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The Week Ahead: The Fed Returns to Center Stage
Catalyst Calendar: Week of May 5th, 2025
RiskReversal Media
May 04, 2025
This Week
The S&P 500 enters the week riding nine straight days of gains but with Sunday night futures pointing to a slightly lower open on Monday. Ahead lies a key FOMC rate decision day. The Fed is widely expected to hold steady, with odds for a cut this week in the low single digits. Things change for the June meeting where odds are between 30-40%. Last week’s negative GDP print adds to story, but with inflation remaining sticky, the Fed faces a tricky balance. Trader attention will be most focused on the tone of the statement and the press conference that follows.
More on the week ahead shortly—but first, a few weekend headlines, including a growing disconnect between Wall Street sentiment and the recent bullish price action:
Trump Won’t Fire Powell, But He Wants a Rate Cut (Barron’s)
Just days ahead of the Federal Reserve’s next interest rate decision, President Donald Trump repeated his wish that Chair Jerome Powell cut the benchmark rate, but also said he wouldn’t replace Powell before his term ends in 2026.
What Recession? Stock Investors Expect the Good Times to Continue (WSJ)
S&P 500 is now down just 3.3% for year, reflecting hopes for tariff rollbacks
Wall Street’s best forecasters have been warning that tariffs could spark a recession. Goldman Sachs puts the chances at 45% in the next 12 months. Apollo Global Management’s top economist recently pegged it at 90%. Someone forgot to tell stock traders. The market is roaring ahead, despite those gloomy predictions, as investors put their faith in solid economic data including Friday’s jobs report, and bank on a swift de-escalation of President Trump’s global trade war.
Stock Market Bulls Have Gone Into Hiding. Why Our Money Pros Are the Most Bearish in Nearly 30 Years. (Barron’s)
Big Money pros are more anxious now than during the bursting of the dot-com bubble, the 2008-09 financial crisis, and the Covid-19 pandemic.
Short Sellers Bet Against Private Credit Lenders (Bloomberg)
Hedge funds are betting that trade wars, a shrinking economy and rising strain among borrowers will begin to hit private credit in the US. So far, the gamble’s paying off.
End of an era: Warren Buffett will ask Berkshire board to replace him as CEO with Greg Abel (CNBC)
An end of an era was announced in Omaha Saturday as Warren Buffett said he will soon ask the board of Berkshire Hathaway to have Greg Abel replace him as CEO at year end. While Buffett is 94 and Abel was designated as CEO successor in 2021, it nonetheless came as a surprise to the thousands of admiring shareholders gathered for this year’s annual meeting to once again hear the investing legend opine on the future of the company.
We enter this week with even lower implied vols than last week and an SPX expected move down to 2% (it was 2.5% last week, and as high a 6% a few weeks prior). Expect those vols to pick up into Wednesday, with an expected move that may stubbornly stay near 2%.
This Week’s Expected Moves:
SPX/SPY: 2% (5550-5800)
QQQ: 2.4%
IWM: 2.6%
TLT: 1.9%
USO: 5%
Historically, when the VIX gets back to the low 20’s following the type of recent market volatility (and the rally we just saw) it is often an opportunity to hedge or reposition. Again, if you believe this is a counter-trend rally, we’re getting to the point where you should perhaps be using strength to adjust positioning or look for hedges. We’ll cover some trade ideas addressing those themes this week.
Economic Calendar:
Monday, May 5:
9:45am - S&P Global Composite PMI
10am - ISM Services
Wednesday, May 7:
2pm - FOMC Rate Decision
2:30pm - Powell Presser
Thursday, May 8:
8:30am - Initial Jobless Claims
Friday, May 9:
Overnight: - China Import/Export
All Day - Fed Speeches including Williams, Barr, Goolsbee and more.
Earnings season continues (so far so good is the general consensus to this point). This week lacks some of the mega-cap luster of last week but is highlighted by Palantir, AMD, SuperMicro, Disney, Coinbase and more:
Earnings (with expected moves):
Monday
After-hours: PLTR 13%, HIMS 18%, F 7%
Tuesday
After Hours: SMCI 11%, AMD 8%, RIVN 11%
Wednesday
Pre-Market: DIS 6.5%, UBER 7%, NVO 7%,
After Hours: CVNA 13%, OXY 5.5%, APP 20%
Thursday
Pre-Market: PTON 19%, SHOP 11%
After Hours: COIN 7.5%, TTD 14%, MARA 9%, MELI 7%, DKNG 10%
There’s some eye-popping expected moves in there as we leave a week of mega cap reports moving indices to the possibility of some idiosyncratic moves of 20% or more dominating headlines. We’ve got some great shows all week, be sure to tune in and remember to get your questions in to be answered live.
