Mid-Week Wrap-Up - May 7th, 2025

Fed keeps rates steady, markets fall

AuthorAuthor

CMG Venture & Mark Roussin
May 07, 2025

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Market Talk

The major indexes are lower to start the week on the heels of the Fed’s comments, Trump’s firm stance on tariffs, and mixed earnings.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

Fed holds rates steady as it notes rising uncertainty and stagflation risk

The Federal Reserve held interest rates at 4.25%–4.50% this week, maintaining its cautious stance as President Trump’s sweeping tariffs inject fresh uncertainty into the economic outlook. While the Fed sees resilience in the labor market and some signs of growth, it warned that both inflation and unemployment risks are rising—and tariffs could delay progress toward the central bank’s long-term goals.

🔑 Key Points

  • The Fed kept rates unchanged for the fifth straight meeting, citing uncertainty around inflation and employment risks.

  • Powell said tariffs could “delay progress” toward the Fed’s goals for at least a year if they remain at current levels.

  • Q1 GDP contracted by 0.3%, but April’s 177,000 payroll gain and stable 4.2% unemployment rate give the Fed breathing room.

  • Powell dismissed pressure from President Trump, reiterating that rate policy will be guided by data, not politics.

  • No preemptive cuts are coming: Powell said inflation remains above target and more data is needed before any rate moves.

👀 What You Need to Know

The Fed is now in full wait-and-see mode as it navigates a high-stakes game of economic tug-of-war. The job market remains strong, but falling GDP and persistent inflation create a potential stagflation scenario not seen since the early 1980s. Tariffs are now central to Fed policy discussions—adding costs, threatening growth, and delaying decision-making. Powell made clear the Fed won’t flinch in the face of political pressure and sees its current stance as “well-positioned” to react once the economic fallout from Trump’s trade war is better understood. Until then, patience rules.

🔐 Edge Takeaway: Though I’m often a critic of the Fed, Jerome Powell struck the right tone this week, reaffirming the central bank’s…upgrade to Edge+ to read the full Edge Alert.

Trump tariffs live updates: US-China trade talks to start this week with Bessent leading US delegation

Senior U.S. and Chinese officials will meet in Switzerland this weekend in the highest-level talks since the latest round of tariffs ignited fresh tensions between the world’s two largest economies. But even as discussions resume, President Trump continues to take a hard public stance—floating additional tariffs on everything from pharmaceuticals to foreign films and downplaying the impact of reduced trade with China.

🔑 Key Points

  • U.S.–China trade talks resume this weekend in Switzerland, the most senior meeting since early April’s tariff escalation.

  • Trump said he is not open to pulling back 145% tariffs on China and maintains China “deserves it” and the U.S. is “losing nothing” from the standoff.

  • Despite the rhetoric, China has reportedly drafted a list of U.S. goods exempt from its 125% duties to ease tensions behind the scenes.

  • Trump also targeted Canada, saying the U.S. should stop “subsidizing” a neighbor that “doesn’t do much business” with the U.S.

  • New sectors are now at risk: Trump floated fresh tariffs on pharmaceuticals and foreign films, with Ford already warning of a material hit.

👀 What You Need to Know

While top officials are preparing to start a dialogue, President Trump’s aggressive tone continues to inject uncertainty into global trade. His mixed messaging—publicly doubling down on extreme tariffs while hinting at potential rollbacks—leaves markets guessing. Trump’s threat of 100% tariffs on films and proposed duties on imported medicine could rattle sectors beyond industrials. With Ford already citing a $1.5B hit from tariffs, the broader corporate impact is no longer theoretical—and more earnings downgrades could follow if these threats materialize.

📚 Edge-ucation: What are tariffs - and who do they really hurt?

Tariffs are taxes imposed by a government on imported goods. When the U.S. sets a tariff, say 145% on Chinese electronics, that cost is added to the import price. In theory, this makes foreign goods more expensive and encourages consumers and businesses to “buy American.”

Governments use tariffs to protect domestic industries from foreign competition, punish unfair trade practices, or gain leverage in negotiations. For example, Trump’s current tariff strategy targets China’s manufacturing dominance and aims to bring production back to the U.S.

Pros:
✅ Protects domestic industries and jobs (at least short term)
✅ Can serve as a bargaining chip in trade negotiations
✅ Generates tax revenue for the government

Cons:
❌ Raises costs for U.S. businesses that rely on imported parts
❌ Increases consumer prices, especially for autos, tech, and goods made abroad
❌ Can spark retaliation from other countries, hurting U.S. exports

Who’s impacted right now?

  • Consumers: Prices are rising on everything from electronics to cars and clothes.

  • U.S. Manufacturers: Companies like Ford and Tesla face higher input costs, and Ford has already pulled guidance, citing a $1.5B tariff impact.

  • Retailers: Import-heavy businesses like Walmart and Target must absorb or pass along price hikes.

  • Exporters: Retaliation from countries like China and Canada threatens U.S. farm, energy, and industrial exports.

  • Investors: Earnings risk is rising—especially in autos, semis, industrials, and retailers tied to global supply chains.

Tariffs are a blunt tool. While they can help level the playing field in the short run, they often backfire by hurting the very consumers and businesses they’re meant to protect. Investors should stay alert for ripple effects—particularly as companies adjust guidance and margins under this new tariff regime.

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Earnings Roundup: tariff talk and guidance continues to drive stock moves

Earnings season is delivering a mixed bag of beats, misses, and major headlines. Disney surged on streaming strength, while Palantir cratered despite an upbeat narrative. The biggest bombshell? Warren Buffett’s announced exit from Berkshire Hathaway, coinciding with an earnings miss and a $348B cash pile. Investors are weighing solid results from AMD and Disney against a string of weak reports and guidance cuts from names like Uber and DoorDash.

🔑 Key Points

👀 What You Need to Know

Tariffs have reemerged as a key market risk, with Ford and Ferrari both cutting guidance due to anticipated cost impacts. Several high-profile tech names, like Uber and DoorDash, delivered disappointing revenue and cautious commentary, dragging shares lower despite prior momentum. Meanwhile, AMD’s beat stands out as a bright spot in an otherwise volatile tape.

The earnings landscape is punishing even minor shortfalls, especially in growth stocks, while rewarding only the most convincing beats with upward price action.

*Note - our full breakdowns of these reports, along with graphics and our takeaways from each report will be sent out in Friday’s Earnings Recap.

In Other News

In this section we'll be curating a selection of news headlines we think you'll find interesting. If a topic catches your eye, click the provided links to read more about it.

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The Second Half

Earnings from several mega cap names are sure to move markets over the next few days, while all eyes will be on the nonfarm payrolls report on Friday.

Earnings Reports

Earnings season carries on as several companies we cover are scheduled to report. Here are the names we will be watching to end the week:

  • Wednesday 5/7: --

  • Thursday 5/8: Shopify, Coinbase, and The Trade Desk

  • Friday 5/9: Enbridge

Here is the calendar of earnings releases scheduled for the rest of the week:

Source: Earnings Whisper

Economic Reports

It’s been a quiet week for economic reports and that continues into the end of the week. The only report on the calendar of note is initial jobless claims, while several Fed members are slated to speak on Friday.

Here is the full calendar of events scheduled for the remainder of the week:

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.

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