It was a shortened trading week, thanks to the Memorial Day holiday, but the news cycle was still active and, as a result, the Fab Five posted a solid $293 billion gain for the week. The Telco Top Five largely marked time, with four of the five stocks in the group now posting double digit stock price gains for the year.
The big economic news came on Friday when the Bureau of Economic Analysis released their Personal Consumption Expenditure Index (here), commonly known as the Federal Reserve’s preferred measure of inflation. With or without food and energy prices included, inflation is slowly subsiding (2.1% increase overall, and 2.5% increase excluding food and energy).
The surprising metric has been continued increases in personal income. Here is a chart from the link above:
The blue stacked bar reflects changes in personal income – February, March, and April have been particularly robust (cumulative 2.3% increase over the last 90 days). But that is not matched by increased spending, implying that consumers are holding on goods purchases until the tariff uncertainty has been resolved (the article breaks out spending by type of good and service).
On top of this, the balance of trade (goods) figures were released on Friday, with the sharpest month-over-month decline in recent history. The following chart from The Wall Street Journal (article here – subscription required) says it all:
Such a dramatic drop impacts the outlook for growth, as decreases in the trade deficit increase Gross Domestic Product estimates. These two reports triggered a rare Friday change in the Atlanta Fed GDP Now report on Friday, now projecting a 3.8% growth rate for 2Q GDP (prior was 2.2%). Tomorrow could bring a completely different story, but for now, imports are down and exports are flat to slightly rising. That’s good news for interest rates, inflation and jobs.
Closing arguments in Google’s antitrust case were delivered on Thursday and Friday (The New York Times has an excellent summary of the arguments here and a sidebar article on the enourmous importance of data gathering here). We found the last paragraph of the first article particularly interesting:
The judge also floated the possibility that the court could allow Google to continue to pay for prime placement for its search engine on browsers and in smartphones, but retain the option to restrict the payments later if competition does not improve.
For those of you not following the case, this would be a huge win for both Google and Apple. That Judge Mehta is considering this as an option at this juncture is surprsing.
Consolidation continued in broadband with one Midwest middle-mile network purchasing another, although this time out of a prepackaged bankruptcy. Bluebird, led by former UPN CEO Jason Adkins, will be the CEO of the combined company with the transaction estimated at $285 million dollars. The announcement is here with some insights from The Cleveland Business Journal here.
Keeping with the bankruptcy theme, it was disclosed in some court documents that Tilson Technology Management will file for Chapter 11 bankruptcy (company announcement here), citing the abrupt cancellation of a large contract (which was disclosed in the court filing to be GigaPower). The ripple effects of this are unknown, but it will be the buzz at this week’s Fiber Connect 2025 conference. If you afre attending, our Monday night dinner is now full, but Jim will be around the show all day on Tuesday.
Full data file is below. Have a terrific week!
