“Fair Value” for Stocks?
The US stock market has clawed back most losses since the initial tariff announcement. The S&P 500 remains down (3.86%) for 2025, and off (8%) from its all-time high, 6147.43 on February 19, 2025, according to the Wall Street Journal.
The lingering debate, are stocks over-valued, under-valued or at fair-value? The current set of data suggests the answer is currently illusive.
The Federal Reserve does not know whether to increase rates because of possible inflation or lower rates due to a slowing economy? Last week the Fed decided to keep rates steady hoping for more clarifying data.
Corporate CEOs are grappling with several moving parts, enough to have them keep their wallets tight for the time being. A positive corporate profit reporting season is winding down however guidance about the near-term future is absent.
Many companies and consumers have made additional purchases anticipating higher costs around the corner.
Are stocks at fair value? In my opinion, it’s not possible to have a firm opinion.
Trade Deal Impact
As of this writing on Monday @ 4:30am, we have 2 possible trade deals. The deal with the UK appears to be moving forward and late last evening, it was announced we have progressed forward with China. We apparently have paused the large tariffs for 90 days, to continue negotiations. It does appear the base 10% tariff will stay in place, at least for the time being.
Will we make sufficient progress prior to the soft economic data impacting the hard data, such as employment, manufacturing, consumer spending and inflation? That answer may determine the short-term direction of the US stock market. The market needs additional trade deals finalized prior to the hard data softening. There is much work still to be done.
This Week!
The week’s economic reports feature inflation reports including the Consumer Price Index (CPI) and the Producer Price Index (PPI). Retail sales, Small Business Optimism, Consumer Confidence and Housing reports may also gather attention.
We may hear additional information on the pending tax bill. Over the last couple days, it’s been floated, the Childcare Tax Credit may be expanded in addition to the standard deduction. There will be plenty of debate, as the rumor has it, as a sizable percentage of House Republicans are concerned about the deficit while others are focused on providing juice to the economy.
Let us hope Congress can pass a responsible budget to create one element of certainty.
Portfolio Positioning
Each week I read journalist opinions of how YOU should position your investments. These journalists are unaware of the particulars of your needs and your situation.
A well-diversified* and allocated portfolio continues to make sense. If you are retired or planning to soon, knowing how and where you’ll be receiving your needed income is prudent.
Please feel free to share our weekly retirement blog with friends, family and colleagues.
*There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
