Dear valued client,
Markets made significant gains this week as the U.S. Bureau of Labor Statistics reported a robust addition of 177,000 jobs, surpassing economists’ expectations of 133,000. Despite ongoing international trade disputes, the unemployment rate held steady at 4.2%, aligning with estimates and the prior month. Corporate leaders, cautious due to tariff-related concerns, are adopting a conservative approach to investment and hiring, avoiding significant layoffs but allowing workforces to shrink gradually through natural attrition, reflecting a cautious optimism in the face of economic challenges.
This week marks a pivotal moment for Ukraine, with Vladimir Putin proposing a three-day ceasefire starting May 8. Ukraine finds optimism in Russia’s faltering wartime economy — Goldman Sachs reports Russia’s growth has plummeted below zero — and in its advancing domestic drone production.Meanwhile, the U.S. and Ukraine have finalized a landmark minerals deal, a significant “economic partnership agreement” that grants the U.S. access to Ukraine’s valuable rare earth minerals, critical for electric vehicle batteries and military technology, while establishing a joint investment fund for minerals, oil, and gas development. Signed after months of contentious negotiations, the deal ensures a 50/50 profit split, with future U.S. military aid counted as part of Washington’s investment, though it does not reimburse the $120 billion in prior aid. Ukrainian President Volodymyr Zelensky views the agreement as a strategic move to secure ongoing U.S. support, giving Washington a vested interest in a peaceful, sovereign Ukraine, which could deter President Trump from halting defense aid. Trump, who championed the deal as a way for Ukraine to offset U.S. assistance, emphasized its role in keeping “bad actors” out, signaling a long-term U.S. commitment. While Ukraine’s parliament must still ratify the deal, the agreement strengthens Kyiv’s position by ensuring continued Western investment.
According to the Department of Commerce, the U.S. economy contracted by 0.3% in Q1 of 2025, marking its first decline since 2022. This unexpected shrinkage, against economists’ predictions of a 0.4% increase, was largely driven by a 41% surge in imports as companies stockpiled goods ahead of President Trump’s tariffs, which negatively impact GDP calculations. Consumer spending grew modestly by 1.8%, the weakest in two years, though March saw a spike in big-ticket purchases like cars. This complex economic picture complicates the Federal Reserve’s upcoming decisions on inflation and labor market policies.
Mark Carney’s Liberal Party secured a stunning victory in Canada’s election, winning 168 of 338 parliamentary seats, just shy of the 172 needed for a majority. Facing U.S. President Donald Trump’s trade war and provocative rhetoric, Carney capitalized on a surge of Canadian nationalism. While the Conservatives gained 144 seats, the NDP and Bloc Québécois saw significant losses. Carney’s minority government will likely seek ad hoc support from the NDP or Bloc Québécois to govern, with his primary challenge being to negotiate tariff-free access to the U.S. market in a looming showdown with Trump.
“Without economic power, we are weaker in terms of national security. No great military power has ever remained so without great economic power.” – Jon Meacham
Have a great weekend,
PW
