CIO Monthly Observations - May 2023

Chris Zaccarelli |

Markets in Review

Markets were volatile in April, rising for most of the month, then dropping negative in 2 of the last 4 trading days before month-end; then reversed course again and finished up for the month. The S&P 500 gained 1.5% in April, improving its year-to-date performance to 8.6%. The MSCI All Country World index also rose, gaining 1.3% during the month and extending its year-to-date return to 8.2%. The Bloomberg BarCap U.S. Aggregate Bond index improved 0.6% during April and its year-to-date return is now 3.6%.

The topsy-turvy month was included a surprise oil production cut, a takeover of the second largest bank in Switzerland and antitrust actions out of the UK, which blocked Microsoft from acquiring Activision, as they were deemed to have too much market power.

Monthly Highlights

Credit Suisse, the second largest bank in Switzerland, was taken over by UBS Microsoft’s bid to buy Activision was blocked by UK regulators

OPEC+ surprised the market by cutting oil production by over 1 mm barrels per day

News in Review

Below are some stories that caught our eye this past month. To learn more, follow the links to the full article.

Swiss Weighed Credit Suisse Bankruptcy Before Choosing UBS

Switzerland’s second biggest bank was in danger of going bankrupt, but regulators decided to allow UBS to take them over in order to prevent contagion risk. Similar to the problems at US banks in the previous month, Credit Suisse faced a severe bank run and a takeover was determined to be the best option, because it would deliver “considerable confidence” to investors.

Microsoft's $69 Billion Deal is Blocked by the UK

Microsoft was attempting to buy Activision, a maker of video games, for $69 billion dollars, but regulators in the United Kingdom vetoed the bill on antitrust grounds. Microsoft said it would appeal the decision, but pressure had been mounting on them as US and European regulators have been skeptical of the tie-up. Had it gone through it would have been one of the top 30 largest acquisitions ever. According to one expert, “Microsoft already enjoys a powerful position in cloud gaming, and this would [enable them] to undermine new and innovative competitors.”

OPEC+ Announces Surprise Oil Output Cuts

Saudi Arabia and the other countries in the OPEC+ oil cartel announced that they were cutting oil production by

1.16 million barrels per day. The decision was a surprise and represents 3.7% of global demand, which had some people fearing this would make the existing inflation problem worse. However, if we have a recession then it is possible that oil prices will go lower anyway, which would alleviate some of the pricing pressures.

The Guy Who Ate a $120,000 Banana in an Art Museum Says He Was Just Hungry

An Italian artist had created a piece called the “Comedian,” which is a duct-taped banana on a wall. One day a South Korean graduate student saw it and ate it because he said he was hungry. Initially employees were very upset, but because they replace the banana every few days in order to keep it looking fresh, they decided not to press charges against the student.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance, a registered investment advisor. Independent Advisor Alliance and Blackbridge Financial are separate entities from LPL Financial. The opinions expressed in this material do not necessarily reflect the views of LPL Financial.
This newsletter was written and produced by the Independent Advisor Alliance, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
S&P 500 INDEX: The Standard & Poor's 500 Index is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
NASDAQ 100 INDEX: The Nasdaq 100 Index is an unmanaged, capitalization-weighted index of the largest 100 non- financial stocks traded on the Nasdaq market. Unlike the S&P 500 it does not represent all major industries and may be more volatile than more broadly constructed indices.
MSCI ACWI INDEX: The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 24 emerging markets (EM) countries. With 2,495 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index: The Bloomberg U.S. Aggregate Bond Index is a broad-based index of the U.S. investment-grade, fixed-rate bond market, including both government-related and corporate securities and mortgage- backed and asset-backed securities.
Please note this newsletter contains hyperlinks to additional content. The information being provided is strictly as a courtesy. We make no representation as to the completeness or accuracy of information provided by these websites..