News and articles

Hello everyone. Welcome to the weekly roundup. Today we will cover possible trade agreements, inflation, and earnings releases. Hello Ben.

Hi Eva. How’s it going? Going good, sun shining, happy day.

When the sun is out, it’s a happy day. It always is.

So we’re going to pick up from last week’s meeting when President Trump and the Chinese president met. Did anything material actually come out of it? And with talks between the Chinese president and Putin also revived, where are all these geopolitical dynamics headed?

Well, it’s become a very interesting and unique dynamic. President Trump and Xi are friends and not friends. That meeting was good in the sense that it showed they are going to continue trying to work together. It’s hard to think that President Xi fully trusts Trump. A lot of actions the US has taken this year, such as against Venezuela and Iran, have had an immediate negative impact on China.

Coming into the meeting, they were somewhat hostile externally, but since they came out with a united front, did anything actually happen? I think the answer is no. President Xi effectively reiterated that Taiwan remains the most important issue for China. Both also said they wanted the Iran conflict to go away, but that doesn’t really change much for either side at this point.

The reason Taiwan continues to be a major issue is that China still considers it part of its country, while the rest of the world largely disagrees. This is critical because most advanced semiconductors come from Taiwan. Without semiconductors, we wouldn’t have modern technology. So this remains a key focus.

Regarding Putin and Xi, they are close partners and support each other. Russian oil is flowing to China as quickly as possible to meet demand. Their relationship continues to evolve, and they are aligned in a complex global environment.

Moving on to inflation, it seems to be coming back into focus with increasing discussion that the Fed could be behind the curve and may need to hike again. How do you see this playing out?

I think that’s probably the biggest risk in the world today. If this conflict continues like the Ukraine-Russia situation, which has lasted years, inflation could become a real challenge. That conflict didn’t affect global energy as much, but here the risk is higher.

If this situation lasts one or two years, inflation will be a major issue. The challenge is that we already had a slowing economy, and now we may see upward inflation pressure. The worst-case scenario is stagflation: a slowing economy with rising inflation. That’s a nightmare for central banks, because unemployment rises while inflation rises at the same time.

This is very negative for consumers. Markets are not fully pricing this risk in. China, which has been experiencing deflation, might begin to see inflation, which could actually be positive for them by improving margins and asset prices. But for the rest of the world, inflation remains a concern.

Markets currently view inflation as temporary, but if this persists another three to six months, it will become a government-level issue because central banks alone won’t be able to manage it.

My last question: earnings season became more interesting with Nvidia’s results. Nvidia is the poster child for the AI-driven market rally. What did the numbers tell us and what should investors watch?

Nvidia has led the AI space. They developed chips originally for gaming, which positioned them ahead when AI demand exploded. Their latest earnings were excellent, and their forward guidance was strong.

However, the market reaction shows how sensitive it is to their performance. Markets were up and down, and today the NASDAQ is slightly lower, with semiconductors down as well.

It’s an important indicator to watch. We are in a tech-driven run-up that could resemble a bubble. The question is whether it continues and for how long. Nvidia’s reporting also shifted metrics slightly, so it will be important to see how other tech companies adapt.

We’re recording around 1:00 on Thursday, May 21st. If anything significant happens before next week, we’ll comment then.

The first chart shows that the current shock goes beyond crude oil. Materials like helium, which is essential for semiconductors, are also affected. If supply is constrained, it impacts production. Energy products like crude oil and liquefied natural gas are also affected, as well as fertilizers such as sulfur, ammonia, and urea.

This won’t impact the current growing season much, but if disruptions continue, it could affect the next one, creating further inflation risk. Petrochemicals, used in many everyday products, are also impacted.

Supply chains are more resilient than in 2020 due to higher inventory levels, but if this situation lasts several months, it will negatively affect the economy and push inflation higher.

The next chart shows a surge in U.S. imports driven by AI-related categories like computers, semiconductors, and telecommunications equipment. These have risen sharply, while the rest of the economy has declined.

This divergence is unusual and typically seen during recessions. Some believe it reflects a structural shift toward AI, while others think it will eventually normalize. The key question is how far this divergence can extend.

Another chart shows U.S. households increasing exposure to the stock market. A larger share of household wealth is tied to equities, which means the economy has become more sensitive to market fluctuations.

In contrast, countries like China have much lower exposure, so stock market changes have less economic impact. In the U.S., however, a significant market correction could have a substantial negative effect on the economy.

As always, these opinions do not necessarily reflect those of National Bank Financial. Everyone has different risk tolerances, so feel free to reach out if you’d like to discuss your situation.

What’s on the agenda for next week?

There will be a lot of economic data in the U.S., which will influence the central bank’s decisions ahead of its June meeting. Energy markets will remain volatile, and geopolitical developments between the U.S. and Iran will be important to watch.

If tensions escalate, markets could come under pressure. If there is a ceasefire agreement, markets could rally. Meanwhile, some sectors are reaching all-time highs, and it may be worth considering reducing risk in certain areas.

There’s an old saying “sell in May and go away,” and we’ll see if that holds true this year.

Thank you everyone. Remember to visit, subscribe, and follow us on YouTube and LinkedIn at Hard Investment Group. The link to our daily financial updates will be in the caption or sent by email.

Clients, feel free to reach out if you have questions or would like to schedule a review meeting.

Thank you for listening and enjoy the rest of your day. Bye.

Hello everyone. Welcome to the weekly roundup. Today, we’ll be discussing the possible trade agreements from the FOMC and recent earnings releases. Hello, Ben.

Hi Eva. It’s been a buzzworthy week.

Yes, there’s a lot to cover today.

