Navigating the Current Challenges
The Saga continues!
Coming into 2025, many agreed the economy was on stable footing, employment strong, inflation moderating, business profits forecast to rise. Certainly, ok!!
Also agreed, we have a debt and spending challenge. Who would disagree 30 trillion dollars in the hole, is not responsible. Equally concerning, we continue to borrow from taxpayers, increasingly each year just to meet current annual government expenses and debt payments.
Is there a solution to our debt and spending challenges? I believe we can find the right path. Administrations prior, have not recognized the need to do so and I do not believe the current administration is on the correct path for fiscal soundness.
I personally and professionally do not agree with the aggressive pressure the Trump administration is employing; however, we are where we are. At this point, I hope trade negotiations move quickly and end with fair trade policies that are truly beneficial.
Markets Volatility
Last week stocks and bonds were whipsawed. When the dust cleared, stocks rose for the week and US government bond yields increased.
According to the Wall Street Journal the S&P 500 rose 4.86%, however it remains down, just under 10% for 2025. The Dow rose 5.18%, the Nasdaq 7.13% and the Russell 2000 Small cap index .38%.
Foreign stocks rose 4.27% lifting the MSCI EAFE international index up 3.45%, for 2025. Emerging market stocks rose 2.09% for the week.
Bond yields finished higher for the week, ending last Friday with a yield of 4.497%. Yields remain range bound, however there were concerns early in the week as yields spiked higher. After a weak demand for our 3-year Treasury auction raised additional concerns, the US auctioned off blocks of 10-year and then 30-year US Treasuries. According to the LPL research, both auctions were met with strong demand, pausing concerns. Let’s hope this continues as an orderly US Treasury market is critically important to all market participants. Let’s also hope yields remain range bound.
Corporate Profits & Guidance
Last week kicked off $1^{\text{st}}$ Quarter reporting season with JP Morgan, Wells Fargo and Morgan Stanley topping estimates however far too early to draw any conclusions.
Investors want to hear how much profit guidance will be shaved for 2025. Currently it’s challenging to estimate the value of stocks and the stock market. Until companies truly know their cost structure and rules to the game, planning and forecasting the future is a moving target.
This week we will hear from Bank of America, Johnson and Johnson, Abbot Labs, ASML, Walmart, Amazon, Costco, Taiwan Semiconductor, United Health, AMEX, Netflix and more. A good cross section of industries.
Guidance should be telling!!
April 15th: Tax Day
As tax season concludes for most taxpayers, just a reminder for clients to forward their 2024 tax returns to our office. Projecting 2026 in advance can sometimes point out opportunities to reduce your income tax burden.
