Dear valued client,
Markets rose again this week after the Federal Reserve opted to keep interest rates unchanged for the sixth consecutive time on Wednesday, holding steady at a two-decade high of 5.25-5.5%. Chair Jerome Powell reiterated that rate cuts would only be considered in the presence of improved inflation data or unforeseen weaknesses in the labor market. However, recent economic indicators have added complexity to the Fed’s outlook. While job growth in April fell short of expectations, with just 175,000 positions added and a slight uptick in the unemployment rate to 3.9%, concerns about inflation persist. Investors found some reassurance in Powell’s remarks, which suggested a focus on the jobs market rather than imminent rate hikes. Nevertheless, the uncertainty surrounding inflation’s trajectory and its implications for monetary policy remain key points of consideration moving forward.
Tech earnings continued to roll in this week with Apple in the spotlight. Despite a 10% year-over-year decline in iPhone sales and a 4.3% drop in revenue to $90.8 billion, Apple managed to buoy investor confidence with a record-setting $110 billion share buyback announcement. This move, the largest in the company’s history, contributed to a surge in Apple’s stock price during after-hours trading. Additionally, while sales in China decreased compared to the previous year, coming in at $16.4 billion, they exceeded analysts’ expectations. These strategic initiatives, coupled with resilient performance in key markets, demonstrate Apple’s proactive approach to sustaining investor satisfaction amidst market challenges.
College campuses across the United States remain focal points for protests regarding Israel’s actions in the Gaza conflict. Recent events at UCLA, Columbia, Portland State, and Rutgers highlight the elevated tension. Several protesters were arrested at UCLA, while police cleared a library occupation at Portland State, and Rutgers postponed exams amidst peaceful negotiations for protesters to vacate. The Associated Press reports approximately 2,000 arrests related to campus demonstrations in recent weeks. President Biden emphasized the legality of peaceful protests while condemning violence and vandalism, reaffirming that these protests have not altered his stance on Israel.
Meanwhile, positive news from the Middle East suggests the U.S. and Saudi Arabia are on the brink of a significant security agreement, marking a pivotal moment for diplomacy in the region. This anticipated deal, a focal point for the Biden administration, has the potential to reshape dynamics and pave the way for Israel’s formal diplomatic ties with Saudi Arabia, an unprecedented development. Secretary of State Antony Blinken’s meetings with Saudi leaders and Israeli Prime Minister Benjamin Netanyahu underscore the potential surrounding this pact. Proposed terms include Saudi recognition of Israel in exchange for a fortified defense partnership with the U.S., contingent upon Israel’s cessation of hostilities in Gaza and a commitment to facilitating Palestinian statehood.
Cooler heads are prevailing.
“Our lives are connected by a thousand invisible threads. And all along these sympathetic fibers, our actions run as causes and return to us as results.” – Herman Melville
“Real strength lies in the control or, even better, the domestication of one’s emotions, not in pretending they don’t exist.” – Ryan Holiday
Have a terrific weekend,
PW
