For Week Ending May 17th

Markets Overview

• A very positive week for the markets as all major indexes finished positive. This comes after Trump delayed the reciprocal tariffs on China citing potential agreement talks between the two nations. Investor sentiment rose on this news as it appears the tariffs seem to be slowing down. There has been a shifting tone as equity markets are not far off all-time highs. Additionally, talks of a recession are much calmer now, although still remain. It is fair to say that while the US may experience slower than expected growth, there will not be a recession that we expected after liberation day.

Section Written by Chase Orciuch

Current Bond Market Movements

Current Bond market movements – the 10-year US Treasury yield rose above 4.5% for

the first time in nearly three months, reflecting investor concerns over inflation and fiscal

policy.

Government bond yields have been on a roller coaster ride due to the effects of the

tariffs since early April, as tariff threats have been either delayed or walked back by

President Trump.

Moody’s Downgrades US Sovereign Credit Rating

Recently, Moody’s Investors Service downgraded the US government credit rating down

from the top level (AAA) to Aa1, citing that this “reflects the increase over more than a

decade in government debt and interest payment ratios to levels that are significantly

higher than similarly rated sovereigns”

A credit rating downgrade only makes the US government debt seem riskier, so

investors could demand higher yields in the future due to this. The US Treasury must

offer higher interest payments to attract buyers, which will in turn negatively impact the

national debt. As the long-term yield rates are rising to high levels just like the short-

term rates due to the Fed policy, there is even more concern of spending slowing down,

and even a potential recession in the market.

Outlook

The bond market’s movements this week highlight the balance that exists between the

investor mood, and fiscal policy. Although the stock market has shown great growth in

the short-term, investors should continue to be aware of the concerns coming from the

bond market, in order to realize the possible effects on their portfolios.

Section by Chad Doto

US-China Relations

One possible outcome of the trade talks is that the current tariffs turn into something more permanent. If both the U.S. and China agree to keep tariffs lower for an extended period, businesses could finally get some relief from rising costs. This wouldn’t mean all tensions disappear, but it could indicate a better effort to stabilize trade relations and prevent further economic disruptions.

Another scenario is a small trade agreement, where both sides make minor concessions but avoid tackling the bigger, more controversial issues. China might loosen market restrictions just enough to satisfy U.S. negotiators, while the U.S. could relax some export controls on Chinese tech companies. It wouldn’t be a sweeping resolution, but it would show at least some willingness to cooperate.

If talks break down, we could see reversal, with tariffs shooting back up and both governments doubling down on their trade barriers. Businesses would have to adapt again, adjusting supply chains and facing higher costs. This would likely lead to renewed uncertainty in global markets, making it harder for companies to plan ahead.

Whatever happens next, companies around the world will be watching closely. These tariffs shape supply chains, costs, and investment strategies.

M&A and IPO's

-Etoro (ETOR), went public on May 14th with an IPO price of 52 dollars per share. After the opening bell, it was trading at 69 dollars per share respectively.

• Many see this as a positive for the future of crypto as Etoro has been known for their crypto trading platforms.

• Additionally, we may see more competition for companies like Coinbase and Robinhood.

Capital One Finalizes Deal

-The acquisition, valued at 35 billion, is set to bring further competition to other Wall Street giants.

Right now, U.S News, values Captial One at number 4 for top 8 credit card companies and Discover at number 6.

1. Chase: $1.25 trillion

2. American Express: $1.12 trillion

3. Citi: $593.8 billion

4. Capital One: $575.4 billion

5. Bank of America: $494 billion

6. Discover: $217.9 billion

7. U.S. Bank: $200.2 billion

8. Wells Fargo: $192 billion

   (US News)

Dicks's Sporting Goods Buys Foot Locker

• Dick's Sporting Good's has purchased Foot Locker in a 2.4 billion dollar deal.

• This comes after years of decline for Foot Locker. Total Sales have dropped significantly over the last half decade. In Q3 2024 alone, Foot Locker closed 14 stores and closed 85 more in 2024.

Upcoming Events

Initial Unemployment Claims------- May 22nd

Existing Home Sales---------May 22nd

New Home Sales----- May 23rd

Consumer Confidence----Ma7 27th

Core PCE Deflator-----May 30th