CNBC Daily Open: Playing “chicken” in markets could be a dangerous affair

When threatened, birds blow his own trumpet their feathers to look better than they in fact are, and squawk to sign aggression.

On Friday, U.S. President Donald Trump advised he would now not be “Mr. NICE GUY” to China after the rustic “totally violated” its business settlement with America. The similar day, Trump mentioned he would elevate price lists on metal imports to 50% from 25%.

The escalations observe a détente in May, right through which Trump reached a business handle the U.Okay., agreed with Beijing to sharply cut back reciprocal import tasks and behind schedule for greater than a month a tariff of 50% at the European Union — two days after announcing it.

Those satisfied tidings lifted shares. For May, the S&P 500 rose 6.2% and the Nasdaq Composite jumped 9.6%, with each indexes playing their very best month since November 2023. The Dow Jones Industrial Average received 3.9% for the month.

But the temper amongst traders would possibly trade temporarily, relying on verbal exchange coming from the White House.

The phrase “hen” is used as a metaphor for cowardice. In fact, they are able to be bad — there were studies of people being killed by way of Colonel Sanders’ favourite fowl.

Mixed U.S. markets for finish of May
U.S. markets traded blended Friday. The S&P 500 used to be flat, the Dow Jones Industrial Average rose 0.13% and the Nasdaq Composite fell 0.32%. Futures tied to the 3 indexes ticked down Sunday night stateside. The pan-European Stoxx 600 index added 0.14% Friday, breaking a two-day dropping streak. Germany’s DAX climbed 0.27% because the nation’s inflation eased to 2.1% in May from 2.2% the former month — however used to be nonetheless upper than anticipated.

Expected Trump-Xi communicate
Trump and Chinese President Xi Jinping may just talk about business negotiations “this week,” U.S. National Economic Council director Kevin Hassett mentioned on Sunday. The dialog would possibly ease tensions, which rose after Trump on Friday mentioned that China has “TOTALLY VIOLATED” its initial business settlement with America, and Chinese U.S. embassy spokesperson Liu Pengyu spoke back by way of accusing the U.S. of enticing in “abuse of export keep watch over measures.”

Trump says he will double metal price lists
Trump on Friday informed steelworkers at U.S. Steel that he’ll elevate import tasks on metal to 50% from 25%. The new import tasks will get started June 4, the president posted on Truth Social. On Saturday, the European Union mentioned it’s “ready to impose countermeasures, together with in keeping with the newest U.S. tariff building up.” Even so, “price lists don’t seem to be going away,” U.S. Commerce Secretary Howard Lutnick mentioned on “Fox News Sunday.”

Mild U.S. inflation in April
The U.S. private intake expenditures worth index, the Federal Reserve’s most well-liked inflation studying, used to be muted for April. Prices ticked up 0.1% for the month, in keeping with the Dow Jones forecast. On an annual foundation, it rose 2.1%, 0.1 proportion issues less than anticipated. Excluding meals and effort, the core studying on which Fed policymakers have a tendency to center of attention got here in at 0.1% and 2.5%, in opposition to respective estimates of 0.1% and 2.6%.

Musk cuts himself from DOGE
Elon Musk bid farewell to his function on the U.S. Department of Government Efficiency Friday. At the clicking convention, Musk deflected a reporter’s query a couple of New York Times article detailing his alleged drug use remaining yr. Tesla stocks misplaced 14% this yr amid Musk’s involvement in politics — however they received 22% in May following Musk’s April remark he would spend much less time at DOGE.

[PRO] May jobs file in center of attention
The U.S. nonfarm payrolls file for May, out Friday, will supply additional info on how the financial system is maintaining up amid Trump’s a couple of price lists —and play a large function in figuring out whether or not the May rally in shares nonetheless has legs. Economists be expecting the collection of jobs added in May to dip from April. It misses the forecast, markets may just take a downturn because the White House seems to ratchet up its tariff rhetoric.

Investors are piling into giant, brief Treasury bets along Warren Buffett

Investors at all times pay shut consideration to bonds, and what the newest motion in costs and yields is pronouncing in regards to the financial system. Right now, the motion is telling traders to stick with the shorter-end of the fixed-income marketplace with their maturities.

Long-term treasuries and long-term company bonds have posted unfavorable efficiency since September, which may be very uncommon, mentioned Todd Sohn, senior ETF and technical strategist at Strategas Securities, on “ETF Edge.”

The best different time that is came about in trendy occasions used to be right through the Financial Crisis,” he added. “It is tricky to argue in opposition to momentary period bonds presently.” 

It would seem that Warren Buffett agrees, with Berkshire Hathaway doubling its possession of T-bills and now proudly owning 5% of all momentary Treasuries, in keeping with a contemporary JPMorgan file.