The relief rally continued this week with the DJIA, S&P 500, and Nasdaq looking to close 3%, 4%, and 6% higher. For clarity, last week was the best week for returns since last November. Additionally, the Nasdaq notched its 12th consecutive positive day (as of yesterday) which is its longest winning streak since 2009. I’d say optimism is high that the negotiations with Iran are going well and the first meeting between Israel and Lebanon in 30 years could set new prospects for peace. If you had asked me at the start of the year if a war with Iran and skyrocketing oil prices would lead to a new all-time high on the S&P 500 and Nasdaq, I might have looked at you funny. But here we are.
Clearly, the news that drove markets this week revolved around reports that negotiations with Iran are progressing well. But there was other news that flew under the radar which also gave hope that the economy continues to chug along with nary a hiccup from the global events. Banks began reporting first quarter earnings and it seems they’re all doing quite well. Goldman Sachs got the ball rolling on Tuesday, announcing its earnings rose 19% y/y. Global Banking & Markets achieved record quarterly revenues of $12.74B while equities trading posted an all-time record revenue of $5.33B. JPMorgan saw earnings grow by 13% with total revenue increasing 10% y/y. The Markets & Securities division saw revenue grow 20% while investment banking fees surged 28%. And not to be outdone, Bank of America’s trading desk did not post a single daily loss during the first quarter. In fact, revenue from equities trading had its best quarter in history, jumping 30% y/y. The takeaway is that the financial sector is not showing any signs of slowing down. This is positive for the economy.
In other news, I hope you had as much fun filing your taxes as I did this year. As of early April, 99.8 million returns had been received by the IRS, a 1.6% decrease from 101.4 million by the same point in 2025. The good news is that the average refund amount is $3,462, an increase of 11.1% or $346 compared to the $3,116 average last year. Approximately 70% of returns processed so far have resulted in a refund. The flip side is that analysts had expected the average refund to be $1,100 more this year causing some taxpayers to wonder where the rest of their refund went. Regardless, tax refunds are providing a significant but temporary boost to consumer spending and the broader economy. Data indicates an increase in discretionary spending on categories including electronics, restaurants, travel, and home improvements.
For the off-the-wall story I came across, we turn to Allbirds which is a footwear brand that is having an identity crisis. The company was founded in 2015 and quickly reached a valuation of $1.4B by 2018. Known as a pioneer in the direct-to-consumer space, Allbirds expanded globally and opened dozens of physical stores. The company went public in 2021 with a valuation of $4 billion but by March of this year was facing financial challenges and declining sales. This is where things get strange. This week the company announced it is ditching its core business of shoes and apparel for the more lucrative business of AI infrastructure provider. Management says it has $50 million to make this pivot, which seems surprisingly small given that another company in this space, CoreWeave, is planning on spending $35 billion this year. Not that long ago it was the internet, then it was cryptocurrency, and now it seems they’re all scrambling to cash in on the AI boom.
In closing, we are going to be hearing a lot about President Trump’s choice to be the next chair of the Federal Reserve. The nomination hearings for Kevin Warsh begin next Tuesday and will reveal that if confirmed, he will be the wealthiest chair ever. His financial disclosures show he is worth between $135 million and $225 million. He said he would divest from assets that may pose a conflict of interest and resign from other positions he holds. What you may not know is he is married to Jane Lauder, heir to the Estee Lauder fortune. Forbes pegs her net worth at $1.9 billion. Now you know.
Bruce J. Mason, MBA
