Uriel Loredo

Middle East Tensions Raise Risks – But Oversupply Could Keep Prices in Check 

Geopolitical Tensions on the Rise: What’s the Impact on Oil Markets? 

A ceasefire was recently reached between Israel and Iran, yet tensions flared again after the U.S. launched airstrikes on Iranian nuclear sites. In response, Iran threatened to close the Strait of Hormuz—a key passage for global oil shipments. 

Here are three key points to help put the situation into perspective: 

• Limited Immediate Impact: Iran accounts for only 3% of global crude supply and exports just half of that. Shutting down Hormuz would hurt its own economy. 

• Strategic Reserves Are Ready: OECD countries hold 1.2 billion barrels in reserves—enough to cover up to 60 days of exports through Hormuz. 

• Oversupply Ahead: Global demand is expected to grow by less than 1% this year, while supply could grow more than three times as fast, driven by Brazil, Norway, and adjustments in OPEC+ output. 

Market Implications 

S&P 500 companies have very limited direct exposure to Iran and Israel. In the short term, market sentiment may drive volatility. But from a broader perspective, oil market fundamentals remain relatively balanced. 

Over the past 30 years, markets have shown resilience. Following similar geopolitical events, the S&P 500 has delivered an average return of nearly 8% over the next 12 months. 

Source: Raymond James 

Posted in Weekly Comment

Fed holds rates steady, Middle East tensions rise, and global growth signals remain mixed  

Economic Radar 

Week of June 16–20 

A week of contrasts: mixed signals across growth, interest rates, and geopolitics 

This week was shaped by key central bank decisions, contrasting economic indicators, and renewed geopolitical tensions. Below is a summary of the most relevant developments by region: 

  • United States: The Fed held its benchmark rate at 4.25%–4.50% and revised its projections: GDP growth was lowered to 1.4% (from 1.7%) and core inflation was raised to 3.1% (from 2.8%). While two rate cuts remain on the table for 2025, seven members now forecast no changes. In parallel, retail sales fell 0.9% month-over-month, and Middle East tensions pushed oil prices higher following evacuation orders issued by Trump in Tehran. 
  • Europe: The ECB maintained a flexible stance without committing to further cuts. In the UK, annual inflation stood at 3.4%, in line with expectations. The Bank of England kept its rate at 4.25%, signaling potential cuts if conditions allow. 
  • China: The PBOC left benchmark rates unchanged. Retail sales surprised to the upside (+6.4% YoY), and industrial production grew 5.8% YoY. 
  • Brazil: The Central Bank raised the Selic rate to 15%, marking the seventh consecutive hike. Authorities anticipate elevated financing costs for longer to contain inflation, projected at 4.9% for 2025. 
  • Mexico: Investment fell 4% quarter-over-quarter in Q1 2025, marking the second consecutive decline. The IMEF projects the economy won’t regain momentum until 2027, amid uncertainty surrounding the judicial reform and USMCA renegotiation. 

In a highly uncertain environment, discipline and analysis remain the foundation of a sound investment strategy. 

KEY UPCOMING EVENTS 

  • In the United States, Powell will present his semiannual monetary policy report 06/24 
  • In the United States, GDP data will be released 06/26 

Monitor 

Posted in Weekly Summary

The Fed holds rates steady and keeps rate-cut outlook, but revises growth down. 

Fed sticks with rate cut outlook, but lowers growth forecast. 


As expected, the Federal Reserve kept its interest rate unchanged at 4.25%-4.50%. While uncertainty has eased somewhat, the Fed emphasized that lingering risks still call for a cautious approach. 

The latest dot plot shows that expectations for two rate cuts in 2025 remain. However, seven members of the Committee now anticipate no rate cuts in 2025. The Fed also revised its GDP growth forecast downward to 1.4% (from 1.7% in March) and raised its core inflation projection to 3.1%. 

Updated projections point to a softer labor market, with unemployment expected to reach 4.5%. No changes were announced to the Fed’s balance sheet reduction plans. 

Market Takeaway: 

The statement confirms a cautious stance in response to slower growth, tariff pressures, and lingering inflation risks. While rate cuts are still in the forecast, the Fed acknowledges that balancing growth and inflation will be more challenging. 

