I took the weekend off; what did I miss?
I’m kidding – even though it’s not funny at all. Saturday night the U.S. launched an airstrike against nuclear-enrichment sites in Iran. We do not yet have an assessment of how successful the strikes were. And we are waiting to see what Iran’s response will be. Its Parliament has voted to shut down the Strait of Hormuz, through which much of the globe’s oil and natural gas supply is transported, but that hasn’t happened yet. The U.S. is asking for a negotiated settlement that will keep Iran from ever developing a nuclear weapon, but Iran may not feel like talking after getting kicked in the face.
Oil prices are rising on fears that supply will be compromised.
Everything that I planned to write about today now looks unimportant. But I’m going to tell you anyway, dammit!
Last week was Fed week. And although we’re all a little tired of seeing the Fed do nothing, it was still the right call. Most tariffs will hit next month, if they are not postponed again, and it remains to be seen how much inflation this will cause.
The dollar is down slightly on all of the news. If you remember the old cash-flow model, in which we buy brightly-colored stuff from Asian countries, which therefore end up with dollars, which they then use to buy Treasurys, you will know that it is being upended by the tariffs and threat of tariffs. With fewer dollars flying around, and less demand for dollars with which to buy our debt, the dollar has to fall in price in order to attract buyers.
Stock prices went mostly sideways last week as all eyes turned to the Israel-Iran conflict. And that was before the U.S. stepped into it.
The justification for the attacks on Iran is that they are/were very close to developing a nuclear weapon, and since Iran is the country that regularly calls for the death of both Israel and the United States, that is worrying. We don’t know how close Iran really is, but the most recent inspection by IAEA (International Atomic Energy Agency) showed that no progress had been made since March. And no one knows if Supreme Leader Khamenei of Iran has ordered weapons to be developed.
Did we jump the gun? Well, we’re not racehorses, and so it remains to be seen.
It seems quaint now to remember that trade talks between the U.S. and China in London were buoying stock prices before the bombing began. According to the trade pact reached, the U.S. will leave tariffs on Chinese goods at 55%, while China levies 10% tariffs on American goods. But our agreement to buy rare earth minerals from China was extended for only six months.
You already know that our trade deficit with China is our largest. But do you know who comes in second? Ireland. Yes Ireland. It turns out that Ireland produces lots and lots of weight-loss drugs. And Americans consume lots and lots of the same.
The Consumer Price Index rose 2.4% in May from a year earlier. Not quite at the Fed’s 2.0% target, but darned close. The Producer Price Index rose 2.6% for the trailing twelve months. And ditto.
For the week ending on June 20th, the S&P 500 finished at 5,967, the Dow Jones Industrials at 42,206, and the Nasdaq at 19,447. The yield on the ten-year Treasury closed at 4.375%. U.S. crude oil cost $74.28 per barrel, N.Y. gold cost $3,367.81 per ounce, and one Euro was worth $1.15.
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) CNN, CNBC, Axios, Yahoo Finance, Business Insider, The Wall Street Journal, The New York Times, USA Today, The Washington Post, The Bureau of Labor Statistics, Barron’s, MarketWatch, The Economist, Bloomberg, Morning Brew, Reuters, 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.
Deloitte US is a high-pressure high-profile company that offers executive training, audit and tax services, and many other resources for other high-profile companies. Deloitte offers its employees a $1,000 “well-being” subsidy to spend on self-care things like gym memberships. So it bears watching when Deloitte updates the list of things that qualify as contributing to well-being. This year, Lego sets made the list. I would laugh, but my latest Lego bouquet kit is waiting for me. Working on something Lego-special yourself? Send pictures!