Coinbase In, Recession Out

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💰Coinbase In, Recession Out

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Markets surged this week as fresh data showed inflation cooling and recession risks easing, giving investors room to breathe. Coinbase’s inclusion in the S&P 500 marked a major shift in markets, highlighting the growing role of technology in traditional finance. With tariffs easing, the Fed holding steady, and corporate earnings surprises, sentiment is quickly turning more optimistic.

Let’s go.

BIG IDEA 1💡
Trade Progress and Cooling Prices Fuel Market Optimism

Wall Street Rallies on Inflation Relief

• S&P 500 Rises 0.7%: April CPI came in at 2.3% year-over-year, the lowest since early 2021.

• NASDAQ Gains 1.6%: Tech led the charge on hopes that peak inflation is in the rearview mirror.

• Dow Slips 0.6%: Blue chips lagged slightly, weighed down by signs of weakness in healthcare.

Federal Reserve Holds Steady, Eyes June

• Tariffs Rolled Back Sharply: U.S. dropped levies on Chinese goods from 145% to 30%; China cut its retaliatory rate from 125% to 10%.

• 90-Day Suspension: Both sides agreed to pause tariffs temporarily, boosting investor confidence.

• Broader Impact Looms: Barclays and Goldman Sachs both lowered recession odds on the news.

Fed Stays on Hold, Eyes Data

• No Rate Change: Fed funds rate held at 4.25%–4.5%, with Powell adopting a cautious tone.

• Policy Watch: Barclays now forecasts just one cut in December, down from two earlier projections.

• Inflation Expectations Tame: Core PCE projected to hit 3.3% in 2025, easing pressure on the central bank.

BIG IDEA 2💡
Global Shifts, Crypto Volatility, and Pharma in the Crosshairs

Crypto Stays in Focus

• Coinbase Joins the S&P 500: Shares surged nearly 24% as the crypto exchange replaces Discover.

• KindlyMD Rockets 251%: Merged with Bitcoin firm Nakamoto Holdings in a bold treasury strategy.

• Bitcoin Slips to $103K: Profit-taking hit BTC after breaking above $105K last week.

Some investors are looking beyond Bitcoin and exploring alternative digital assets.

Nvidia, Boeing Drive Corporate Headlines

• Nvidia Soars 5.6%: Struck a major deal to sell 18,000 AI chips to Saudi firm Humain for a 500MW data center.

• Boeing Climbs 2.5%: China cleared its airlines to resume deliveries, ending a month-long block.

• UnitedHealth Plunges 17.8%: Medical costs spiked, and CEO Andrew Witty announced his resignation.

Investor Positioning Signals Upside

• Sentiment Still Cautious: Goldman’s U.S. Equity Sentiment Indicator remains at -1.5 standard deviations, suggesting investors are still underexposed to equities.

• Hedge Funds Stay Defensive: Net leverage among hedge funds is well below historical averages, leaving room for upside if sentiment shifts.

• Buying Power Builds: Systematic funds are holding unusually low equity exposure, a setup that has historically preceded short-term market rallies.

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FINANCIAL LITERACY CORNER📚
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HEADLINE ROUNDUP🤠
Our 5 Top Stories

1. Coinbase jumps 24% on S&P 500 inclusion, biggest gain since post-election pop

2. Here’s the inflation breakdown for April 2025 — in one chart

3. Google needs 'big bang breakup' that would value its businesses at $3.7 trillion as AI threatens Search: Analyst

4. Consumer prices rise at slowest annual pace since February 2021

5. UnitedHealth CEO Andrew Witty unexpectedly steps down as insurer suspends financial outlook

INFLATION REPORT💸
Today’s Inflation Rate: 2.35% (still relatively down)