Dear valued client,
Tensions were high in Eastern Europe this week as Russia claims to have averted an assassination attempt on their President. On Wednesday afternoon, two drones exploded 16 minutes apart just above the Senate Palace in Moscow. Russian officials said an electronic warfare system neutralized the drones before they reached their target – no injuries were reported. The Kremlin called the incident a “planned terrorist attack and an attempt on the life of the President.” Ukrainian President Volodymyr Zelensky vehemently denied any involvement. Many in the international community are saying this was a ploy to give Russia an excuse to continue its offensive military campaign. This hypothesis has some credence given Putin was not even in the complex at the time of the bombing. Either way, we can be almost certain Putin will retaliate.
The Federal Reserve raised interest rates by an expected 0.25 percentage points this week. This was its 10th increase in a little over a year, bringing rates above 5% for the first time since 2007. Given Jerome Powell’s statements in his press conference, however, interest rate hikes might be put on pause for a while. With the increases already made, in addition to the recent failure of three banks (forcing financial institutions to raise their lending standards), inflation is likely to continue dissipating. The Fed will keep a close eye on the labor market as it attempts to bring down prices without causing a recession.
The jobs report released today showed the U.S. economy added 253,000 jobs this month, bringing the unemployment rate down to 3.4%. This (unfortunately) is not good news for the Fed. Given the inverse relationship between unemployment and inflation (the Phillips Curve), the still-tight labor market might be a reason to raise rates again before the end of the calendar year.
Apple, the largest company on the planet, had better-than-expected earnings in Q1 of 2023 despite their overall sales declining for the second quarter in a row. Demand for iPhones in emerging markets such as India, Indonesia, and the Middle East helped sustain the company’s financials in an environment of tighter monetary policy.
“Revenge and retaliation always perpetuate the cycle of anger, fear, and violence.” – Coretta Scott King
Have a terrific weekend,
PW
