To The Moon

The Week In Rally.

I am sure everyone knows that US market had a good 4 day run last week from Tuesday to Friday.

When trading ended for the week: (see above)

• DJIA: +3.10% (+1,207.46 to 40.113.50).

• S&P 500: +5.59% (+292.57 to 5,525.21).

• Nasdaq: +8.29% (+1,330.18 to 17, 382.94).

The Big Question.

In the last trading week of April (crossing into May) will US market continue to rally or pull back ?

US pre-market indicators for Mon, 28 Apr 2025, show a slight decline across major indexes:

• Dow futures are down 14 points (-0.03%) at 40,240.

• S&P 500 futures are down 2.5 points (-0.05%) at 5,547.25.

• Nasdaq futures are down 10 points (-0.05%) at 19,525.25.

This suggests a mildly negative start for US markets.

Investors need to be aware because this week is jam-packed with a lot of activities in the economic reports and quarterly earnings front.

The Economic Reports.

Jobs and inflation reports will be key because they show how the US economy is doing. The GDP report as well, of course!

Tue, 29 Apr 2025.

• US confidence report.

• Jobs opening & Labour turnover surveys (JOLTs).

Wed, 30 Apr 2025.

• ADP jobs report.

• US Gross domestic product (GDP).

• Personal consumption expenditure (PCE).

Thu, 01 May 2025.

• US weekly jobless claims for week ending 25 Apr 2025.

• S&P Manufacturing PMI (final).

Fri, 02 May 2025.

• US Non-farm payroll for March 2025.

As a rule of thumb, US market tends to be ‘nervous’ on the run up to Non-farm payroll report release.

Quarterly Earnings.

According to LSEG, Q1 2025 earnings season has hit full stride, with 179 of the companies in the S&P 500 having reported.

Of those, 73% have beaten expectations.

This week is when the Mega cap companies report their quarterly earnings.

Mon, 28 Apr 2025.

• NXP Semiconductors (NXP).

• Domino Pizza (DPZ).

Tue, 29 Apr 2025.

• Visa (V).

• Coca Cola (KO).

• Pfizer (PFE).

Wed, 30 Apr 2025.

• $Microsoft(MSFT)$.

• $Meta Platforms, Inc.(META)$.

• Caterpillar (CAT).

• TotalEnergies (TTE).

• UBS AG (UBS).

Thu, 01 May 2025.

• $Apple(AAPL)$.

• $Amazon.com(AMZN)$.

• Eli Lilly and Company (LLY).

• Mastercard Corp (MA).

• McDonald's Corporation (MCD).

Fri, 02 May 2025.

• $Berkshire Hathaway(BRK.B)$.

• ExxonMobil (XOM).

• Chevron Corporation (CVX).

What To Know So Far ?

(1) Tariffs’ Reduced Impact.

In case everyone thinks that the “grave” effects of Trump’s tariffs are going to show up in both economic reports and quarterly earnings impact - think again. (see below)

Mother of all tariffs

• The first tariffs “imposed” by Trump (on Mexico & Canada) is put on-hold until 08 Jul 2025.

• China is still subjected to the ridiculous +145% tariff.

• To confuse everyone further, Trump has exempted tariffs on electronics & semiconductor imports and it includes Chinese manufactured as well.

• This “afterthought” exemption is supposed to minimize tariffs on consumer electronics & critical technology supply chains.

• With the 90-day freeze on “reciprocal tariffs,” a flat 10% tariff is now in place while US negotiates separately with each affected country.

• Effectively, the tariff rate is 10%, excluding exemptions (mentioned above).

There will be impact to the US, given that it is reliant on imports.

Full-blown repercussions might take time to trickle in, perhaps in a month or two time, assuming US & China are still on collision course further down the road.

(2) US Inflation - March 2025.

For March 2025, core CPI continued to cool to 2.8 from February’s 3.1.

Based on Fed Reserve of Cleveland’s NowCasting, PCE estimates as follows:

• Headline PCE (MoM) : 0.2 - lower than Feb’s 0.3.

• Headline PCE (YoY) : 2.12 - lower than Feb’s 2.5.

• Core PCE (MoM): 0.21 - lower than Feb’s 0.4.

• Core PCE (YoY): 2.5.- lower than Feb’s 2.8.

Preliminary data shows that Personal consumption expenditure (PCE) continues to cool, just like Consumer Price Index (CPI) released on 10 Apr 2025.

This could once again spur speculation that US central bank may cut interest rate anytime from Q2 2025 onwards, with the FOMC scheduled to meet on May 1-2.

(3) CME FedWatch Tool for May 2025.

As of 27 Apr 2025, the CME FedWatch tool shows a 91.1% chance that interest rates will stay the same in May 2025.

The Google Effect.

Last Thu, 24 Apr 2025 saw the 2nd Magnificent 7 stock - Alphabet (GOOG)$ report its earnings for the first quarter of 2025.

According to LSEG estimates, they did not disappoint:

• Revenue: was $90.23 billion vs $89.12 billion expected vs Q1 2024’s $80.54 billion, with a +12.0% YoY gain.

• Earnings per share (diluted): was $2.81 vs $2.01 expected vs Q1 2024’s $1.89, with a +48.68% YoY gain.

• Net income: was $34.54 billion vs Q1 2024’s $23.662, with a +45.97% YoY gain.

Other equally pertinent numbers, according to StreetAccount include:

• YouTube advertising revenue: $8.93 billion vs $8.97 billion.

• Traffic acquisition costs (TAC): $13.75 billion vs $13.66 billion.

• Google Cloud revenue: $12.26 billion vs $12.27 billion expected. Revenue increased +28% YoY, with margins coming in at 17.8%, vs 9.4% a year ago.

Guidance / Outlook.

• Google’s business chief, Philipp Schindler, said that ending the “de minimis trade” loophole on 02 May 2025, will have a slight headwind for Alphabet’s Ads business this year, mainly because of APAC-based retailers.

The Bigger Headwind.

Recently, US courts have found Google guilty of illegally monopolizing:

• The online search market.

• Ad tech market.

Google’s default agreements with device makers (Apple & Samsung) and its control over ad tech tools have been judged to block competition, limit consumer choice, and stifle innovation.

US court may require Google to terminate exclusive agreements, share more data with rivals, or even break up parts of its business ie. sell off its ad tech division OR separate Chrome browser from its search business.

Although Google plans to appeal, the legal process could take years. In the meantime, Google faces ongoing regulatory scrutiny and possible new lawsuits in the US and abroad.

If Google is forced to change its business practices, competitors could gain ground in search and digital advertising, potentially reducing Google’s market share and revenue.

In the short term, financial analysts expect the immediate impact on Google’s 2025 earnings to be limited, as legal remedies and structural changes will take time to implement.

In the medium to long term, if Google is forced to break up or make major changes to its ad tech and search practices, it could face (a) higher costs, (b) more competition, and (c) slower revenue growth.

This could weigh on earnings in coming years.

Meaning - Google investors and potential investors need to stay updated on Google’s challenges to stay ahead of changes.

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