ANGLES.

There was yet more tariff whiplash over the weekend as the US and Canada appeared to kiss and make up after the the previous Friday’s trade squabble. Trump then turned his rage on the world’s fourth largest economy, calling Japan “very spoiled” and demanding that it buy more American rice .. or else. The deficit-exploding, multi-trillion dollar tax and spending bill (TSB) inched closer to becoming law on Sunday, although in exactly what form was still unclear.

Monday brought the first half of the year to a close with stocks at record highs, something that was pretty much unimaginable in early April. A holiday-shortened three-and-a-half day trading week kicked off on a positive note with the stock indexes creeping further into record territory.

The second half of 2025 began on Tuesday with yet another Trump tirade against Fed chairman Powell who is apparently a “moron” for resisting the president’s shrieking demands for an immediate cut in the Fed Funds interest rate from 4.33% to 1.33%.

Trump also ripped into his ex-BFF who has variously described the president’s beloved TSB as “insane”, “debt slavery” and “a disgusting abomination”, threatening Musk’s businesses with an ironic DOGE audit and even claimed to be “looking into” the idea of deporting the South African dual citizen. This all sent the price of Tesla stock spiraling lower to below a trillion dollar valuation and close to 40% down from its highs of less than seven months ago. This weighed on the indexes at the opening bell.

The TSB squeaked through the Senate but required Vance’s tie-breaking vote to do so and ping-ponged back to the House for a final sign-off. Stocks experienced a choppy session without much direction with a long weekend on the horizon (albeit with a Jobs Report on Thursday), eventually closing a touch lower.

Rising worries in the ether about a potential adverse market reaction if that Jobs Report the following day were to disappoint kept something of a lid on stock prices on Wednesday morning.

While lawmakers frantically fumbled around with procedural votes on the floor of the House desperately trying (and failing) to pass the TSB that day, the announcement of an apparent US/Vietnam trade deal spiked the prices of a number of retail stocks and flickers of hope about a possible July Fed rate cut helped carry the S&P 500 and the NASDAQ cautiously higher to once again close at, you guessed it, more new all-time highs.

Thursday was a half-day for the stock market before the long weekend, but the latest Jobs Report released before the opening bell certainly had Wall Street’s full attention. It was far stronger than expected with the unemployment rate falling to 4.1% and 147k new jobs created in June. Under the hood, the numbers showed a narrative of lower hiring but still-low firing.

Stock traders breathed a sigh of relief at this indication of a still-strong economy and the prospect of continued solid corporate earnings (Q2 results season begins on July 15th) and kept the indexes nicely in the green through to the early close, extending their record highs.

This was despite a jump in shorter term market interest rates which are the most sensitive to expectations for Fed policy as the solid Jobs Report slammed the door shut on any hopes of a July Fed rate cut and the odds of a cut in September fell sharply in a matter of minutes from 75% to 67%. The most common number of expected 0.25% rate cuts for the rest of the year dropped from three to two (see FEDWATCH INTEREST RATE TOOL below).

The tiresome TSB soap opera in Congress at long last came to its inevitable conclusion on Thursday afternoon. Enough critics of the bill were ultimately strong-armed into submission and it was finally waved through by the House and signed into law by the president.

Here is a good summary of the legislation enacted by the passage of the bill.

You can check here on the impact of the new law on your own individual situation.

The S&P 500 ended the first half of the year last week 5.5% higher than it closed on New Year’s Eve, a remarkably small change given the turbulence and chaos that characterized the whole six-month period (see ARTICLE OF THE WEEK below). This emphasizes the folly of regular investors who respond on a daily or weekly basis to non-stop swings in either direction by making multiple reactive investment decisions.

Always keep the bigger picture in mind and pull your head out of the intra-day weeds and minutiae. Best to leave all that stuff to be pored over by short-term institutional traders and writers of weekly financial market recaps.

Another interesting factoid from the first half of 2025 is that European stocks outperformed their US peers by 16% points (the Stoxx Europe 600 index rose by 21.5% vs 5.5% for the S&P 500), which is the biggest margin ever recorded, finally rewarding patient investors who have stuck with geographic diversification beyond just US markets. Also boosting returns for US-based investors in foreign markets was the 10%+ tumble in the value of the US Dollar over the last six months, its biggest such fall since 1973.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

What Wall Street got wrong in the first half of 2025.

.. AND I QUOTE ..

“I watch financial markets every day because they’re so fascinating, so beautiful, like art. But my personal finances are simple and boring.”

Morgan Housel, author, columnist and partner at Collaborative Fund

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Basic Materials (two biggest holdings: Linde, Sherwin Williams) ⬆︎ 4.1% for the week

Last week’s worst performing US sector: Utilities (two biggest holdings: Next Era Energy, Southern Co.) ⬆︎ 0.8% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 2.2% last week, is up 6.7% so far this year and ended the week at its all-time record closing high.

