Investors Wait For Favorite Fed Report. Russian Coup/Nukes? (Weekly Cheat Sheet)

The week of June 19 to June 26, 2023, saw the stock market undergo considerable fluctuations. Despite the market being shut on June 19 to celebrate Juneteenth, a federal holiday in the U.S., the week’s trading was marked by notable declines.

Last Week

As the market resumed operations, a wave of stock decreases affected Europe’s primary equity index and various industries. This was primarily due to rising global economic concerns and uncertainties surrounding the direction of interest rates. The S&P 500 index witnessed a continuous drop, opening at 4,388.71 on June 20 and finally closing at 4,360.05 on June 26.

The decline was spearheaded by the Nasdaq Composite on June 23, which plunged by 1% amid worries over global interest rate hikes and their potential repercussions on the world economy. U.S. stocks had their roughest week since March, stirred by fears of central banks resorting to an increase in interest rates to ward off inflation.

Certain businesses like Sartorius AG took a hard hit, with a steep 15% fall following an alarmingly large profit warning. The absence of additional stimulus measures also led to a downturn in Chinese tech companies. Chip manufacturers Marvell Technology and GlobalFoundries, Microsoft, and Nvidia witnessed a slump in their stock prices.

Despite the overarching negative trend, there was some positive news. DD’s Discounts, a subsidiary of Ross Stores, announced the inauguration of a new store in Phoenix on June 24, 2023. Similarly, CarMax stocks appreciated, buoyed by better-than-expected earnings. Moreover, 3M was able to reach a settlement in a series of contamination lawsuits.

Several factors influenced the market’s performance, including concerns over global interest-rate hikes, potential implications for the world economy, and the direction of interest rates. The testimony by Federal Reserve Chair Jerome Powell, indicating future interest rate hikes due to persistently high inflation, further fueled the market’s decline.

While a rough road might lie ahead owing to strict monetary policies and dwindling credit availability, investors are encouraged to view pullbacks as golden opportunities to augment their positions. The economic forecast remains somewhat cloudy, with some economists foreseeing a 2023 recession, which could dampen S&P 500’s earnings growth. Yet, amidst these challenges, the tenacity of the labor market and encouraging corporate bond market performance instill a measure of optimism.

Russian Coup? Tactical Nukes?

The Coup?

The uprising led by Yevgeny Prigozhin, the leader of the paramilitary Wagner Group, reached its termination point just 200km away from Moscow last Saturday. The resolution was mediated by Belarusian President Alexander Lukashenko, facilitating a settlement that permitted the Wagner combatants to retreat to their home bases under a state of amnesty while Prigozhin was exiled to Belarus. Prigozhin’s key demand was the removal of Defense Minister Sergei Shoigu, holding him accountable for perceived mismanagement during the prolonged 16-month war with Ukraine.

Coup Significance: Many Western nations sympathetic to Ukraine had hoped that this internal strife indicated that President Putin’s rule was nearing its end. Despite apparent factions vying for influence within Moscow, there are currently no tangible indications that Putin is losing his grip on the nation. The precise terms of Lukashenko’s deal remain undisclosed. Still, they are speculated to potentially encompass some degree of reformation in the Russian Ministry of Defense and possibly even a shake-up of senior personnel.

Putin’s Advisor Proposes Tactical Nukes

Last week, Sergei Karaganov, an advisor to President Putin and chair of the Council on Foreign and Defense Policy, penned an article urging Russia to deploy tactical nuclear weapons against Western targets in Europe. Karaganov proposed that Russia lower the threshold for nuclear weapons to attack, aiming to divide NATO.

Karaganov argues that Moscow must defeat European NATO forces bent on Russia’s destruction to avert a broader global nuclear conflict.

Significance: Several Putin advisors in Moscow have recommended the use of nuclear weapons in recent weeks. The common denominator among their suggestions is the portrayal of NATO as an existential threat to Russia. Karaganov’s strategy is a grander geopolitical manifestation of an “escalate to de-escalate” scenario. These recent encouragements for nuclear engagement with NATO seem to be more about gauging domestic response rather than mere intimidation or empty threats.

What it Means to Investors

If there was a continuation of a “coup” or the escalation of nukes, we expect equities to drop while oil and gold skyrocket. The situation in Russia is very confusing, and no one knows what is happening. I would caution readers not to buy into any of the “media hype” and see what really settles.


  • Tuesday: Consumer Confidence
  • Friday: PCE (Fed’s Preferred Inflation Marker)
  • Russian Coup Fallout?

