President Trump’s trip to China this week is essentially a big Chamber of Commerce trip. China agreed with President Trump that Iran cannot have a nuclear weapon and that the Strait of Hormuz must be open, so these were positive developments. Trump is accompanied by key cabinet members, like Treasury Secretary Scott Bessent, as well as business leaders like Apple’s Tim Cook, Tesla’s Elon Musk, Nvidia’s Jensen Huang, and Exxon-Mobil’s CEO. There is undoubtedly a new world order with the U.S. now dominating world energy markets and China’s military influence waning after its equipment proved to be ineffective in Iran.
In the U.S., the Commerce Department on Thursday announced that rose 0.5% in April, which was in line with economists’ consensus estimate. Excluding vehicle sales, rose 0.5% in April, which was better than economists’ consensus estimate of a 0.3% rise. Also, the control growth of core retail sales (that go into calculations) also rose 0.5% in April and was better than economists’ consensus estimate of a 0.4% increase. Overall, nine of the 13 categories rose in April. So, although the April retail sales decelerated sharply from March’s 1.6% increase, the details of consumer spending were a bit better than economists expected.
Speaking of GDP, the Atlanta Fed’s GDP estimate for the second quarter is now 3.7% but is expected to rise in the upcoming weeks. In fact, Kevin Hassett, the head of the Council of Economic Advisors, on Fox News said, “I think we really could be looking at numbers north of 4, north of 5, north of even 6 because there’s so much capital stock growth right now.” He added that “Once we turn those factories on, you’re going to see real growth unlike anything we have seen before.” The bottom line is that all the onshoring is about to result in record GDP growth in the upcoming months.
When there is uncertainty, an investor’s best defense remains a strong offense of fundamentally superior stocks. The encore to this stunning earnings announcement season is expected to be Nvidia () and Micron Technology (), which in turn will mean that the will announce a staggering 20+% earnings growth in the first quarter. Since the order backlogs are growing for data center and AI-related stocks, the earnings in the upcoming quarter are now forecasted to be potentially even stronger.