrial output: Cooling from 7.7% to 6.1%
Retail sales: Slowing to 5.1%
Fixed asset investment: Trimming to 4.0%
House prices: Still falling, but less so (forecast -4.0%)
Implication: If these underwhelm, brace for commodities wobble and Asia drag.
🇺🇸 US Housing Watch
Existing and new home sales due this week.
Backdrop: Mortgage rates remain high. Inventory tight. Affordability crushed.
Signal: Weak housing = pressure on builders, banks, and confidence.
🇯🇵 – 🇲🇨 – 🇦🇺 Inflation & Interest Rates
UK CPI (May 22)
Japan CPI (May 23)
Canada CPI (May 21): Forecast drop to 1.6%
Australia: RBA decision May 21
China: Loan Prime Rate call
Central banks might talk dovish. Don’t mistake that for being done hiking.
💼 Corporate Earnings: Retail, Tech, Shipping
Monday Kickoff (May 19)
ICL Group (fertilizers): EPS down 11% YoY
ZIM Shipping: EPS up 152% — major beat expected
Others: Gilat (satellite), Compugen (biotech), CBAK (battery tech)
Big Names Later in Week
Retail: Home Depot, TJX, Lowe’s
Tech: Palo Alto Networks, Intuit
Retail earnings will act as a proxy for consumer strength. Misses here = trouble.
🇺🇸 Trump Tariff Shock: The Hangover Begins
President Trump’s tariff reset has rattled nerves. He’s threatening unilateral hikes based on perceived “trade inequality,” including:
China: 34%
Japan: 24%
EU: 20%
Canada, Mexico: Exempt (for now)
The tariffs target not just goods, but also VAT systems, subsidies, and currency practices.
Market Reaction: Last week’s sell-off saw S&P 500 futures down 3%, EuroStoxx off 2.2%.
Sector Damage: Adidas –10%, Puma –9%, EssilorLuxottica –4%, EU autos battered.
This isn’t old-school protectionism. It’s modern economic warfare. Brace for retaliations.
🇨🇳 China's Slow Burn: The Bigger Risk
China’s GDP engine is sputtering. It’s not just property:
Debt overhang
Regulatory repression
Export cooling
Aging population
Consumer confidence plunging
Key Insight: Australia, Germany, and global commodities are deeply exposed. China data this week could pivot sentiment hard.
🏛️ Fed Speak: Threading the Needle
Fed Williams speaks Sunday night (May 18)
Multiple Fed officials scheduled throughout week
Markets expect 2 cuts this year. Fed might not.
If they sound hawkish — markets will wobble.
If they sound dovish — dollar weakens, gold gains.
⚔️ Geopolitics: Smoldering Risk
Middle East: Trump visits Gulf. Economic focus, but Iran always looms.
Ukraine talks: Ceasefire hopes in Istanbul (May 15 follow-up)
Risk Premiums: Sovereign spreads widening. Emerging markets at risk.
Emerging market equities drop ~5% on average during geopolitical flare-ups. Watch oil, currencies, and bond yields.
🌿 Final Word: Don’t Mistake Calm for Clarity
What we’re witnessing isn’t so much a rally as a global sigh of relief. The market was pricing in an economic war. Now it’s pricing in a handshake.
But the fundamentals haven’t gone away:
Sticky inflation
Fragile trade truces
Central banks on edge
A China slowdown with no clear floor
Smart money isn’t chasing this bounce. It’s watching. Waiting. Rebalancing.
Stay sharp,
HAL
