DFCF, LLC
Drulard Family Capital Fund (DFCF, LLC)
Bombs Away
Drulard Family Capital Fund
Fortnightly Macro View
JD Straight Up:
S&P 500 at 5973 – down 1% from 6001 two weeks ago
VIX at 21 – up 17% from 18 two weeks ago
10yr Treasury yielding 4.34% (down 4% from 4.51% two weeks ago)
Agg (US Aggregate Bond Index) at 98.22 – up 1% from 97.32 two weeks ago
Gold at 3387 per oz (up 2% from 3333 two weeks ago) - testing all-time highs again
Crude Oil (WTI) at 74 per barrel (up 14% from 65 two weeks ago)
Bitcoin at 101k (down 6% from 108k two weeks ago)
JPM shares at 276 (up 5% from 264 two weeks ago)
Deutsche Bank shares at 27.44 (down 3% from 28.14 two weeks ago)
Truist shares at 40.49 (down 1% from 40.90 two weeks ago)
Blackstone shares at 137.41 (down 2% from 140.65 two weeks ago)
Magnificent 7 Index at 334 (up 1% from 332 two weeks ago)
US unemployment: at 245,000 in latest claims – up 2% from 240,000 two weeks ago - highest since Oct '24
EUR at 1.15 USD (up 1% from 1.14 two weeks ago)
GBP at 1.34 USD (down 1% from 1.35 two weeks ago)
Macro Environment
Inflation rate in US increased from 2.35 to 2.40% in May, but was kept at bay by subdued energy prices. That will no longer be the case from June. Vehicle prices also helped to slow inflation, but tariffs will likely eliminate that benefit. EU inflation was down to 1.90% in May. Lower energy prices were the primary contributor. War continued in Ukraine and between Israel and multiple parties. US joined with Israel to bomb Iran in an effort to eliminate nuclear weapons potential. Iran retaliated with missile attacks on Israel and expressed intentions to retaliate against US. Oil spiked to the highest level since January. Gold continues to reach new record levels. USD declines to levels last probed in the COVID pandemic.
Macro View
Negotiations on tariffs, trade agreements and other alliances following an early US departure from the G7 meeting and the subsequent bombing of Iran by the US look to have increased in their complexity. Whether by masterful design or accident is irrelevant. The important factor is that uncertainty just increased again across a global scale.
Relevance
Investors and hence markets struggle with uncertainty and volatility. Will tariffs and elevated oil prices drive inflation? If so, when? Will growth suffer as a result of declining investment by companies and consumers? Will those things happen concurrently and bring about dreaded stagflation? Will it be severe enough to drive civil unrest well beyond No Kings and No ICE demonstrations? Will responses include mobilization of national guard and armed forces on a wider scale and result in violence? Meanwhile, US debt continues to compound out and the big beautiful bill continues to largely ignore it. The key question is whether investors will ignore the uncertainty and debt alike when the US issues treasuries. It needs to drive the 10-year closer to 3% while it remains on a plateau stubbornly above 4.25%.
Head Scratchers
1 - Why is JPM climbing to ever-increasing highs? Dimon managed to convince the institutions of the fortress balance sheet? Punters are imagining Dimon taking a seat in the administration and ensuring his old franchise continues to benefit? Bessent to Fed Chair and Dimon to Treasury as the dynamic duo? Investors are assuming JPM can safely manage a deteriorating consumer credit cycle, the proliferation of private credit, a long winter for private equity, pressure on NIM, and a commercial real estate reckoning that has been looming for years. Can it? With or without Dimon at the helm.
2 - How will Iran retaliate against the US and how will markets respond?
Drulard Family Capital Fund
Drulard Family Charitable Fund
#20 - 23Jun25