Weekly Market Review May 10, 2023
The U.S. labor market added 253,000 jobs in April which brings the unemployment back down from 3.6% to 3.4%, matching the lowest reading since 1969. The stock market reacted favorably to the strong employment data, a potential shift in the "good news is bad news" narrative that has driven markets over the past year as the Federal Reserve fights persistent inflation. (Source: The Wall Street Journal)
Speaking of the Fed, Jerome Powell announced a 0.25% increase in the fed funds rate last week, bringing the target range to 5.0% - 5.25%. This is projected to be the last rate hike in the current hiking cycle after raising rates ten consecutive times since March 2022.
Treasury Secretary Janet Yellen warned the U.S. could default on debt obligations as soon as June 1st as Republicans and Democrats continue to negotiate a debt-ceiling increase. The GOP has stood firm that any debt ceiling increase would require federal spending cuts, while the Democrats are pushing for a debt ceiling increase that would maintain current federal spending levels. As the potential default date is fast approaching, the Biden administration is exploring all alternatives, including a short-term debt-ceiling increase to buy some time. (Source: The Wall Street Journal)
This week, President Biden will meet with congressional leaders to continue debt-ceiling negotiations and we'll get an update on inflation with April's Consumer Price Index (CPI) and Producer Price Index (PPI) reports.
Blueprint Numbers
WOODSTOCK FOR CAPITALISTS - Berkshire Hathaway's annual shareholders meeting, dubbed the "Woodstock for Capitalists", took place over the weekend. CEO Warren Buffett, 92, and Vice Chairman Charlie Munger, 99, presided over the conference for the 59th time to more than 40,000 attendees. (Source: NBC News)
LONG WAIT FOR KING CHARLES - King Charles III was crowned over the weekend during a coronation ceremony with traditions dating back to the 10th century. King Charles has waited 70 years to be king, the longest wait in British history. (Source: The Wall Street Journal)
MAGE WINS DERBY - Mage won the 149th running of the Kentucky Derby over the weekend with a time of 2:01. Mage is owned by a group of 382 people, led by Cincinnati businessman Chase Chamberlin. The total purse of the race was $3 million, with $1.86 million going to Mage's ownership group. (Source: USA Today)
ACTIVIST VS. ACTIVIST - Famous activist investor Carl Icahn, who has made a living by betting against companies and then publishing research to justify their overvalued price, got a taste of his own medicine last week as activist investor Hindenburg initiated a short position in Icahn's company, claiming excessive leverage and overvaluation of company assets. The news tanked shares of Icahn Enterprises by 20%, costing Icahn billions on paper. (Source: The Wall Street Journal)
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