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 3.6% last week, is up 1.0% so far this year and ended the week 9.8% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.42% (4.39% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.88% (3.73% a week ago)

* 5 YEAR TREASURY ⬆︎ 3.94% (3.83% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.35% (4.29% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.87% (4.85% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.86% (4.85% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.67%

One week ago: 6.77%, one month ago: 6.85%, one year ago: 6.95%

Data courtesy of: Freddie Mac Primary Mortgage Market Survey

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on July 30th?

* Unchanged from now .. ⬆︎ 95% probability (81% a week ago)

* 0.25% lower than now .. ⬇︎ 5% probability (19% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts in 2025?

* ⬇︎2 (down one from a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market close on Friday. Data courtesy of CME FedWatch Tool.

FEAR & GREED INDEX:

“Be fearful wh…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Over the weekend, Trump (despite having campaigned noisily just last year on a platform of US non-intervention in global military entanglements) ordered direct airstrikes on Iran which he claimed had “obliterated” the country’s nuclear capabilities (intelligence reports later cast doubt on this assertion). He also floated the idea of Iranian regime change (“MIGA”? Really?).

Unsurprisingly, oil prices initially roared higher overnight on Monday and Asian and European stocks dipped lower. Frantically trying to game out the next moves on the global chess board and their impact on stock, bond, currency and oil markets, but also very conscious that selling stocks in response to any geopolitical crises has always burned them in the past, Wall Street traders kept the indexes in the green when the New York session began.

The early gains were only briefly interrupted when news broke of the inevitable Iranian response in the form of largely symbolic and ineffective missile launches at US bases in Qatar and Iraq. The sheer impotence of these reprisals was quickly interpreted as a sign of de-escalation and a market positive. The indexes resumed their climb, closing at the highs of the day, oil prices utterly collapsed and interest rates dropped.

Being as markets were essentially right where they were before Israel first launched its attack, you’d have thought that the announcement of the fragile-looking ceasefire that we got on Monday night wouldn’t move the needle much.

But this is a relentless stock market that really, really wants to head north and is looking for any excuse to move back to within striking distance of all-time record highs and that’s exactly what it did on Tuesday morning, spurred on by the continuing oil price wipeout which basically erased all of the big gains generated over the course of the twelve days of conflict.

While Trump acted out like a frustrated schoolteacher trying to deal with two unruly kids in the form of Israel and Iran, the stock market appeared to be moving on from the whole episode and began to re-focus on things like consumer sentiment readings and Fed chairman Powell’s testimony before Congress. The indexes ended the session solidly higher again with the NASDAQ-100 closing at a new all-time record high.

Stocks took a breather on a relatively drama-free Wednesday with Powell continuing to run rings round lawmakers in Congress without breaking a sweat in response to their mostly dopey grandstanding questions. The NASDAQ tiptoed a little deeper into its record high territory but the S&P 500 flatlined for the entire session.

A pre-market economic data dump on Thursday proved mixed with Weekly Jobless Claims lower than expected and Durable Goods sales higher than expected, but the third and final estimate of Q1 Gross Domestic Product (GDP) confirmed a shrinking economy.

The upward march in stock prices resumed. The market-driven probabilities of a Fed rate cut at the next meeting on July 30th moved up slightly from “not a chance in hell” to “very unlikely” and the number of expected further 0.25% cuts in 2025 moved up from two to three (see FEDWATCH INTEREST RATE TOOL below) as market interest rates continued to sink, pushing bond prices higher.

Nvidia reclaimed its position as the world’s most valuable company by market capitalization (it’s worth close to the GDP of Japan) after a 64% rocket ride in the stock price since the April lows and its hefty weighting in the index helped push the S&P 500 to within a hair’s breadth of joining the NASDAQ in closing at a new all-time record high.

The inevitable new closing record in the S&P 500 was finally achieved on Friday following upbeat global trade appraisals from Lutnick and Bessent, although there was a brief wobble in the afternoon when Trump announced that the US/Canada trade talks appeared to have gone off the rails.

In the short term, three key dates are looming upon which markets will be laser-focused ..

* July 4th: the self-imposed deadline for Congress to pass the 940-page tax and spending bill and get it onto Trump’s desk. There’s still a lot of work to do here and the final outcome is unclear.

* July 9th: the expiry of the 90-day pause to the April 2nd “Liberation Day” and other sector-specific tariffs. Are we looking at an extension to the reprieve across the board? Some country and/or sector-specific extensions but impositions elsewhere? Trump turns tariffs on and off like a light switch so here, too, the outcome is highly unpredictable.

* July 15th: Q2 earnings season gets under way in earnest.

But, put bluntly, what these new all-time record highs mean for long term investors is ..

