🚀 Fed to hold rates steady

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Market Overview
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Year To Date Performances:

1. Federal Reserve Chair Jerome Powell, affirmed that the central bank will maintain current interest rates between 3.5% and 3.75%, opting to look past the "short-term gyrations" of a war-driven oil shock. Despite Brent crude surpassing $112 per barrel, Powell emphasized that inflation expectations remain well-anchored and cautioned that hiking rates now would only burden the economy long after the supply shock has dissipated. This steady-hand approach has significantly recalibrated market expectations, with the probability of a 2026 rate hike plunging from over 50% to just 2.2% following his remarks. As Powell prepares to conclude his term in May, he also addressed volatility in the $3 trillion private credit market, characterizing recent defaults as a localized correction rather than a systemic threat to the broader banking system. His successor’s transition remains clouded, however, as the nomination of Kevin Warsh faces Senate delays amid an ongoing investigation into Federal Reserve headquarters renovations.

2. Billionaire investor Bill Ackman has issued a defiant call to "ignore the bears," characterizing the current market volatility as one of the most attractive entry points for high-quality companies in years. Despite his own Pershing Square Holdings being down 19% year-to-date, Ackman argues that macro fears regarding the Iran war and energy prices have created "asymmetric" opportunities, specifically singling out U.S. mortgage giants Fannie Mae and Freddie Mac as being deeply undervalued. His bullish outlook hinges on the potential for a "large peace dividend" as President Donald Trump signals a possible conclusion to Middle East hostilities, even as the administration threatens strikes on Iranian energy infrastructure if the Strait of Hormuz remains blocked. As Ackman prepares to list Pershing Square on the New York Stock Exchange under the ticker "PS," he is increasingly positioning his firm as a permanent capital vehicle modeled after Berkshire Hathaway, betting that the current dislocation will reward concentrated, long-term bets on large-cap leaders.

3. The global aluminum market is reeling as prices surged to a four-year high of $3,492 per tonne following Iranian drone and missile strikes on major smelting facilities in Bahrain and the United Arab Emirates. With the Strait of Hormuz effectively closed, the attacks on Emirates Global Aluminium’s Al Taweelah plant and Aluminium Bahrain have paralyzed a region responsible for 9% of the world's supply, threatening a full-year global deficit. While some analysts suggest China could mitigate the crisis by restarting idle smelters, others warn that production caps and environmental regulations limit Beijing's ability to offset a prolonged disruption. As aluminum is a critical component for the automotive, electronics, and renewable energy sectors, the "shockwaves" from these strikes are forcing firms to brace for a period of structurally higher costs and tighter availability.

   Headlines

   1. Trump is threatening to seize the export hub of Kharg Island to “take” Iran’s oil.

   2. The US has allowed a Russian shipment of crude oil to Cuba in an apparent reversal of the strict blockade policy.