Did you know that the Dow Jones Industrial Average, one of the most watched stock market indices in the world, was created in 1896 by Charles Dow and originally consisted of just 12 companies?

Just as the Dow has expanded and adapted, so too do traders and investors adapt their strategies to stay ahead.

In today’s newsletter, we bring you three key articles:

• Israelis Prove Biden He’s Wrong On Rafah: First, we’ll discover how Israel managed to safely evacuate nearly a million civilians from Gaza despite the skepticism from the Biden Administration 🤯

• Is Nvidia Set To Join The Dow After Its Stock Split? Next, we’ll explore Nvidia's impressive earnings and its potential to join the prestigious Dow Jones Industrial Average 💻

• The ECB Will Beat The Fed To Cutting Rates: Finally, we’ll learn about the European Central Bank's anticipated rate cuts 🏛️

Stay informed with our expert analysis and stay ahead in the world of options trading and the global economy. Let’s go!

Israelis Prove Biden He’s Wrong On Rafah 🤯

For months, the Biden Administration bitterly opposed an Israeli invasion of Hamas’s last stronghold in Gaza.

The mantra was that Israel had “no credible plan” to evacuate the city’s 1.3 million civilians.

Yet the Israelis went ahead anyway, and two weeks later they have safely evacuated an estimated 950,000 people.

This was supposed to be impossible ❌

Rafah became a red line for Biden on the logic that there was no way to conduct a major operation with all those civilians present.

That was the justification for the President’s arms embargo.

“We’re walking away from Israel’s ability to wage war in those areas,” he said.

Even as the evacuation got underway, Secretary of State Blinken repeated that Israel had “no credible plan.”

National security adviser Jake Sullivan added, “We still believe it would be a mistake to launch a major military operation into the heart of Rafah.”

When the evacuation began to work, the Biden team moved on to criticizing Israeli readiness for the “day after” the main fighting, as if success in Rafah were a foregone conclusion.

Finally, the Biden Administration claimed credit 🏆

“It’s fair to say that the Israelis have updated their plans. They’ve incorporated many of the concerns that we have expressed,” a senior U.S. official told reporters.

He also said the Rafah operation might create “opportunities for getting the hostage deal back on track.”

The Biden Team cannot lead, it needs to be led 🐑

Is Nvidia Set To Join The Dow After Its Stock Split? 💻

Nvidia’s blowout earnings show that the artificial intelligence revolution isn’t close to peaking anytime soon.

Nvidia is clearly a bellwether for not just the tech sector, but the global economy 📢

Now that Nvidia’s stock is set to do a 10-for-1 split, and its share price will fall from over $1,000 per share to a little over $100 per share, the AI leader could soon become a member of a very exclusive stock market club—the Dow Jones Industrial Average.

The Dow is weighted by price, not market capitalization.

This means that stocks with a very high absolute share price (like Nvidia currently) would skew the daily returns of the Dow 🔃

United Health Care, with a stock price of around $517, is the biggest component of the Dow, with a weighting of about 8.6%.

Nvidia, at current levels, would have more than double that weighting.

But once Nvidia shares fall to the low $100-ish range after the split takes effect June 7, the stock could make sense as a new Dow component.

It would seem to be a fairly easy decision to make.

Nvidia is already a top stock in the S&P 500 and the numerous index mutual funds and ETFs that track it.

However, becoming part of the Dow would solidify the company’s status as one of the most influential companies in America 🥇

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The ECB Will Beat The Fed To Cutting Rates 🏛️

As the Federal Reserve considers when to start lowering interest rates, the European Central Bank has already moved on to thinking about what to do after its first cut.

The central bank, responsible for setting interest rates for the 20 countries using the euro, is widely expected to lower borrowing costs at its next meeting on June 6.

The ECB has historically been slower to pivot than the Fed or even the Bank of England, but not this time 👀

Euro-zone inflation held steady at 2.4% in April, near the 2% target, and ECB President Christine Lagarde has communicated that a cut is likely in June.

Last month, she insisted that the central bank was “data dependent, not Fed dependent” 📊

The market consensus is for the ECB to cut in June, September, and December—leaving a meeting in between each move to exercise caution and ensure inflation remains under control.

But with all the complexities, the path to lower rates is very much subject to change 🤷🏻

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