Markets ended an extraordinary week with the S&P 500 at a new record high as investors digested geopolitical events, new Presidential pronouncements, and a busy economic calendar.
The week began with news the US military and law enforcement officials had apprehended Venezuelan President Nicolas Maduro on drug trafficking charges. Following Maduro’s arrest, President Trump stated the US will “run” Venezuela, including its oil industry, for the time being. On Friday, Trump said he expects US oil companies to spend at least $100B to rebuild Venezuela’s energy infrastructure. Venezuela has one of the world’s largest oil reserves estimated at ~300 billion barrels, or 17% of global supply, however, due to mismanagement and aging equipment, only produces about 1% of global supply. Oil prices ended the week up 2.5%. Longer-term, increased Venezuelan supply could put downward pressure on prices, potentially benefitting consumer, but could also lead to lower profits for US oil producers which could respond by reducing production.
Over the course of the week, President Trump made several economic and business-related pronouncements. On Wednesday, Trump said he wants to ban institutional investors from purchasing single-family homes to improve housing affordability. On Thursday, Trump ordered defense companies to stop stock buybacks, stop paying dividends, and curtail “exorbitant” pay packages, or risk losing government contracts. Also on Thursday, Trump said he was “instructing my representatives” to buy $200B in mortgage bonds in an effort to lower mortgage rates. Federal Housing Finance Agency Director Bill Pulte said Fannie Mae and Freddie Mac would execute the purchases. The news helped push the 30-year mortgage rate lower, ending the week at ~6.0%, its lowest level since February 2023.
