The three major indices the Nasdaq, S&P 500 and Dow Jones index, surged as a downtrend emerged in CPI numbers this week. The same rise was seen in markets across the globe, as European inflation also displayed a rather stagnant trend. Falling demand with lowering consumer inflation and rising production costs fueled investor expectations of rate cuts by the Federal Reserve sometime later this year. In commodities, crude oil prices rebounded from two month lows as the market balanced economic growth against the weak global demand forecasted by IEA for 2024. Warren Buffet’s Berkshire Hathway finally revealed the investment he has kept under wraps since last year as the insurance giant, Chubb. Buffett’s company had shielded the position from public knowledge as it was building the stake, requesting “confidential treatment” from the SEC in previous filings. As the technology sector rallied during the week, Google’s announcement of its new processor Trillium, a chip with five times better computing performance compared with the TPU v5e, created buzz around the future of AI and its leaders. Finally, geopolitical tensions continued to be elevated, as the U.S. delayed the sale of munitions to Israel after the siege on Rafah, while Ukraine had to be double down on its efforts to stop the advance of Russian troops in the north eastern city of Kharkiv as President Putin ordered the practice of nuclear drills in Russia.

Global Updates
  • The MSCI All Country World Index spiked during the week after the positive news of U.S. inflation falling in April month-over-month. The technology and utilities sectors, which are interest rate-sensitive, were instrumental to the spike.
  • The U.S. government had an interesting week as it announced its decision to supply Israel with $1 billion in military aid, while imposing increased tariffs on $18 billion imports from China including EV batteries, computer chips, medical products, and semiconductors. 
  • The European Commission forecasted a soft landing for the EU economy in 2024 with lower inflation of 2.5% and economic growth.
  • The Chinese central bank started its 1 trillion Yuan worth bond issues this week. Also, China’s central government is considering buying millions of unsold homes to ease oversupply in the market and support the real estate sector.
  • Ukrainian President Volodymyr Zelenskiy visited Kharkiv as Russian forces have made inroads of at least several kilometers into the north of the region, forcing Kyiv’s outmanned troops to try to hold the line on a new front. Russian President Vladimir Putin has ordered his military to practice the deployment of tactical nuclear weapons after what Moscow said were threats from France, Britain and the United States.
U.S. Equity
  • The S&P 500 Index rose over this week, with the latest CPI data indicating a drop in inflation.
  • Warren Buffet’s Berkshire Hathway revealed a $6.7 billion stake in insurance provider, Chubb. The insurance provider made headlines in March after the company underwrote Donald Trump’s nearly $92 million appeal bond in E. Jean Carroll’s defamation lawsuit.  
  • Insurance giant Aflac acquired 40% stake for $100 million in private lender Tree Line Capital Partners, to enter the private lending sector for small and medium sized companies.
  • European energy majors Shell and Total Energies have proposed listing their stocks in U.S. stock markets for improved valuations compared to European markets.
  • Cisco Systems stocks rose as quarterly revenue of $12.7 billion beat expectations.
  • Alphabet unveiled Trillium, a custom chip for AI data centers, five times faster than existing processors. Alphabet also added generative AI to its google search engine and android smartphones. 
  • Reddit shares rallied towards the end of the week following a partnership with artificial intelligence firm OpenAI that is expected to draw in more users for the social media platform with AI-enhanced experience and attract more advertising revenue.
  • Endeavour Group’s $13 billion deal to take the company private was in the spotlight as the board made public its decision to deny minority shareholders the ability to veto the deal.
U.S. Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index spiked early this week in anticipation of CPI data indicating rising inflation but fell after the official release of decreasing inflation. 
  • The U.S. 10-year Treasury yield marginally fell to 4.37 over the week and the yield on the 2-year note fell to 4.79.
  • The U.S. Dollar Index marginally fell to 104.62 during the week as the dollar depreciated against the Euro and Yen.
  • U.S. Treasury Department released data of China offloading $53.3 Billion in treasury and agency bonds, with escalation of American tariffs on Chinese goods.
Sources

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