JD Straight Up - 22Jun26 - Summer Heat

Summer Heat

Drulard Family Capital Fund

Fortnightly Macro View

JD Straight Up:

S&P 500 at 7477 – flat from 7456 two weeks ago

VIX at 18 – down 5% from 19 two weeks ago

10yr Treasury yielding 4.51% (down 1% from 4.55% two weeks ago)

Agg (US Aggregate Bond Index) at 98.60 – flat from 98.23 two weeks ago

Gold at 4224 per oz (down 3% from 4353 two weeks ago)

Silver at 66.26 per ounce (down 3% from 68.16 two weeks ago)

Crude Oil (WTI) at 77 per barrel (down 16% from 92 two weeks ago)

Bitcoin at 65k (up 1% from 64k two weeks ago)

JPM shares at 331 (up 5% from 314 two weeks ago) - testing all time highs

Deutsche Bank shares at 36.01 (up 14% from 31.65 two weeks ago)

Truist shares at 48.96 (down 1% from 49.26 two weeks ago)

Blackstone shares at 124.03 (up 7% from 115.57 two weeks ago)

Magnificent 7 Index at 414 (down 4% from 431 two weeks ago)

US unemployment: at 226,000 in latest claims – flat from 225,000 two weeks ago

EUR at 1.14 USD (down 2% from 1.16 two weeks ago)

GBP at 1.32 USD (down 1% from 1.34 two weeks ago)

Macro Environment

US inflation clocked in at 4.2% and EU at 3.3% with no signs of reprieve evident.  War continues in Ukraine while ceasefires are in place in Iran and Gaza.  Iran and US continue to negotiate a peace settlement.  Strait of Hormuz is nominally open yet traffic has yet to fully resume.  AI models continue to be released rapidly including significant strides made by Chinese labs to close the gap with US labs.

Macro View

Asset prices take a breather on a high plateau as they wait out the summer heat.  Frothy IPOs, ceasefires, and new central bank chairs are not enough to cool the burn caused by continued increases in inflation.  Supply chain disruptions from Hormuz closing continue to impact energy prices and bleed into summer travel and consumption.

Relevance

Direction will be dictated by bond markets.  Top concerns are compounding inflation and debt levels.  Second is creditworthiness at a corporate and sponsor level as well as sovereign.  

Head Scratchers

1 - Will the great debtor countries continue to try to inflate their way out of monumental debt loads?  Will the 'run it hot' approach work?  Where countries allow higher than target inflation in order to get higher than expected GDP growth and thereby lower the debt to GDP ratios through higher reported growth?  Will bond markets allow this approach or will they demand higher yields and have yield growth and debt growth outpace GDP growth?  So much rides on companies and countries being able to roll their debt that these are the existential questions facing the market.

Drulard Family Capital Fund

Drulard Family Charitable Fund

www.drulardfund.com

#45 - 22Jun26