for May was forecasted to drop from April’s +0.4% to +0.3% and came in at +0.2%, a relief for the markets. Headline came in at +0.5% as forecast, one tick lower than April. While better than some feared, these numbers are well above the Fed’s 2% target. Needless to say, Kevin Warsh’s first meeting as the new Chairman of the next week will be of high interest to investors.
The situation in Iran appears far from resolved after an exchange of attacks where Iran attacked a US helicopter patrolling the Strait of Hormuz and the US retaliated on Iranian military sites, followed by Iranian attacks on US bases in the Middle East. This morning, President Trump announced that Iran must “pay the price” for taking too long in peace talks. prices rose modestly on the developments, though interest rates remain flat, as investors have become less reactive to Trump’s saber-rattling.
The massive IPO is coming this week and appears to be heavily oversubscribed, though many pundits see it as overpriced, priced for success in unproven markets. Betting against Elon Musk has not worked well in the past. The IPO has unusual features, such as a fixed price rather than a negotiated one, 30% of the shares allocated to the public, and no insider sales until the shares are up 30%. The success of the offering may have a meaningful impact on the tech market’s plans for further IPOs later in the year.
The Iran situation is the biggest concern, and the SpaceX IPO going well is important. But tech stabilizing remains the most important element. Oracle () reports after the close and will have a big impact on the AI narrative, particularly in software.
The trend has turned negative, but the is still only 3.7% from its high, and earnings estimates are strong and not coming down. We are still in the range of a normal and overdue correction.