First, the Atlanta Fed's GDPNOW estimate for the second quarter's annual GDP growth increased from 3.8% to 4.6%, which is much higher than the current consensus forecast and will mark a significant recovery in the January-March contraction.

Second, the White House said President Donald Trump and China's Xi Jinping could make a speech this week, a sign of a trade war between the two countries that could create global economic and market uncertainty.

Meanwhile, bond and money market trends established in recent weeks show no signs of reversal, and the first trading day of each month saw the dollar and treasury decline again, with the output curve continuing to be steep.

U.S. interest rates could still be responded to by Chicago Fed President Austan Goolsbee later this year, Fed Gov. Christopher Waller said in a speech Sunday. It depends on the dollar and short-term yields, but tariffs and inflation are worrying, making long-term yields higher, while 20- and 30-year yields are again compared to 5.00%.

The dollar slideshow, economic uncertainty and increased geopolitical tensions are all strongly bidding under gold, which has brought nearly 3% to three-week highs. April's record peak was $3,500/oz, not far away.

Tuesday's meeting could again be dominated by tariff headlines, while speeches by Bank of Japan Governor Kazuo UEDA and the euro zone inflation figures are also other events, and investors will be watching closely.

American companies are well prepared for the upcoming storm

Tariffs, bond yields and “stagnation” headwinds are focusing their forces, but U.S. companies are unable to better face the economic storm that may be building.

U.S. pre-tax profits fell $118.1 billion, or 2.9% in the first quarter, the fastest pace since 2020, suggesting companies feel the tariffs even before they start biting properly. After-tax profit fell by 3.6%.

But, three months ago, profits soared by $205 billion, or 5.4%, and any sense of alarm should be alleviated. The decline between January and March is only normalized later in the bump quarter.

Moreover, on a year-on-year basis, profits increased by more than 5%.

Yes, the next few quarters may be messy. If growth slows down or inflation starts to rise, corporate profit margins may be compressed, consumers may curb spending, and companies may find their pricing power limited.

But magnified, the bigger picture shows that American companies are rarely strong.

Depending on how you slice and dice, the company's profits as national output or revenue share remains high. In some cases, they are close to the highest recorded.

Consider inventory assessment and capital consumption adjustments before tax profits. In the first quarter of this year, these years fell slightly to 13.0% of GDP, which was the yearly year, but that was a record 13.5% between September and December.

After-tax profit fell to 12.2% of GDP from the last quarter of last year. Again, this is a small drop, and its after-tax profits are still close to 12.8% of the historical peak of GDP in the second quarter of 2021. The average in the past 75 years is less than 7.5% of GDP.

To explain former British Prime Minister Harold MacMillan, American companies have never been so good. This is the same, because the headwind is gathering.

Domestic and "travel"

One can argue that any amount of brewing risks will fall on the actual economy, but if companies end up facing the collective shock of tariffs, weakening consumer demand, lowering pricing power and higher interest rates, they will certainly feel pain.

"A growing dispersed environment means that economies are trending differently. It's an environment ... which will limit profits at home and around the world," said Gregory Daco, chief economist at EY-Parthenon.

Tariffs and trade protectionism will compress global supply chains and overall trade. It is interesting to observe the differences between domestically generated profits and returns generated in this environment by the rest of the world (ROW).

Of course, domestic profits account for the majority of total revenue, but the share has exploded recently. Or look at another way, the profit share from abroad has dropped. If Trump's trade war succeeds, U.S. companies will bring more production home, then the "track" footprint may be narrowed further.

In the fourth quarter of 2019, just before the pandemic, domestic production was about 75% of the total of $2.13 trillion, with a quarter of the “row” profit on a seasonally adjusted year. In the first three months of this year, domestic profits accounted for 87.5% of the total, and the proportion of profits from abroad has decreased to 12.5%.

The company's profitability is under test. According to LSEG I/B/E/S, the S&P 500 companies saw a second-quarter earnings growth of 5.5%, down from 10.2% two months ago. Earnings growth forecast for the 2025 calendar year narrowed to 8.3% today from 14.0% at the beginning of the year.

The challenges are getting bigger, but American companies can face them from the position of strength.

Can the market be transferred tomorrow?

*South Korea Presidential Election *South Korea CPI inflation (May) *China Caixin Manufacturing PMI (May) *Eurozone inflation (May, Flash Estimates) *U.S. Durable Goods Orders (April) *US JOLTS Job Vacancy (April) *Federal Government Officials scheduled to speak include: Chicago FBI, including:

The opinions expressed are the opinions of the author. They did not reflect the views of Reuters News, which is committed to integrity, independence and freedom from prejudice under the principle of trust.

(Edited by Jamie McGeever; Nia Williams)