Markets Update

The market was looking at modest weekly gains into last Friday which quickly evaporated on the growing Israel-Iran conflict which kicked off the night before. Geopolitics is back in the spotlight after trade, tariffs, and the possibility of economic recession have dominated the narrative for months. Israel launched a series of massive strikes against Iran trying to cripple its nuclear program and killing several senior defense commanders. The US called it a unilateral action, and Trump has expressed support, while calling Tehran back to the bargaining table to try and conclude a nuclear deal. The IDF (Israel Defense Forces) confirmed they were coming under fire by Friday afternoon. The evolving situation took markets lower, and caused crude oil to spike 8% higher (its largest single-day gain since 2022, chart below.. with a 1-year chart right below that for context on the Friday spike).

On the economic front- May inflation readings came in below expectations, consumer sentiment came in notably stronger, small business optimism broke a four-month streak of declines, and trade headlines were mixed but pointed to ongoing resolution(s), mainly with China after 2 days of meetings. The cooler inflation data was the main talking point on why stocks were higher before the Israel-Iran situation at the end of last week.

This week we will hear from the Fed on Wednesday, though no major expectation for a change in rates and comments will likely be in-line with the last couple months. We also have retail sales, homebuilder sentiment, and jobless claims. Trump is attending the G7 leaders’ summit in Canada (Jun 15-18). Representatives from the US and Iran had been scheduled to meet this past weekend in Oman for another round of nuclear talks, but have been suspended indefinitely.

One quick note on the US IPO window: It appears to be open, maybe for real this time. We saw another successful debut last week from fintech company Chime, popping 37% on day 1 on a deal that had several times more interest than available stock. That makes for 5-6 noteworthy IPOs to come to market successfully in the last handful of weeks. We’re not saying this is peak crazy issuance like we saw in 2021, but we could start to see a more consistent & reliable cadence to IPO roll-outs with positive data points like we’ve been seeing from capital markets. A major (and negative) change in tone on either trade talks, or certainly now on the geopolitics front, could very quickly change that, but its something to be mindful of in this environment.

Corporate Roundup / Macro Highlights

Trump called Fed Chair Jerome Powell a ‘numbskull’ in the latest knock on Fed rate policy, two thirds of family offices are planning to increase their private equity exposure, the Boeing crash in India last week was first fatal incident involving a 787, US household net worth fell for the first time since 2023, the ‘bond king’ Jeff Gundlach says ‘reckoning is coming’ for US debt, Elon officially said he regrets the Trump attacks after a successful make-up call with DJT, Papa Johns was offered $2 billion to be taken private by Apollo & Irth Capital, and Zuckerberg is personally recruiting talent for an ‘AI superintelligence team’ with $100m+ pay packages.

Have a successful week... Work hard & Head on a swivel!

From the Team @ HPLT 6/16