Special thanks are due to Joe DePatie of Diastole for writing the Monday Comment last week while I played hooky. He wrote a wonderful piece and now I don’t have any job security.
A few things have happened since then. SpaceX stock started falling back to human levels after rising like a rocket after its IPO. This morning the stock is trading around $175 per share. It was initially listed at $135 per share and traded as high as $225 over the past ten days.
A cease-fire deal between the U.S. and Iran seems to be holding, while peace negotiations are ongoing in Switzerland. The Strait of Hormuz has opened, closed, and reopened again. Currently the Iranian government says it is closed, but some traffic is moving through it. Oil prices have fallen on all of this news, with both WTI (U.S.) crude and Brent (international) crude trading below $80 per barrel. We have China to thank for the relatively reasonable oil prices we have seen during the war with Iran. China opted to buy NO oil during the conflict, relying instead on its hefty reserves.
Last week was Kevin Warsh’s first Open Market Committee meeting as Fed Chairman. He indicated that instead of having the Fed move markets, he would prefer that markets move the Fed. Warsh gave the usual press conference after the interest-rate decision was announced, but he was a man of few words, both in his comments and his written summation of the meeting. We will learn more about his style as chairman as time goes by.
The FOMC announced no rate change at its meeting – as was fully expected and decided unanimously. Of the 19 governors on the Committee, nine anticipate a rate hike coming later this year. In March, that number was zero.
Rate hikes can be necessary to combat inflation, and inflation is what we see when we look at the latest Producer Price Index. In May it rose 6.5% over the trailing twelve months, and import prices increased 6.7% over the same period. U.S. retailers reported sales growth acceleration in May – not necessarily reflecting increased purchasing, but perhaps just increased prices on the same goods being bought. Under former Chairman (and still Fed member) Jerome Powell, the Fed’s target inflation rate was 2%. Chairman Warsh has announced his commitment to the same target.
According to Axios and Forbes Magazine, “Median household net worth in the U.S. is around $193,000.” Jeff Bezos is worth roughly $249 billion, while Elon Musk is now worth more than a trillion dollars. You know what that means, don’t you? Our piddly fortunes are now closer to the value of Bezos’s than his is to Musk’s. Yikes!
For the week ending on June 18th, the Standard & Poor’s 500 finished at 7,500, the Dow Jones industrials at 51,564, and the Nasdaq Composite Index at 26,517. The yield on the ten-year Treasury Note closed at 4.496%. WTI (U.S.) crude oil cost $73.61 per barrel, while Brent (international) oil cost $77.69 per barrel. New York Gold cost $4,155.68 per ounce, and one Euro was worth $1.14, reflecting a strengthening dollar.
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) Morning Brew, Yahoo Finance, Barron’s, Bloomberg, The Wall Street Journal, Axios, USA Today, The Bureau of Labor Statistics, The New York Times, The Washington Post, The AP, Reuters, Fortune Magazine, Forbes Magazine, PitchBook, Morningstar, CNN, and The BBC. If you have questions, please call Diastole at 800-458-5220 or email me, Liz Cook, at ecook@dwinvest.com. Thank you for reading!
Elon Musk won’t see the entirety of his SpaceX payout until and unless he meets all the terms of the deal he made with SpaceX. One of them is that he establishes a permanent colony on Mars. Seems far fetched, but who am I to sell Elon short? In the meantime, NASA has revealed its plans to build a permanent Moon base. Before humans can live there, lots of machines will have to be delivered, and Jeff Bezos’s Blue Origin is one of the companies that will produce the machines. But Musk’s SpaceX is being contracted to deliver the humans. And meanwhile, the Chinese seem to be ahead in the race back to the moon. Oh, the drama!