Momentum in the AI space has returned in force. After announcing plans for a new AI chip for the Chinese market this week, Nvidia’s stock valuation surpassed $4 trillion, the first company to ever do so. On the whole, market indices moved little this week. Investors have largely been shrugging off tariffs, anticipating further deals to be reached after the July 9^th deadline was extended, yet again, to August 1^st. The president contends this is the last extension. The S&P 500 finished the week down -0.3%, while the Nasdaq fell -0.1%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.42%, rising +8 bps from last week.

After extending the reciprocal tariff deadline, the administration sent letters to a number of trading partners with its most recent demands, while signaling that more deal announcements are in the works. Among recent tariffs proposed is a 50% tariff on copper imports and a 50% tariff on Brazil goods. On the domestic front, weekly unemployment claims came in below expectations and we’ve seen some loosening in the housing market, as MBA mortgage purchase applications jumped to a two-year high.

Amazon’s Prime Days this week drew in billions of dollars in sales each day, with other major retailers trying to piggyback on the event. Costco held Member Savings Days, while Walmart also offered dueling discounts. OpenAI said they are close to releasing an AI-powered web browser that could challenge Google’s dominance of search. This has been in the works for months, and has been an overhang for Alphabet’s (aka Google’s) stock this year.

Next week, big banks will kick off the Q2 earnings reporting season on Tuesday, with JPMorgan, Citigroup, and Wells Fargo all slated to report. We believe bank outlooks will be positive as interest rates stabilize, macro-outlooks become less murky, loan growth accelerates, and capital markets remain strong. Key economic data points next week include CPI inflation on Tuesday, PPI on Wednesday, retail sales on Thursday, and then on Friday some housing metrics come and U of Michigan’s Consumer Sentiment. Throw in at least a handful of Federal Reserve members hosting speaking events and it should be a busy week.

We are happy to announce our new hire, Gavyn Jensen-Schneider, has started this week. He takes the spot of Vini d’Avila, who left at the end of April with plans to move to Germany. Gavyn hails from North Branch, MN (along the route from the Twin Cities to Duluth), and is a recent Carleton graduate who majored in Economics. Gavyn is not one to sit still; he not only interned at Franklin Templeton last summer, on their global macro team, but he also spent time his senior year collaborating on a research paper with a history professor, in addition to completing his senior thesis. Additionally, Gavyn studied abroad on the Cambridge economics program, was the lead student-advisor in Carleton’s career center, and played competitive ultimate frisbee. We are very happy to welcome Gavyn and believe he will be a strong addition to the UIA team!

The major indices are back to all-time highs, surpassing their prior mid-February peaks. It was difficult to see such a possibility just a few months ago. The rebound has been swift and vast from the early-April lows, as tariffs have been toned down and as Congress has gained traction on their big fiscal bill. The S&P 500 finished the week +1.7%, the month of June +5.0%, and the second quarter (Q2) +10.6%. The Nasdaq finished the week +1.6%, June +6.6%, and Q2 +17.7%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.34%, up +3 bps from last week, but down -20 bps from the start of the year.

The government’s large reconciliation bill passed the Senate on Tuesday and looks poised to pass the House later today. The bill is packed with changes to both tax revenues (partly via extension of 2017 TCJA cuts) and government spending. Net-net, it keeps fiscal deficits in place as well as adding to the national debt. The impact on GDP growth and inflation will continue to be debated amongst investors.

On the trade front, progress was made towards deals with a number of countries, including Canada, the EU region, Vietnam, and China. Next week the pause on many reciprocal tariffs is set to expire on July 9^th, but the administration has suggested there may be a willingness to extend with those countries in which deal progress is being made. On the economic front, most manufacturing readings this week were in-line to a touch below expectations. May job openings (JOLTS) were a little better, rising to 7.77 million. Then on Thursday the June employment report was more robust than forecast. The economy added 147,000 jobs, particularly within education and health services as well as in state and local government.

Markets, and our offices, will be closed this afternoon and tomorrow in observance of the Independence Day holiday. Next week should be rather quiet. The NFIB Small Business Index will be released Tuesday and Delta Airlines will report their Q2 results on Thursday. Earnings season won’t ramp up materially, though, until the big banks start reporting the following week.

We wish you a safe & enjoyable July 4^th weekend!