Fed Indicators Update (June vs. March) 

Source: Federal Reserve 

Posted in Weekly Comment

Mixed trends in inflation and growth 

Week of June 9–13 

Mixed inflation data, downward growth revisions, and easing trade tensions between China and the U.S. set the tone for the week’s global economic narrative. 
Here’s a brief summary of the most relevant developments across major economies in recent days: 

  • United States: May inflation rose just 0.1%, staying below expectations. The Fed is not expected to cut rates before September. The World Bank lowered 2025 GDP growth to 1.4%. Gold and oil rose on geopolitical tensions. 
  • Europe: Germany raised its 2025 growth forecast to 0.3%. An ECB policymaker said interest rates are well positioned, signaling a prolonged pause as inflation continues to ease. 
  • China: Exports grew 4.8% year-over-year, but those to the U.S. fell 34.5%. Annual inflation declined, and producer prices also retreated.  
  • Brazil: Inflation reached 0.26% in May, below the 0.33% forecast. The annual rate fell to 5.32%, reinforcing expectations of a pause in the Central Bank’s rate hike cycle. 
  • Mexico: Inflation climbed to 4.42% year-over-year in the second half of May, its highest level in five months. The World Bank cut its 2025 growth forecast from 1.5% to 0.2%. 

Investing wisely isn’t about timing the market, but about staying informed, diversified, and avoiding impulsive decisions. 

KEY UPCOMING EVENTS 

  • In the United States, the Fed policy announcement will take place 06/18 
  • In the United States, Juneteenth will be observed (market closed) 06/19 

Monitor 

Posted in Weekly Summary

Market Outlook and Positioning

June 2025 

The expectation of fewer rate cuts and trade-policy uncertainty defined a volatile first half of the year. Recently, sentiment improved on the prospect of government agreements with its main partners. 

Key Market Highlights: 

  • Market Performance: 
    The S&P 500 and Nasdaq have reversed their April declines and now show year-to-date gains of approximately 3% and 2%, respectively. 
  • Monetary Policy & Valuation: 
    The Fed has held rates steady, reiterating that there’s no rush to resume cuts. The S&P 500’s forward P/E remains elevated at roughly 23×, versus a long-term average of 17×. 
  • Strategy & Positioning: 
    While the corporate backdrop could improve over the coming years, we have adjusted our tactical stance from positive to neutral on Large-Cap equities. 

Upcoming Events to Watch: 

  • Trade and fiscal policies under the new Trump administration 
  • Employment data releases and the potential timing of any rate cuts 
Posted in Uncategorized

Inflation slows down in May – but no clear signals yet 

May Inflation: A Softer Reading 

The latest U.S. inflation report came in better than expected. Consumer prices (CPI) rose just 0.1% in May and 2.4% over the past year, matching forecasts. Core inflation (which excludes food and energy) also increased by only 0.1%, bringing the annual rate down to 2.8% — both lower than anticipated. 

Gasoline, used cars, and clothing saw notable price drops, while services like housing and insurance continued to show moderate increases. Despite this progress, the Fed has yet to signal that a rate cut is coming anytime soon. 

Market Takeaway: 

Investors are still expecting the first rate cut to happen in September, while keeping an eye on the impact of tariffs and signs of a slowing economy. 

Annual inflation dropped from 3.3% in May 2024 to 2.4% in May 2025, showing a clear slowdown in recent months. 

Source: Bureau of Labor Statistics. 

Posted in Weekly Comment

Mixed signals in the global economy: inflation, tariffs, and monetary policies shape the week

Week of June 2–6 

Volatile week for the markets, as tariffs and trade tensions once again captured investors’ attention. 


The economic environment continues to show mixed signals. While some indicators are improving, uncertainty remains around productive activity, inflation, and trade policies. Here are the most relevant data points from the week, by country: 

  • United States: The OECD cut its growth forecast to 1.6% for this year, impacted by tariffs. Job openings rose in April, while the services sector contracted for the first time in 12 months. 
  • Europe: Eurozone inflation dropped to 1.9%, below expectations. The ECB lowered its policy rate to 2%, and the services sector weakened, weighing on business activity. 
  • China: Manufacturing posted its sharpest contraction since 2022, hit by weaker external demand linked to tariffs. 
  • Brazil: The Central Bank reaffirmed its restrictive stance, while signaling flexibility to adjust monetary policy in light of new data. 
  • Mexico: Remittances fell 12.1% year-over-year in April. Still, the OECD raised its growth forecast, citing potential relief in trade tensions. 

