After nine weeks of gains, investors chose this week to end the streak. This has been the longest period of consecutive weekly gains since 2023 and has resulted in daily headlines proclaiming new highs, if only by very small increments. Interestingly, there seems to be an acceleration of money coming out of semiconductors, and technology more broadly, and going into financials and health care which are the two weakest sectors year-to-date. It’s hard to say whether the momentum that has driven the technology sector to stratospheric levels is slowing but nothing goes straight up forever. The rotation we’re seeing may be a new phase, or it may just be a pause. It is always important to stay diversified.
Let’s talk about the good news. The May Nonfarm Payrolls report came out today and it hit the proverbial ball out of the park. The data shows that 172K jobs were created in May, more than doubling Wall Street’s consensus estimate of 85K. This represents a significant increase and suggests that the labor market is gaining meaningful traction after stumbling last year. Additionally, there were upward revisions of 29K in March and 64K in April. While the low-hire, low-fire environment can be frustrating for those currently looking for work, the data shows that it’s not nearly as dire as the headlines may have you believe. For those wondering, the jobs are primarily being created in leisure and hospitality, local government, and health care.
As for something we haven’t talked much about in some time, President Trump invoked Section 301 of the Trade Act of 1974 to announce sweeping new tariffs targeting 99% of all U.S. imports. The policy targets 59 countries and the European Union for allegedly failing to crack down on forced labor. This is in reaction to the Supreme Court ruling that President Trump exceeded his constitutional authority when he imposed sweeping global tariffs. There is a public hearing on July 7, 2026, with the expectation that new tariffs ranging from 10% to 12.5% will be levied shortly thereafter. There will be exemptions on essential commodities such as beef, tomatoes, coffee, energy, rare earth minerals, and aircraft parts.
In other news, you may have noticed your home insurance renewals have gone up a bit (or a lot in some cases) over the last few years. What you may be unaware of is that claims are being denied at an alarming rate. The Wall Street Journal recently reported that “many Americans face a near flip-of-the-coin chance” that their insurance carrier will approve a claim when weather damages their house. The five largest home insurance carriers – Allstate, Farmers Insurance, Liberty Mutual, State Farm, and USAA – didn’t pay out on more than 44% of claims last year. That’s up from 36% in 2015. It turns out you are to blame according to the insurance industry. Apparently, we aren’t very good at filing the claims which are increasingly done on the company’s mobile app. The more realistic and perhaps honest answer is that the insurers are using new risk-assessment methods which is code for new predictive models instead of using historical data. There are plenty of plausible reasons, but the increase in premiums and denials of claims seems like something we should get used to.
As for the story of the week, I turn to whey powder which many use as a protein supplement. It turns out that there is a shortage which is causing prices to skyrocket. As more products, i.e. Doritos and Starbucks, look to include protein, suppliers are struggling to keep up. A whey powder tub that used to cost $40 on Amazon now costs $54 just 6 months later. Some suppliers are stating their costs have increased 300% since 2023. The good news is that this may be a temporary blip as the North American dairy industry is undergoing a $12 billion expansion. Get ready for the next round of “Milk: It Does a Body Good.” Now you know.
Bruce J. Mason, MBA
