Greetings,

Companies and markets this week are digesting the big threats to financial stability outlined in the Federal Reserve's latest Financial Stability Report. More on that below.

Also in this edition:

• SEC suggests phasing out PCAOB's independence rules
• S&P 500 earnings surge 27% in Q1
• CFO compensation outpaces CEOs, but tenure declines
• Banks regain market share from private credit

Geopolitical tensions and the oil shock tied to the Iran war emerged as the top financial stability risks in the Federal Reserve's latest Financial Stability Report. Respondents warned that sustained energy price pressures could fuel inflation, strain markets and potentially force tighter monetary policy. The Fed also flagged artificial intelligence and private credit as emerging risks, while saying private credit vulnerabilities remain manageable for now.

Ken Hullings, EVP Client Success - Institution Channel at LPL Financial, discusses the state of the financial advisory industry and outlines key findings from LPL's third annual Institution Benchmark Report. This year's findings reveal a critical vulnerability: despite strong year-over-year growth; just 20% is organic, leaving most institutions exposed to market shifts and advisor turnover that they cannot control. Hullings details four key trends firms should embrace to prepare for the future and also shares his bold predictions about how the advisory industry will evolve in the next year.

The Securities and Exchange Commission is considering revising auditor independence rules, starting with informal guidance and potentially updating rules to address complex issues such as artificial intelligence. Chief Accountant Kurt Hohl has suggested that the Public Company Accounting Oversight Board rescind its independence rules and rely on those of the SEC.

US stocks have reached record highs as S&P 500 companies reported first-quarter earnings that surpassed expectations by the widest margin since 2013. Profits surged 27%, driven mostly by technology giants benefiting from artificial intelligence. The Magnificent Seven is expected to post a 57% increase in profits for the quarter, and the remaining S&P 500 companies are projected to see profits rise 17%.

Anthropic CFO Krishna Rao is managing rapid growth as the company prepares for a potential IPO and secures computing capacity amid surging demand. Rao, who joined Anthropic in 2024, has been praised for his balanced approach and ability to handle high-pressure situations, drawing on experience at Airbnb and Blackstone.

The Senate Banking Committee is set to vote Thursday on stablecoin legislation as lawmakers continue discussions around provisions related to yield and rewards. The bill is part of a broader push to establish a regulatory framework for digital assets in the U.S. The House passed its version of the Clarity Act in July 2025, but the Senate must approve legislation by the end of 2026 for it to reach President Donald Trump’s desk.

Banks increased lending to companies in the first quarter while private credit firms saw lending volumes decline, suggesting some borrowers are shifting back toward traditional bank financing. Market participants say the change could lower funding costs for companies, as some private credit funds face reduced lending capacity following more than $15 billion in investor redemptions during the quarter.

President Donald Trump plans to temporarily reduce tariffs on beef imports to address record-high beef prices, suspending the annual tariff-rate quota for all beef-exporting nations. The administration also will support US ranchers by increasing Small Business Administration loans, reducing regulations and decreasing protections for wolves under the Endangered Species Act.

Productivity is a main driver for artificial intelligence adoption, with 34% of CFOs citing it as the primary reason, according to a PYMNTS Intelligence report. The report also notes that while 60% of CFOs feel somewhat prepared for AI-driven workforce changes, only 12% feel very prepared.

CFOs at major US public companies saw median compensation rise 62% to $3.86 million in 2024, surpassing COOs, according to a Datarails report. The report also found that CFO turnover increased 17%, with average tenure dropping to 2.12 years. "The role has fundamentally changed over the last few years, as finance heads have become strategic architects translating financial intelligence into competitive advantage," Datarails CEO Didi Gurfinkel says.