Every single decision you have made in the past to sell (or to hold off/pull back on buying) ETFs or mutual funds representing the S&P 500 and/or the NASDAQ indexes in a direct response to fears about market conditions (aka market timing) was a bad decision.

It’s sooooo important that anyone investing for multi-decade time horizons understands this and acts accordingly by tuning out the market noise and just continually buying broad market diversified funds to the extent that they can.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

“If you sell during a bear market, do you really lose 20%? For many long-term investors, there’s a case to be made that the answer is no.”

Reframing how we think about falling markets.

.. AND I QUOTE ..

“The investor’s chief problem - and even his worst enemy - is likely to be himself.”

Benjamin Graham, “The Intelligent Investor” (1949)

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Communication Services (two biggest holdings: Google, Meta) ⬆︎ 4.7% for the week

Last week’s worst performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) ⬇︎ 4.5% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 3.2% last week, is up 4.2% so far this year and ended the week at its all-time record closing high.

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 2.8% last week, is down 2.6% so far this year and ended the week 11.2% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬌ 4.39% (4.39% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.73% (3.90% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.83% (3.96% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.29% (4.38% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.85% (4.90% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.85% (4.89% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.77%

One week ago: 6.81%, one month ago: 6.88%, one year ago: 6.86%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on July 30th?

* Unchanged from now .. ⬇︎ 81% probability (83% a week ago)

* 0.25% lower than now .. ⬆︎ 19% probability (17% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts in 2025?

* ⬆︎ 3 (one more than a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market close on Friday…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

[Note: this report was put together before Saturday evening’s US airstrikes on Iran]

Financial markets were spoiled for choice about what to focus on at the kick-off of a holiday-shortened week - geopolitics, energy and shipping prices, tariffs and trade, a G-7 meeting in Canada, the tax and spending bill and multiple central bank interest rate-setting meetings around the world including at the Fed along with the publication of its quarterly dot plot.

The previous Friday’s risk-off narrative that had been triggered by Israel’s attack on Iran moderated at the opening bell on Monday as oil prices retreated somewhat from their spike. The Bank of Japan held interest rates steady. Stocks shifted nicely higher and by the closing bell, the S&P 500 had recovered almost all of Friday’s losses.

After the market close, Trump raised the geopolitical temperature by calling for the evacuation of Tehran. He refused to sign on to a statement agreed upon by the rest of the G-7 leaders that did no more than call for a de-escalation of the conflict and then, just as he did in 2018, he promptly walked out of the meeting early and went home. No coherent explanation was given for his premature departure.

A renewed sense of anxiety returned to markets on Tuesday following Trump’s antics and oil prices resumed their march higher. Stocks bumped nervously along just below the unchanged line for a while until Trump started posting again, this time a demand for Iran’s “UNCONDITIONAL SURRENDER!”, raising fears that the US might soon weigh in militarily. Stock indexes took a dive to finish the day quite a bit lower.

Fed Day dawned on Wednesday with zero prospects of an interest rate cut but a lot of attention on the dot plot and on what chairman Powell’s tone was going to be like in the press conference.

Stocks were very perky in advance of the 2pm ET announcement which came in as expected with no rate cut and dot plot forecasts of imminent lower economic growth and higher inflation and unemployment (stagflation, anyone?). The median expected number of further 0.25% cuts in 2025 remained unchanged at two, matching that of futures markets (see FEDWATCH INTEREST RATE TOOL below).

Right after being publicly labelled as “a stupid person” by the president, Powell as usual danced expertly around the landmines that the financial press pack tried to lay for him in the press conference and Wall Street took away very little, other than the sense that this is a central bank that is in absolutely no rush to cut interest rates. But we all knew that anyway. The earlier rally fizzled out and both stocks and bonds finished the day unchanged.

US markets were closed on Thursday. Across the pond, the Bank of England became the third major central bank of the week to leave interest rates unchanged but its Swiss equivalent cut its local rates to zero. The Israel/Iran war rumbled on and death and destruction also continued in Ukraine and Gaza with no resolution in sight. Oil prices kept on climbing, heading for a third straight week of gains.

Wall Street traders returned to their posts for something of a potential dead duck of a session on Friday (although it was a triple witching day), still trying to game out where things were heading in the highly unpredictable arenas of the Middle East, the White House, Congress and the bond market.

The indexes meandered sideways ahead of another potentially impactful weekend of news and the now fully-anticipated spontaneous flare-ups from within the White House, with the S&P 500 ending both the session and the week just fractionally lower, a touch south of the 6000 level.

On its surface, the Israel/Iran clash is potentially extremely negative for markets as it risks plunging the Middle East into a regional war if more countries get involved and raises the risk that Iran attacks US assets in the region.

However, the market reaction has been benign with the S&P 500 only about 1% lower than where it was the day before Israel launched its attack and many are asking, why doesn’t Wall Street care more about this?

