Markets moved up, down, and sideways last week and ended the week essentially unchanged. On the whole, not too bad. And markets appear to be headed higher this morning, on the news from Treasury Secretary Scott Bessent that a deal was reached with China over the weekend to reduce tariff levels on both sides for 90 days beginning this Wednesday.
The Chinese and the Americans both agreed to cut their tariffs by 115% – leaving U.S. tariffs on China at 30% while Chinese tariffs on the U.S. fell to 10%. For the next three months.
OPEC increased its level of oil production despite weak prices and an uncertain demand outlook, according to the Wall Street Journal. Increased production leads to lower prices, which are welcomed by consumers, but dreaded by producers. It seems obvious that the U.S., which is a large oil-producing country, would just keep its own oil for its own use, but the oil that is produced in the domestic U.S. is not the same kind of oil that we need to turn into gasoline. So, we export our oil, and import other people’s oil, and the two cannot be netted out.
The influence of lower oil and gas prices is helping to keep inflation from rising on the back of tariffs and uncertainty. We will learn more when the consumer-price index for April is released tomorrow. One of the commodities which is rising in value is bitcoin. Since early April, the price of bitcoin has jumped more than 35% to $103,000 and is now nearing all-time highs reached in January.
Why is bitcoin moving so dramatically? Part of the interest in bitcoin comes from investors who see it as an inflation hedge, the way some people see gold. It doesn’t always work as a hedge, but people keep trying it. Also, the recent interest in the president’s meme coin ($Trump) has brought buyers to all of the cryptocurrencies. Plus, we are seeing more of the traditional institutions of finance bowing to market pressures and dipping their collective feet into crypto. Nothing succeeds like success!
Before the Sino-American trade deal was announced, we had the U.K./U.S. trade deal. It was announced with fanfare but ultimately amounted to an agreement to think about thinking about getting together again to discuss trade. The American tariffs on the U.K. remain at 10%, but there are new carve outs for British vehicles, which include very expensive cars (Bentley, Rolls, Jaguar) and very tiny cars (Minis).
The dollar has strengthened a little, after many weeks of languishing. Despite some dollar-selling in Asia, today it takes $1.11 to buy one Euro, while last week it took $1.14. That’s progress. And it means that foreign governments are back to thinking that they might want to buy U.S. Treasurys, for which they will need our dollars. Keep an eye on the value of the dollar, which is a good indicator of the level of trust other countries have in our economy,
As predicted, Jerome Powell and the Federal Reserve kept interest rates the same at last week’s meeting. <yawn> At his news conference, Powell said, “My gut tells me that uncertainty about the path of the economy is extremely elevated and that the downside risks have increased.”
Bill Gates is planning to give away 99% of his fortune over the next 20 years, including the endowment of the Gates Foundation. He believes that it will come to more than $200 billion by the time the Gates Foundation closes its doors in 2045. His past efforts to eradicate polio, poverty, and malnutrition have given hope to people all over the world, and he plans to build on those efforts. “People will say a lot of things about me when I die, but I am determined that ‘he died rich’ will not be one of them,” Gates said, according to CNBC.
For the week ending on May 9th, the Standard & Poor’s 500 finished at 5,659, the Dow Jones Industrials at 41,249, and the Nasdaq Composite at 17,928. The yield on the ten-year Treasury Note closed at 4.375%. U.S. crude oil cost $61.02 per barrel, N.Y. gold cost $3,336.04 per ounce, and one Euro was worth $1.11.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here was gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Axios, Yahoo Finance, Barron’s, MarketWatch, Morning Brew, The Economist, CNBC, The Wall Street Journal, The New York Times, The Washington Post, USA Today, CNN, Reuters, UPI, and The Associated Press. If you have questions, please call us at 203.458.5220, or reply to this email to reach me, Liz Cook.
A second grader in Kentucky secretly used his mother’s phone to order 70,000 Dum-Dums from Amazon. His mother had no idea of his plot until 30 cases of the lollipops arrived on her front porch. The cost of all the suckers was approximately $4,200. After some negotiating, Amazon agreed to accept a return of the entire order. What did Liam learn from this experience? Next time, quickly set up a roadside Dum-Dum stand as soon as the candies arrive? Apologize to his mother so that he retains access to her phone? Hope that things go differently with his newly planned purchase of Tootsie-Pops?