“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” — Bernard Baruch 

KEY UPCOMING EVENTS 

  • In China, export and inflation data will be released 06/08–09 
  • In the United States, May inflation data will be published 06/11 

Monitor 

Posted in Weekly Summary

Trade uncertainty: legal rulings and market outlook

Recent court decisions keep tariff policy in the spotlight. 

Tariff update: mixed signals from the courts 

In recent weeks, U.S. trade policy has returned to the spotlight. A ruling by the Court of International Trade suggested potential changes, but a federal appeals court has temporarily blocked that decision. As a result, current tariffs—covering sectors like steel, aluminum, and autos—remain in place. 

This ongoing legal tug-of-war is prolonging uncertainty for businesses and investors. Here’s a quick summary of the potential impacts: 

  • Economic impact: A hypothetical reduction in tariffs could lift GDP by 0.1% for every one percentage point drop in average rates, with a similar effect on inflation. But for now, it’s all still under negotiation. China has pushed back against the latest U.S. accusations. 
  • Market reaction: While the S&P 500 has shown signs of recovery, several headwinds remain—high valuations, 10-year Treasury yields hovering near 4.5%, fiscal uncertainty, and pressure on corporate margins. New tariffs could also emerge in sectors like semiconductors or pharmaceuticals. 

Market implications: 

Tariff policy remains uncertain — and likely to stay in focus. Until there’s more clarity, volatility may continue across markets. 

CEO confidence just saw its sharpest quarterly drop in nearly 50 years, driven in part by trade policy uncertainty. 

Source: Raymond James 

Posted in Weekly Comment

What’s Moving the Markets? Tariffs, Revisions, and Rate Cuts

Week of May 26–30 

It was a short week for the markets, with tariffs remaining the main focus.


Weekly Update: Mixed Signals and Key Decisions on the Radar 
Markets had a short trading week, but important developments still made waves. Here’s a regional breakdown of the most relevant news: 

  • United States: President Trump postponed the 50% tariffs on the European Union until July 9. Consumer confidence rebounded from multi-year lows, and Q1 2025 GDP showed a smaller-than-expected contraction of 0.2%. A trade court blocked global tariffs, but a federal appeals court temporarily reinstated them. 
  • Europe: Germany’s Chamber of Commerce projects a 0.3% economic contraction this year—marking three consecutive years of decline. The ECB is expected to cut rates by 25 bps in its upcoming policy announcement. 
  • China: Industrial profits rose 1.4% year over year in April, accelerating from the previous month. 
  • Brazil: May inflation fell to 5.4%, below market expectations. However, the average cost of domestic debt issuance climbed to 13.05%—the highest in over eight years. 
  • Mexico: The government confirmed that USMCA renegotiations will begin between September and October. The central bank lowered its 2025 growth forecast to 0.1% amid trade policy uncertainty. 

The global landscape remains shaped by a mix of encouraging data and ongoing risks. Attention will now shift to upcoming monetary policy decisions and ongoing trade negotiations.

KEY UPCOMING EVENTS 

  • U.S. ISM Manufacturing – June 1 
  • U.S. Employment Report – June 6 

Monitor 

Posted in Weekly Summary

 Sell in May and go away? 

A look at summer market prospects: Between strong historical trends and new risks on the horizon. 

This old Wall Street saying tends to resurface around Memorial Day, suggesting investors reduce their exposure to stocks during a seasonally weaker period. But history doesn’t fully support that view. Over the past decade, the S&P 500 has averaged a +3.9% gain between Memorial Day (May 26) and Labor Day (September 1), closing higher 80% of the time. 

Still, summer isn’t without risks. Trade tensions, downward revisions to earnings estimates, and a recent rise in interest rates could weigh on investor sentiment. For example: 

  • Tariff effects may catch up: While the economy has shown resilience, growth is expected to slow in the second half of the year as tariffs begin to more noticeably impact consumer spending and business investment. 
  • Corporate earnings outlook: Q1 2025 surprised to the upside. However, many earnings reports still don’t fully reflect the new trade environment. Full-year EPS estimates have started to come down, though they remain relatively optimistic, projecting +10% annual growth. 
  • Rising long-term rates: With the 10-year Treasury yield now above 4.5%, valuation pressures are building – especially in interest-rate-sensitive sectors like real estate. 

Market implications: 

While history suggests summer can be a constructive period for markets, current conditions make it harder to rule out potential volatility. 

On average, the S&P 500 has seen a drawdown of roughly 7% at some point between May and September over the past decade. 

Source: Raymond James

Posted in Weekly Comment
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