Definitely. So, we’ll start with one of the top news stories this week—Kevin Walsh has been confirmed as the next Federal Reserve Chair.

Yeah.

With inflation numbers still elevated, what should investors expect from his first meeting?

That’s a fantastic question and a great place to start. I’ll be covering some of that today. You’ve already seen the chart, so we’ll go in-depth, including some insights about the process within the Fed. To comment on Walsh specifically, it’s worth noting that he was one of three main candidates considered for the role. The decision saw some back and forth—Trump’s support for Walsh fluctuated. Walsh left his Fed role in 2011 and has since worked on numerous projects, including spending over a decade with Stan Druckenmiller’s private family office. Druckenmiller is arguably the most successful hedge fund investor of all time, having never lost money in over 40 years. Walsh’s experience alongside Druckenmiller, as well as his work on various tech and AI boards globally—including at least one company in Singapore—gives him strong finance and economics credentials. Over the past year, he’s spoken a lot about policy and his intentions. Notably, he’s suggested he wants to lower the front end by cutting rates, but that’s unlikely right away. The first meeting should provide a clearer sense of his plans. He also wants to shift the conversation around forward guidance, which he doesn’t support. This meeting will be a key indicator of his leadership style and intentions. Walsh is expected to have a positive working relationship with Treasury Secretary Bent, which bodes well for the U.S. and particularly for the U.S. dollar. The upcoming meeting in June will be crucial for understanding his approach. Walsh’s mix of business and economic experience marks a departure from Powell’s leadership, which will be important to monitor. Now, let’s move on to other news.

Trump has arrived in Beijing for his first official visit. The agenda is expected to focus on trade, AI, and broader geopolitical issues—these are high-stakes talks. What should investors expect? Is meaningful progress or a new trade agreement likely, or is a modest easing of tensions a more realistic outcome?

He brought Elon Musk along, so Musk is attracting a lot of attention—even Tim Cook got a selfie. Big picture, Trump has caused considerable strain on the Chinese economy recently, particularly with actions involving Venezuela and Iran. These will likely be discussed behind closed doors. We may see an agreement to keep rare earth elements flowing for semiconductor production, and perhaps something on oil trade. However, Xi remains committed to his long-term plans for China, while Trump seeks short-term wins. It’s good they’re still talking, and relations seem to be on a cooperative footing, but don’t expect anything earth-shattering—the U.S. and China remain in a significant standoff, especially regarding energy.

To wrap up with the market, we’re still in earnings season. Alibaba and Cisco were in focus this week. What should investors watch for in their results, and how was general market sentiment this past week?

These two companies provide useful bookends. Alibaba’s earnings initially looked poor, with the stock down about 5% pre-market but up 3% at the open. The company’s business model is unique, and from a valuation perspective, Alibaba is much cheaper compared to Amazon, which likely contributed to the rebound. As China’s economy digitizes, Alibaba’s payment processing could make cash nearly obsolete in China within a few years. Cisco, on the other hand, has benefited from the AI boom, posting strong revenues and rising 13–15% in a single day. U.S. tech firms have generally been beating expectations and raising guidance, with AI, productivity, and energy driving growth. While market sentiment is positive, there’s a notable divergence—U.S. consumer sentiment is at an all-time low, while the stock market is at record highs. This could suggest the market is at the higher end of its range, possibly presenting opportunities to trim or hedge.

Let’s look at the charts. There are some interesting trends today.

We’re trying to provide context on what to expect with the new Fed chair. This is being recorded on 2026-05-14 at 1:08 p.m. Any developments between now and next Thursday will be addressed then. Starting with the Worsh Fed Chair transition, the Senate confirmed Walsh yesterday by a narrow margin. His term officially begins tomorrow, with the swearing-in likely next week. The important FOMC meeting is set for 2026-06-16 and 2026-06-17. While no major policy changes are expected, Walsh’s framing and communication style will be important to watch, especially regarding interest rates and inflation, as he is considered more dovish. The Fed’s voting members include appointees from both Republican and Democratic administrations, making for a balanced committee. Walsh’s ability to influence their views will be a key development to follow in the first meeting.

Regarding interest rates, Walsh has a bias towards cutting. The Fed mainly controls the short end of the yield curve, and Walsh may defer more of the long end to the Treasury than Powell did. He favours rate cuts, which would be positive for consumers, but sticky inflation and energy tariffs may make immediate cuts hard to justify. Rate cuts are expected over the next year, but probably not in the first meeting, especially with current inflation challenges. Walsh is likely to focus on core inflation, which excludes volatile categories like energy, and may discuss how AI can boost productivity. Forward guidance is another area to watch, as he may change how the Fed communicates its plans.

As always, the opinions expressed here are independent and do not necessarily reflect those of National Bank Financial. If you have questions or want to discuss your portfolio, please reach out to Eva or Ben anytime.

Thank you, Ben.

You’re welcome. So, what’s on the agenda for next week?

Now that everything is official, that’s positive for market direction. With the ongoing developments between Xi and Trump, any real breakthrough could drive markets higher, but for now, markets are volatile and many stocks are hitting all-time or 52-week highs. It’s important to monitor follow-through, market breadth, and capital flows. The main indicator to watch remains the U.S. 10-year bond rate; in the past, similar levels have led to significant corrections. Rising yields could signal market concerns, so keep a close eye on that.

Thank you, everyone. Remember to visit, subscribe, and follow us on YouTube and LinkedIn at Heart Investment Group. The link to our daily financial reviews with Ben is provided. Thanks again for tuning in, and enjoy the rest of your day. Bye bye. Thanks, everybody.

For our clients, please reach out if you have questions or would like to book a review meeting with Ben. Thank you again for listening, and have a great day. Bye bye. Thanks, everyone.