Market Cross Roads: What to Expect in May 🔮

Good afternoon, Insiders!

Welcome to the second macro update of this month. This note will cover some of the new macro risks that have emerged in recent weeks. It will also cover the outlook for equities following recent quarterly earnings reports.

Market Outlook

Economic and political risks seem to have accelerated in recent weeks, and equity markets have been sensitive to this transition. Leading growth stocks like Amazon [AMZN], Microsoft [MSFT], Meta Platforms [META], and Nvidia Corporation [NVDA] have all sold off in recent trading sessions.

One of the major culprits of this short-term sell-off was the surprise inflation report last month. This report showed a higher inflation rate, which implies that the Federal Reserve may not be able to cut rates and achieve a soft landing. On top of this, other previous sources of concern, such as political risks and the United States’ debt, have also come into focus.

Furthermore, commodities could also be poised to have a bull run, as gold, copper, and silver have already had a solid start to this year. Many have turned to physical gold and gold mining equities in this risky political environment.

Growth stocks could be very vulnerable this month and experience more substantial pullbacks. However, the initial earnings results have been favorable, so this weakened sentiment may be less dramatic.

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