A preface to the newsletter:
In this week's newsletter I cover some of the comments from Powell's final speech as Fed Chair reflecting on "nagging inflation" and "resilient consumer spending". I also touch on recent earnings announcements and go into detail about the use of the U.S. Dollar as the Global Reserve Currency (and what could happen if that paradigm were to shift). In this week's Longevity Science Foundation spotlight, I summarize the research of the health benefits of some of my favorite beverages: coffee, tea, and red wine. I must admit that the recent research that has come out has changed my perspective about the health benefits (and risks) of consuming these drinks.
As always, please don't be shy about sharing feedback and please feel free to forward this on to anyone else who might find it interesting.
Have a nice week ahead,
Kevin
Stocks
Stocks had a mixed but ultimately encouraging week. The S&P 500 finished Thursday at a brand-new all-time high, capping what was the best month for stocks since November 2020.
Bonds
Bonds were choppy. When the Fed held rates steady Wednesday, bond yields briefly jumped (which means bond prices dipped). By Thursday though, yields calmed down as economic growth data came in softer than expected, helping bond prices recover a bit. Bonds tend to do well when investors are more concerned about short-term economic stability than long-term inflation risk.
Oil
Oil prices remain elevated above $100 a barrel due to the ongoing U.S.-Iran conflict.
The Fed held interest rates steady for the third meeting in a row
This was Jerome Powell's final meeting as Fed Chair, and the committee voted to hold rates at 3.5%-3.75%. The decision itself was no surprise, but the meeting was unusually dramatic: four of the twelve voting members disagreed on the direction ahead, the most internal dissent since 1992. I'm keeping an eye on this leadership transition at the Fed. Powell, who has led the central bank since 2018, announced this was his final meeting as Chair. His likely successor, Kevin Warsh, is working through Senate confirmation currently and is expected to be appointed by the end of the month. This kind of transition can add short-term uncertainty, especially given how vocal President Trump has been of his desire for lower interest rates, however it's important to remember that Fed policy is determined by committee, not executive fiat.
Earnings season continues with mixed results from Big Tech companies
Four of the largest technology companies - Alphabet (Google), Amazon, Meta (Facebook), and Microsoft - all reported quarterly results this week. Some reported strong results while others missed expectations, causing daily ups and downs in stock prices. These businesses are a major driver of the overall market and cause significant ripple effects, but it's notable that over 80% of S&P 500 companies that have reported so far this quarter have beaten expectations. That's a healthy sign for the broader economy.
One note of caution: Meta announced plans to spend significantly more on AI infrastructure this year, which spooked some investors. I'm monitoring how these massive spending plans affect profits over time; the jury is still out on AI profitability, but for now outlook is still fairly positive.
The U.S.-Iran conflict continues to keep oil prices elevated and inflation concerns persist despite recent improvements
With the U.S. reportedly preparing an extended naval blockade, oil briefly touched $126 a barrel this week before pulling back. While inflation has cooled significantly from its peaks, it's still not quite at the Fed's 2% target and many economists expect that it may reverse course and rise again. Higher gas prices are a real-world cost we all feel. But here's the important context: even with this conflict, the U.S. stock market has pulled back less than 10% from its peak and has now fully recovered to new highs. Markets have shown impressive strength despite the geopolitical and economic uncertainty.
"The US economy has just powered through shock after shock. Consumers are still spending." - Jerome Powell, Fed Chair, admitting inflation remains a nagging problem.
The U.S. economy continued to expand in early 2026, with Q1 GDP growing at an estimated 2% annual rate, driven by stable consumer spending and a boom in AI-related investment. The "nagging" problem however is that inflation has proven persistent, staying above the Fed's 2% target for five consecutive years. The personal consumption price index jumped 0.7% in March, climbing to 3.5% from 2.8%, reflecting the biggest increase since the middle of 2022. Higher gas prices tied to the Iran war were mostly to blame, and the upward pressure on inflation probably isn't over. Oil prices have surged again this week and higher oil prices will lead to higher prices elsewhere in the economy. That also reduces the probability that the Fed will cut interest rates in the near term. Inflation is outpacing the Fed's 2% target, and there's no telling when the war with Iran will end.
The path of inflation has been very uneven since last year, when it briefly moved close to the Fed's 2% target. However a huge increase in tariffs under President Trump nudged inflation higher in 2025 and now the Iran conflict is doing the same. Yet the U.S. economy has continued to expand, propelled in large part by a boom in investment in AI and stable consumer spending.