Economic Reports

As market watchers anticipate this Friday’s release of May’s data for the personal consumption expenditures (PCE) price index – the Federal Reserve’s key inflation metric – the inflation statistics will be instrumental in molding investor predictions about the central bank’s rate decision in July. Although the Federal Reserve held off on rate increases at the June assembly, it hinted at future hikes. Furthermore, the latest consumer confidence report, which fell to a half-year low in May, will be out on Tuesday. Market analysts are forecasting a slight uptick for June’s index. The national home price index from Case-Shiller will also be published on Tuesday. As these data releases are scrutinized, investors will be assessing trends in interest rates, consumer sentiment, and housing, which all bear weight on the larger economic prognosis.

Euro Inflation

The eurozone is scheduled to disclose initial inflation figures for June on Friday. The overall inflation rate is predicted to decline, while the core inflation is projected to see a minor rise. President Christine Lagarde took markets by surprise after a recent rate increase by the European Central Bank (ECB), advocating for additional interest rate hikes to steer inflation towards the ECB’s 2% target. During a panel at the ECB’s annual forum in Sintra, Portugal, investors will be privy to insights from Lagarde and other global central bank chiefs, including Federal Reserve Chair Jerome Powell.

China Data

China is set to release the June purchasing manager indexes (PMIs) this Friday, which are expected to underscore the narrative that the country’s economic recovery is slowing down. In a bid to stimulate growth, Chinese policymakers recently cut their key lending rates. However, the scale of the easing measures fell short of expectations due to apprehensions about the real estate market. As investors grow increasingly restless for authorities to lend more support to the economy, numerous global investment banks have already downgraded their 2023 GDP growth predictions for China following weaker economic data in May. The upcoming PMI figures will be closely tracked to determine the status of China’s economic rebound and understand the potential implications for future policy actions.


In the bond market last week, there were several notable developments. Treasury yields declined on Friday, ending mixed for the week due to a series of interest rate hikes by global central banks. U.S. investors have been suggested to consider medium-term fixed-income ETFs to provide attractive carry and as a buffer against volatile equity market returns.

Short-term Treasury yields have seen an upward trend as Federal Reserve Chairman Jerome Powell signals more rate hikes. Unless certain conditions are met, the 10-year Treasury yield is not expected to push far above 3.85%. There are concerns that a pause from the Federal Reserve could trigger a “sell-the-news” pullback in the stock market, as it is deemed unsustainable in the near term.

From a more global perspective, European government bond yields also declined due to fears of recession. Central banks in England, Switzerland, and Norway have all raised interest rates to combat inflation.

Concerns about future Federal Reserve rate hikes and weak manufacturing output added to worries of a potential U.S. recession, which also impacted municipal and corporate bonds.

Looking to the future, persistent inflation continues to compel central banks to maintain tight policies. In the week ahead, the focus will be on U.S. consumer spending and inflation data. This could have significant implications for bond yields and the broader market.


Oil & Energy

Market sentiment is currently bearish. Oil prices are teetering near their annual lows, with European Brent and US WTI priced at approximately $72 and $66 per barrel, respectively. Central bankers globally are unified in their stance of reminding markets that the battle against inflation remains ongoing. Their somewhat aggressive rhetoric is negatively impacting the prices of risk-oriented assets, including oil. This has overshadowed the unexpected decrease in US oil reserves, which shrank by 3.8 million barrels this week, in contrast to the anticipated increase of 0.3 million barrels, rendering this development a secondary concern for financial analysts.

Precious Metals & Gold

The price of a metric ton of copper experienced an uptick this week in London due to two primary bullish influences. Firstly, the Chinese government signaled its intention to jumpstart economic activity by reducing two primary interest rates. Secondly, the London Metal Exchange (LME) inventories have been dwindling. Consequently, copper is currently trading at around $8670 per ton. As for gold, the situation is less than ideal. Gold values are down to $1917, continuing to be affected by the strengthening US dollar.


This week, Bitcoin has seen a substantial rise, buoyed by Bitcoin spot ETF deposits from institutional entities such as BlackRock, Wisdom Tree, Bitwise, and Invesco. The leading cryptocurrency has increased by over 14%, valued just over the $30,000 benchmark, and is nearing its highest annual levels. In the meantime, ether is also experiencing a resurgence, albeit to a lesser degree, with a 9% increase since Monday, nearing the $1,900 milestone. The recent institutional interest in bitcoin, led by asset management behemoth BlackRock, could potentially provide additional impetus to the value of cryptocurrencies if ETF applications gain approval from the US regulatory body.

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