• Stocks concluded a volatile week which saw the major indexes set all-time closing highs during the earlier part but then give way to inflation fears on Thursday (see below) before partially recovering on Friday.  The exception was the tech heavy NASDAQ Composite which as a result of a strong earnings season closed out the week at a record high.  As we enter the summer months, expect volume to contract a bit which should add to volatility.  As noted previously, the best way to prepare for your financial future is to ignore the short-term and invest in accordance with your long-term objectives, a period which has historically been much more predictable.
  • Thank you to all those who have served or are still serving the United States of America, helping to keep us safe and to protect and preserve our freedom.  Initially observed in May 1868, the day was originally meant to remember the fallen soldiers from the Civil War.  Today, we hope that we remember all of the men and women that have sacrificed for our country.  Thanks again.
  • Minutes from the 2-day meeting of the Open Market Committee of the Federal Reserve (FOMC) which concluded on May 1 were released this past Wednesday at 2:00p which, in turn caused quite a stir in the financial markets.  Two statements of note within the minutes included 1) “participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2-percent objective” and 2) that “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.”
  • Despite the ensuing pullback following that release on Wednesday afternoon and into Thursday, we don’t think the minutes contained any earth shaking revelations.  Yes, inflation is a little stickier than the Fed anticipated and of course, they would hike should inflation reignite.  In our opinion, inflation a la pre-great recession will hover between two- and three-percent as a result of strong economic growth, reshoring/nearshoring of our manufacturing base along with substantive, long overdue wage gains for American workers.
  • Several big box retailers, including the likes of Walmart (WMT) and Target (TGT) announced price cuts this past week as consumers have become more selective about where and how they are spending their money.  Inflation, although coming down, has persisted longer than most have expected.  Most analysts see this as an effort by the retailers to maintain foot traffic and keep their customers despite what it may do to their margins over the short-term.  In a similar move, McDonald’s (MCD) announced that it was introducing a $5 value meal next month.
  • Nvidia posted earnings and revenue growth above the expectations of analysts as demand for its Graphic Processing Units (GPU) continued to outstrip supply, bolstered by the race for market share in regard to Artificial Intelligence.  Earnings per share came in at $6.12 as compared to expectations of $5.59 while revenue rose to $26.04 billion, above the consensus estimate of $24.65 billion.  The company also announced a 10:1 stock split.  Company officials also announced that it had repurchased $7.7 billion worth of its shares during the prior quarter and that it was increasing its pre-split quarterly dividend by 250% to $0.10 per share from $0.04.
  • JP Morgan CEO Jamie Dimon was once again in the news on a couple of fronts.  First, in response to a question pertaining to succession planning, the 68-year-old stated that “the timetable isn’t five years anymore” and that the bank was “on its way, we’re moving people around.”  On a macroeconomic note, speaking at the JP Morgan Global China Summit in Shanghai, Dimon stated the obvious in that looking “at the range of outcomes and again, the worst outcome for all of us is what you call stagflation, higher rates, recession.  That means corporate profits will go down and we’ll get through all of that.  I mean, the world has survived that but I just think the odds have been higher than other people think.”  Dimon softened that statement by then observing that in his estimate with unemployment below 4%, the labor force as well as the consumer is still in good shape.
  • Japan’s 10 year sovereign breached 1.00% this past Wednesday, its first time in eleven years that it had risen to this level.  The 10-year closed the week at 1.01%.  This is of note as Japan’s debt as a percent of their Gross Domestic Product (GDP) exceeds 250%, by far the highest of any developed nation.  As interest rates rise the cost of funding that debt will also rise.
  • According to the Federal Home Loan Mortgage Corporation (FreddieMac), “Spring homebuyers received an unexpected windfall this week, as mortgage rates fell below the seven percent threshold for the first time in over a month.    Although this week’s data on previously owned home sales showed a decline, total inventory of both new and existing homes is up.  Greater supply coupled with the recent downtrend in rates is an encouraging sign for the housing market.”
  • We believe that we are in the early innings of an industrial super cycle, as a result of on-shoring and near-shoring.  Investors can benefit by investing in technology, companies that utilize technologies to increase efficiencies, industrials, materials and infrastructure plays.
  • Corporate news – The push to unionize continues as two CVS (CVS) retail stores in Rhode Island joined The Pharmacy Guild, a national pharmacy union.  Expect this move to continue resulting in an upward push on wages and benefits.  The Justice Department is suing online concert and ticket platform, Live Nation Entertainment (LYV) over alleged antitrust violations.  The Justice Department is looking to break up LYV.
  • Upcoming Economic Reports scheduled to be released this week include the following, on Tuesday, the first revision to Q1 Gross Domestic Product (GDP), April Wholesale Inventories and M2 Money Supply; on Thursday, the Weekly Report of Initial Claims for Unemployment Insurance and on Friday, April Personal Income and Spending.
  • The Q1 Earnings has begun to slow.  However, companies of note scheduled to report this week, include – HP (HPQ), Agilent Technologies (A), Salesforce (CRM), Diageo (DEO), Marvell Technology (MRVL), Dell Technologies (DELL), Veeva Systems (VEEV), Dollar General (DG), Zscaler (ZS), MongoDB (MDB), Costco (COST) and NetApp (NTAP).

General Disclosure:“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.

Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”

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