AAPL: Fall or Rebound in PCE Inflation Week?
US Market Weekly Recap.
On Fri, 23 May 2025 US market did not have a chance to close the week on a high, ahead of Memorial Day (26 May 2025).
In fact the week of 19 May - 23 May has not been kind to the US market.
The ripple effect of Moody’s downgrade of US credit rating to “Aa1” on Fri, 16 May 2025 set a negative tone at the start of the week.
US market was further hammered when Trump’s “big, beautiful bill” (tax-and-spending proposal) advanced in Congress.
This heightened investors’ concern on BBB’s estimated -$3.3 trillion addon impact on US national debt through 2034. * note: US national debt currently stands at $36.89 trillion and increasing.
These worries drove long-term Treasury yields sharply higher, with the 30-year yield surpassing 5% for the first time since the 2008 financial crisis.
Spike in yields piled pressure on US stocks, especially Growth and Tech stocks.
On Thu, 21 May 2025, it was reported that US 20-year Treasury auction saw weak demand on Wednesday, pushing the Treasuries to new lows for the year as yields climbed.
US Treasury Department only sold $16 billion of newly issued 20-year bonds, a small slice of the $514 billion the department need to raise over the 3 months ending 30 Jun 2025.
The auction, saw heightened interest as investors worried that increased uncertainty about US economic policies would lead to less demand for the Treasuries. Their fears were spot on.
The auction saw investors accept a yield of 5.047% on the 20-year note, compared with the past six auctions’ average of 4.613%.
It was also 0.011% points higher than the yield seen before the bidding deadline.
This was also a first for Treasury to sell a 20-year note with a rate over 5% since October 2023.
The final nail on the coffin happened on Fri, 23 May 2025 when Trump (once again) reignited global trade concerns through his propaganda machine, Truth Social, announcing that trade talks with EU were faltering.
He threatened a 50% tariff on all EU imports starting 01 Jun 2025.
As if that was not bad enough, he also categorically stated that any iPhone sold in the US must be manufactured domestically or face a 25% tariff.
These announcements triggered a sharp sell-off in stocks, particularly impacting Technology sector and dragging down the major indexes.
When US market closed on weekend Friday:
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DJIA: -0.61% (-256.02 to 41,603.07).
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S&P 500: -0.67% (-39.19 to 5,802.82).
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Nasdaq: -1.00% (-188.53 to 18,737.21).
Friday’s volume on US exchanges was 17.67 billion shares, compared with the 17.73 billion average for the full session over the last 20 trading days.
Health of US Economy.
Minus all the brouhaha brought about by a president who is hell-bent creating unrest, domestically and globally, time and again, US economy is actually holding up “better” than expected.
The economic reports out for the week (see below) were not as dire, given the unrest and uncertainty created by the tariffs policy, that is already half-way through the 90 days reprieve.
There is still no breakout celebratory news; except the trading framework with UK announced on 08 May 2025, some 2 weeks ago.
US Weekly Jobless Claims.
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Initial jobless claims for the week ending 17 May 2025, fell by -2,000 to 227,000, marking a 4-week low and coming in slightly better than forecasts.
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The 4-week moving average of initial claims edged up by +1,000 to 231,500, but remains at relatively low levels.
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Decline in claims was attributed to fewer layoffs, particularly in manufacturing sector in states like Michigan.
Readings Implication:
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Dip in weekly claims signals that US labour market remains resilient, even amid broader economic uncertainty and ongoing trade policy tensions.
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Steady, low levels of new claims suggest companies are largely retaining workers and there is no sign of a significant uptick in layoffs.
US Weekly Continuing Claims.
However, the same could not be said about US weekly continuing jobless claims.
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Continuing jobless claims (number of people still receiving unemployment benefits) rose by +36,000 to 1.903 million for week ending 10 May 2025.
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It is the highest since late 2021.
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The insured unemployment rate remained unchanged at 1.2%.
