Israel’s Motives, Iran’s Options, and the U.S.’s Role

Israel has repeatedly stated that a nuclear Iran is an unacceptable proposition. It’s safe to speculate that Iran’s nuclear capabilities will be set back years, if not decades, after Israel concludes its offensive. Regime change, however, does not come without its costs. While many Israelis believe regime change would be beneficial, a potential outcome could be a more hardline Islamic Revolutionary Guard Corps-led government, potentially leading to an increasingly intense and perpetual conflict.

Could Iran Blockade the Strait of Hormuz?

Any action to block the strait would likely trigger further retaliation and could cause a spike in oil prices, initiating backlash from China, Iran’s largest oil customer. China purchases three-quarters of Iran’s oil exports and would exert significant economic influence to prevent any disruption. Second, Iran has a history of threatening to close the Hormuz waterway, but has never taken action. The last major threat came in 2018 when the U.S. withdrew from nuclear negotiations and reimposed sanctions.

Portfolio Diversification Strategies in Uneasy Times

While portfolio diversification strategies aimed at dedicating 45% to alternatives is not for every individual 401(k) holder, somewhere between 10 and 20% is reasonable. Empower is the second-largest provider of US workplace retirement plans. Earlier in May, the company announced a multi-partner deal with the private investing behemoths Partners Group and Apollo Global Management among others to begin allowing private equity, credit, and real estate in some of the accounts Empower manages. 401(k) plans typically hold public stocks and bonds, and many employers have been reticent to wade into private investments due to liquidity constraints and the valuation learning curve. Portfolio diversification strategies, however, are leading the change with five companies already signed on with Empower.

President Trump's First 100 Days

The S&P 500 plummeted more than 10% over the subsequent three days, and at its lows, the index was down 19% from February record highs. Investor anxiety was through the roof, as retirees watched their relatively secure portfolios get hammered. The President quickly shifted, announced the 90-day pause, and the rollercoaster shifted in the opposite direction. The market has recovered with the S&P 500 and Nasdaq 100 now positive for the year. A constructive trade deal with the United Kingdom and advanced conversations with China on lowering tariffs have also bolstered investor confidence. But it would behoove the President to take into consideration the long-term effects of elevated tariffs. His base support is seeking economic security.

The Value of an MBA is Slipping

Some have posited cyclical factors, such as the post-pandemic slowdown in consulting and the tech sector’s boom-and-bust nature. But others warn of more profound issues at play. The traditional pipeline to consulting and finance, which absorbed the majority of MBA graduates, is weakening. The number of graduates landing jobs at major consulting firms dropped by a quarter in 2024 compared to the preceding three years. Simultaneously, the tech industry’s hiring of MBAs has more than halved from its peak between 2018 and 2022.

What’s Behind the Stock Market Volatility?

The Fed is “trapped” at the moment, reluctant to make any significant policy moves until they can gauge the true effects of President Trump’s policies. During the Fed’s most recent March 18-19 meeting briefing, Fed Chair Jerome Powell cited a form of the word “uncertainty” a worrisome 18 times. The target range for the federal-funds rate remains at 4.25% to 4.5%, and Fed officials are projecting stagflation – lower growth and potentially higher inflation – for the year.

US Interest in Greenland - A Shipping and Reserves Case

Over the past two decades, a loss of older, thick ice has created new channels. Before 2018 there were virtually no bulk carriers or gas tankers in the Polar Code area, but the Yamal Gas project and the Mary River Mine in Nunavut have contributed to a swell in activity. Chinese President Xi stated in a visit to Moscow in 2023 that stronger diplomatic relations with Russia were vital to counteract, “a long campaign by the United States to hobble China’s ascent.”

The Experiment in Argentina - Javier Milei Wins and Work to Do

Also known as “shock therapy,” outside observers predicted this campaign fulfillment would result in a rise in poverty. No surprises here but rates this high do risk derailing what could be the region’s biggest turnaround story in decades. Milei and his supporters rightly point out that since Q3, there has been an emerging rise in real wages.6 This has contributed to greater economic activity and some analysts believe the recession likely ended in Q2 2024.7 The President was fully transparent with the electorate during his campaign, communicating frequently that there would be short-term pain and a recession. While some critical welfare programs have been cut, Milei has in parallel expanded the Universal Child Allowance and a popular Food Card program providing support to families in need.

2024 US Election: Donald Trump and Kamala Harris on Crypto

In June, venture capitalist David Sacks held a swanky fundraiser for the former President in his Pacific Heights, San Francisco mansion. Guests paid up to $300,000, with rumored attendees spanning the C-suites of some of the U.S.'s largest crypto and blockchain companies. Meanwhile, it didn’t take much work for Trump’s team to compile a list of the regulatory crackdowns occurring at the hands of the Securities and Exchange Commission Chair, Gary Gensler. A Biden appointee, Gensler has sued crypto companies for violating securities laws and sought to dissuade banks from serving crypto companies.