The U.S. Dollar as the World's Reserve Currency
The U.S. dollar is the world's "go-to" currency. Countries hold it in reserve, global trade is priced in it, and most importantly, oil is bought and sold in dollars worldwide. This last point is crucial; it means every country on earth needs dollars just to keep their economy running, which creates permanent, massive demand for the dollar. That demand lets the U.S. borrow cheaply, run large deficits, and wield enormous financial power globally.
The dollar earned this role after World War II. In 1944, the major Allied nations met at Bretton Woods, New Hampshire, and agreed to peg their currencies to the dollar, which was itself pegged to gold. Even after the U.S. abandoned the gold peg in 1971, the dollar's dominance stuck, backed now by the sheer size and stability of the American economy and financial markets. Today, roughly 58% of global foreign exchange reserves are held in dollars, compared to about 20% for the euro, its nearest competitor.
Why Might the Dollar Be Replaced?
Several pressures are building, though none are acute enough to cause imminent displacement:
Which Currencies Could Replace It?
Nothing is ready. The Chinese yuan is the most talked-about alternative, but China's capital account is not fully open (meaning foreigners cannot freely move money in and out) which is a fundamental requirement for a reserve currency. China also maintains tight political control over its financial system, and international trust in Chinese institutions is limited. The yuan currently makes up only about 2–3% of global reserves.
The euro is the second-largest reserve currency and represents a deep, liquid market. But the eurozone is fragmented between many countries and disparate economies - remember the PIIGS countries of 2010-2014 that relied on Germany for a bailout? Without a unified financial accord across the eurozone, it will be difficult for the euro to be seen as stable currency.
BRICS nations have floated a common currency, but the political and economic coordination required is extraordinary. Similarly, some nations (El Salvador, for instance) have experimented with crypto as legal tender, but the volatility, scalability issues, and regulatory uncertainty make Bitcoin an unlikely global reserve asset in any near-term horizon.
The most probably outcome isn't replacement of the dollar, rather it's a gradual splintering, where the dollar remains on top but other currencies claim larger regional roles.
What Would Replacing the Dollar Mean for the U.S. Economy?
The consequences would be significant and largely painful:
How Likely is this to Happen?
It's unlikely in the near term. The dollar's dominance has already slipped from 72% of global reserves in 2000 to around 58% today, and that slow decline will probably continue. The transition from the British pound to the dollar took roughly 30–40 years and coincided with two World Wars and the near-bankruptcy of Britain. A dollar displacement would almost certainly be a prolonged, disruptive process rather than a sudden event. An outright replacement would take decades and a serious collapse in trust in American institutions - which is possible, but far from inevitable.
A different way to think about agency in long term health & philanthropy
The Benefits of Coffee, Tea, and Red Wine: What the Science Actually Says
Coffee has the strongest case. Drinking 3–4 cups a day is consistently linked to lower risk of death and better heart, liver, and metabolic health. Decaf shows similar benefits, meaning the polyphenols (protective plant compounds), not just the caffeine, deserve much of the credit. Two caveats though: use a paper filter, since unfiltered methods like French press raise LDL ("bad") cholesterol, and stop drinking caffeine at least 8–12 hours before bed, since poor sleep undermines everything else.
Tea has modest benefits. Drinking 1–2 cups a day is linked to slightly lower mortality in large studies, with green tea showing particular promise for cellular health. Beyond that amount, the extra benefit flattens out. Keep it unsweetened and consider adding a squeeze of lemon to boost absorption of its beneficial compounds.
Red wine's purported benefits don't hold up. When studies are done carefully, separating people who never drink from those who quit for health reasons, the apparent longevity advantage of moderate wine drinking largely disappears. Resveratrol, the compound that made red wine famous in longevity circles, exists in quantities far too small in a typical glass to replicate the effects seen in animal studies. Alcohol also raises cancer and injury risk, and the safe thresholds for women are lower than men too.
The bottom line: Coffee and tea offer small but real health benefits with minimal downsides, as long as they don't wreck your sleep or cholesterol. However red wine does not. Enjoy it if you like the taste, but don't pour a glass in the name of your health, the science no longer supports that story.
To learn more, go to: Coffee, Tea, and Red Wine
The market's strength this month - despite a war, high oil prices, and Fed uncertainty - is a reminder that headlines don't always predict what markets will do. Stocks just had their best month in over five years and investors who stayed the course were rewarded. Don't let the noise push you to make changes you'll regret.
The continuing conflict in Iran, the Fed transition, and ongoing earnings reports will likely keep markets jumpy in the short term, but the underlying economy remains resilient. The jobs report comes out next Friday, May 8 and that data will give us a fresher read on the economy - I'll be watching it closely. In the meantime, stick with your plan. Disciplined investors who avoid knee-jerk reactions are the ones who reach their goals.
Have a nice week ahead!
Kevin