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With the latest data out, it implies it is taking longer for some unemployed workers to find new jobs, suggesting a slight cooling in the pace of hiring.
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Overall level remains historically manageable, and the labour market is still considered solid by economists and Federal Reserve officials.
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Recent uptick in continuing claims may reflect a normalization after years of exceptionally rapid hiring, rather than a sign of significant weakness.
S&P Global Flash PMI.
For May 2025, S&P Global Flash US Manufacturing PMI rose to 52.3, from 50.2 in April 2025.
This marked the highest reading in 3 months, signaling the strongest improvement in business conditions since June 2022.
Factory production returned to growth after 2 months of decline.
New order growth reached a 15-month high. Inventories posted their largest increase since the survey began in 2009, and supply chain delays were the most pronounced in 31 months25.
It is not all good news though. manufacturing employment declined for the 2nd consecutive month, acting as a drag on the overall index.
Manufacturing input costs also rose at the fastest rate since August 2022.
Selling prices posted the largest monthly increase since September 2022, signaling a renewed acceleration in consumer price inflation.
The Next Week.
(1) Economic Reports.
With a new round of anxiety caused by Trump, I wonder if the following economic reports out will have any impact on US market.
If it does, it would be adding fuel to fire.
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Tue, 27 May 2025 - Consumer confidence report.
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Wed, 28 May 2025 - Minutes of Fed's May 2025 FOMC meeting.
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Thu, 29 May 2025 - US weekly jobless claims.
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Thu, 29 May 2025 - US Gross domestic product (GDP) - first revision.
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Fri, 30 May 2025 - Personal consumption expenditure (PCE) for April 2025.
(2) Quarterly Earnings reporting.
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Tue, 27 May 2025 - $PDD Holdings Inc(PDD)$
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Wed, 28 May 2025 - $NVIDIA(NVDA)$
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Wed, 28 May 2025 - Salesforce(CRM).
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Thu, 29 May 2025 - $Costco(COST)$
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Thu, 29 May 2025 - $Dell Technologies Inc.(DELL)$
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Thu, 29 May 2025 - Li Auto(LI).
AAPL - Cont’d To Fall.
On Fri, 23 May 2025, $Apple(AAPL)$ fell by -3.02% to end the week at $195.27 per share. (see below)
This as Trump threatened a 25% tariff on iPhones sold in the US unless the devices are made in the US.
The “funny” thing was that he would levy the same tariffs on all imported mobile phones as well.
Although verbally claimed that he wanted manufacturing to be homebased, he knows enough that it is virtually impossible in terms of (a) supply chain on all components required to assemble an iphone and (b) costs of production.
What’smore American’s labour union and laws have priced Americans out of competition, not to mention the lack of skill sets, deft enough to perform the tasks of assembling an intricate mobile device like iphone.
Ultimately its about collecting the 25% tariffs as revenue source, not just from Apple but also from Samsung and other manufacturers even if it means the costs (revenue to government) is going to be paid by consumers (US citizens).
Treasury Secretary Scott Bessent struck a more concessionary note in an interview with Fox News instead.
He framed it as :
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He thinks one of US’s greatest vulnerabilities is this external production, especially in semiconductors.
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A large part of Apple’s components are in semiconductors, so we would like to have Apple help us make the semiconductor supply chain more secure.
Although Tim Cook has intended to shift iphone production from China to India, it did not sit well with Trump.
Could it be because of the impasse in trade talk between both countries ? Who knows what could have been the trigger for Trump’s bitchfits ?
Afterall, wasn’t it Bessent who confidently proclaimed that a trade deal with India was within reach, about a month ago ? Now, the talk is still ongoing ? (see above)
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Do you think AAPL will continue to consolidate this week ?
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Do you think US economic reports out this week (especially PCE) will help US market to get ahead or sink it further (after Trump’s sudden tariffs turn about)’?
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