JD Straight Up - 6Jul26 - America, I love ya

America, I love ya

Drulard Family Capital Fund

Fortnightly Macro View

JD Straight Up:

S&P 500 at 7533 – up 1% from 7477 two weeks ago

VIX at 16 – down 13% from 18 two weeks ago

10yr Treasury yielding 4.49% (down 1% from 4.51% two weeks ago)

Agg (US Aggregate Bond Index) at 98.56 – flat from 98.60 two weeks ago

Gold at 4166 per oz (down 1% from 4224 two weeks ago)

Silver at 62.50 per ounce (down 6% from 68.26 two weeks ago)

Crude Oil (WTI) at 68 per barrel (down 13% from 77 two weeks ago)

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

JPM shares at 337 (up 2% from 331 two weeks ago) - all time highs

Deutsche Bank shares at 36.96 (up 3% from 36.01 two weeks ago)

Truist shares at 51.28 (up 5% from 48.96 two weeks ago)

Blackstone shares at 123.96 (flat from 124.03 two weeks ago)

Magnificent 7 Index at 426 (up 3% from 414 two weeks ago)

US unemployment: at 215,000 in latest claims – down 5% from 226,000 two weeks ago

EUR at 1.14 USD (flat from 1.14 two weeks ago)

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

Macro Environment

US inflation is 4.2% while EU is 2.8%.  US unemployment is 4.2% while EU is 5.9%.  War persists in Ukraine and ceasefire continues in Iran as Hormuz gradually opens.  Energy prices adjust downwards.  ECB raised target rates to 2.25% while US Fed held at 3.5 - 3.75%.

Macro View

In the immortal words of the Menzingers, "America, I love ya, but you're freaking me out."

America is at its prime at the ripe and tested age of 250.  It has control of the reserve currency and the latest technological revolution.  It has the strongest military and economic engines on earth and wields them.  It continues to grow and attract capital from around the world.  It is an optimist and believer in the power of invention and reinvention and continues to bet on itself.

Relevance

Sure, America might be a little vulgar on a relative basis.  It has MMA fighting on its presidential lawn.  It bullies referees in international competitions that it hosts.  It has a leader that generates billions of dollars in personal income while in office.  It is entirely unapologetic about any of its quirks and is confident in its place at the head of the world.  It is ushering in the age of superintelligence with the same confident and unapologetic swagger.  It shows no fear of its mounting debt or deficit and continues to defy the bond market vigilantes and traditional economic policy.

It is becoming a world of bifurcated views where one group is waiting with baited breath for the behemoth to stumble and another is positive in ever greater achievement.  GFC and Covid appear as speed bumps in the rearview mirror of the speeding muscle car.

Head Scratchers

1 - When will the business cycle finally rear its head again?  Will it do so gently or catastrophically?  Is anyone able to predict the catalyst?  Should we all just capitulate and join the view that cycles are over and its different this time as we join a chant of U-S-A, U-S-A?

Drulard Family Capital Fund

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#46 - 6Jul26