Hezbollah Exploding Pagers and Supply Chains

It is still unclear how many members of the Lebanese militant group Hezbollah were killed when thousands of member pagers exploded simultaneously. Just the next day, Hezbollah walkie-talkies suffered similar malfunctions. Sadly, news of bombings, explosions, and death is commonplace in 2024 in the Middle East. But this latest operation, likely at the hands of Israeli intelligence tacticians, has news outlets and pundits questioning the role of of global supply chains, rightly or wrongly.

A Wild Election is Near - Let's Compare Harris and Trump Policies

Unlike President Biden, the Vice President has little trade policy experience. Some pundits suggest she might consider pushing the US back to a more aggressive international digital trade policy with a particular emphasis on Californian tech company interests, her home base. Optimists are hoping that Harris could introduce some much-needed dynamism to trade negotiations, as the past four years have been uncharacteristically stagnant. Meanwhile, Trump is expected to wield his favorite negotiating stick - the tariff.

Fallout from the Chinese Housing and Banking Crises

In addition to the regulations, banks were also constrained from making further loans to developers. President Xi assumed these short-term band-aids could stave off a pending disaster, but in August 2021, the country’s second-largest property developer, the Evergrande Group, promptly halted construction. Overdue payments were at the core of the stoppage, and the following month, Evergrande missed two offshore bond coupon payments for a total of $131 million.

A Chinese-backed Peruvian Port has the US Spooked

Washington’s worry is two-fold: expanding Chinese influence in the region and the potential for future military installations. While BRI projects have grown significantly, and the Chinese potential for expanded military presence is vast, to date China operates just one logistics base in Djibouti and a paramilitary outpost in Tajikistan. Yet, a recent RAND report details Chinese interest in Cambodia, Equatorial Guinea, Namibia, the Solomon Islands, the UAE, and Vanuatu. Couple those with a March 2024 Newsweek report of additional interest in Cuba, Pakistan, Tanzania, Sri Lanka, and Myanmar, Washington’s anxiety does not appear irrational.

The Fed Dilemma: Interest Rate Cuts are Needed on the Road to 2% Inflation

Borrowing costs are at levels not seen since the former Fed Chairman Paul Volcker era. Since the inflation peak of 9.1% in 2022, the CPI has declined steadily until late 2023 and early 2024. March 2024 CPI numbers revealed month-by-month increases, but not by overly significant margins: food was up by 0.1%, energy up 1.1%, and shelter up 0.4%. While unemployment is low, US consumer sentiment, as some economists believe, strongly correlates with borrowing costs and consumer credit supply, explaining much of the economic unease the country is experiencing.

U.S. EV Sales Sluggishness - a Blip or Cause for Concern

In February, Rivian announced it would be cutting 10% of its workforce, prompting Tesla CEO, Elon Musk, to opine over X that the company would go bankrupt in roughly 6 quarters at the current trajectory. Musk then added, for good measure, “They need to cut costs massively, and the exec teams need to live in the factory or they will die.” Although Tesla aims to begin producing a more affordable model, Musk also warned his investors that 2024 Tesla EV sales are likely to be “notably lower.” Tesla reported quarterly revenue of $25.17 billion, falling short of analyst estimates of $25.64 billion.

Nippon Steel Remains Steadfast in its Bid for US Steel

A 2021 Congressional Research Service report found that steel plays a vital role in critical infrastructure projects, missile systems, and overall defense. Politically, practically no issues achieve bipartisan support in 2024, yet protecting the steel industry is one. Key swing states such as Ohio, Pennsylvania, and Minnesota employ tens of thousands of steelworkers, and both candidates are vying for their support.

Election Predictions: Trump vs. Biden on Taxes, Trades, and Energy

President Biden has been trying to have it both ways with energy policy. While simultaneously approving controversial drilling ventures, the President is now flirting with an LNG (liquified natural gas) export ban. In an attempt to appease the environmentalist flank of the party, the administration is taking a “second look” at the criteria employed to approve new LNG export projects. The US began shipping LNG exports in 2016 and now exports more than any other country. The President is in a thorny position as renewables are far from a viable replacement for oil and gas, something a portion of his base remains in wild disagreement with.

Larry Summers was Right about Inflation - So Keep Reading

In the aftermath of the 2008-2009 recession, interest rates were held down by increased savings from an aging population. Coupled with overall uncertainty, people were reticent to spend. This also resulted in less investment which ultimately ushered in a period of secular stagnation. The term “secular stagnation” initially appeared in the 1930s during the Great Recession. But it was Summers who revived it following the 2008 financial crisis.

Global Supply Chains Head into an Uncertain 2024

One of the biggest wins for many CEOs post-Covid was their ability to clear inventory. This was welcome news to shareholders as companies were grasping for reliable demand models during the roller-coaster pandemic years. The inventory-to-sales ratio has remained steady at 1.30 since May 2023 and firms welcomed an additional win with a 3.1% holiday sales bump compared to 2022. All this suggests that the “just-in-case” hoarding strategy of the pandemic years is over and retailers are easing back into a “just-in-time” strategy.
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