I think there are a couple of answers. First, Iran’s military capabilities have apparently been materially degraded by both the attacks and years of sanctions, likely limiting their effectiveness. Second, the barometer of geopolitical risk to markets is the price of oil and Iran is no longer a major global oil player. Given likely OPEC production increases and Saudi Arabia’s dominance, the conflict in its current state is unlikely to keep oil prices elevated for very long.

When added to the other unknowns (tariffs and trade, inflation, interest rates, economic growth etc.), the conflict in its present condition may make stock rallies a bit harder to manufacture in the near term but is likely not, by itself, enough to cause a significant and sustainable correction.

However, if either of those assumptions change and a broader war does break out and/or oil prices sustainably hold at a higher level, then the market will begin to care a lot more about this crisis and it could then start to prove negative for stocks in a more intense and enduring way (see .. AND I QUOTE .. below).

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE(S) OF THE WEEK ..

Copenhagen, Denmark is the best place in the world to live and the best restaurant in the world is in Lima, Peru.

.. AND I QUOTE ..

“Geopolitical risk is not an investable thesis unless you are a very short term trader”

Alicia Levine, Bank of New York Head of Investment Strategy

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) for the second week in a row ⬆︎ 2.9% for the week

Last week’s worst performing US sector: Healthcare (two biggest holdings: Eli Lilly, Johnson and Johnson) ⬇︎ 3.1% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 0.5% last week, is up 1.4% so far this year and ended the week 3.0% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 0.1% last week, is down 5.3% so far this year and ended the week 13.7% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.39% (4.45% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.90% (3.96% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.96% (4.02% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.38% (4.41% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.90% (4.93% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.89% (4.90% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.81%

One week ago: 6.84%, one month ago: 6.84%, one year ago: 6.87%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on July 30th?

* Unchanged from now .. ⬆︎ 83% probability (77% a week ago)

* 0.25% lower than now .. ⬆︎ 17% probability (23% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts in 2025?

* ⬌ 2 (unchanged from a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as …

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

With temperatures rising on the streets of Los Angeles, Wall Street remained cool to start the week with attention focused on the US/China talks in London as well as the prospect of a first peek at inflation data on Wednesday and Thursday that at least partially encompasses the new tariff era.

The path of least resistance for stocks is higher right now and that was the cautious direction of travel taken on Monday in the absence of any meaningful catalysts from London or anywhere else. The indexes closed in the green with the S&P 500 holding above 6000.

Traders were stuck in a rather pedestrian wait-and-see mode on Tuesday morning, watching for any progress reports from the ongoing US/China trade talks and bracing for the first May inflation release the next day. Commerce Secretary Lutnick came out in the afternoon and said that the London talks were “going really, really well”.

Possibly because Lutnick has never exactly been known throughout his career for the rock solid accuracy of what comes out of his mouth, stocks only shifted modestly higher in response but still completed a third straight day of gains.

Markets had a lot more to work with by the opening bell on Wednesday. A federal appeals court kept the Trump tariffs in effect for the time being - but said that it will fast-track its ultimate decision this summer. There was an official announcement (detail-free, of course) that the London talks had indeed resulted in the US and China agreeing some kind of preliminary framework to ease trade tensions which could revive the flow of goods between the world’s two largest economies.

Most impactful, however, was the pre-market release of the latest Consumer Price Index (CPI) measure of retail inflation which was subdued, showing only a small increase in the annualized rate to 2.4%. This was perhaps not too surprising since so many of the tariffs were on hold during the measured period.

Nevertheless, stocks jumped higher out of the gate on the perception of yet another dodged economic data bullet with the S&P 500 creeping to within 1.5% of its all-time record high and interest rates turned sharply lower.

But the indexes reversed their gains late in the session to close lower as Wall Street became somewhat concerned at the lack of any specifics surrounding the China trade deal and the sense that the agreement may not have achieved any more than putting us back to where we were right after the Geneva agreement.

Teeing up another test of the TACO narrative, Trump said after the market close that he would decide on unilateral global tariff rates within two weeks, ahead of the July 9th expiry of the pause. A letter will apparently be sent to countries with a tariff rate written on it and they will be told that they can either take it or leave it.

CPI’s baby brother, the Producer Price Index (PPI) measure of wholesale inflation experienced by manufacturers, came out pre-market on Thursday and confirmed the muted level of price increases, rising at an annualized 2.6%.

Stocks were fractionally higher by the close on low trading volume, ignoring Trump’s ongoing stream of further tariff threats (bumping the automobile levies this time) and more abuse aimed at Fed chairman Powell, who is apparently a "numbskull". Interest rates continued to trundle lower, boosting bond prices.

Overnight Israel launched a deadly attack on Iran. Asian and European markets plunged on the news and oil prices exploded higher by as much as 14%. Trump quickly endorsed Israel’s assault which he described as “excellent” and Iran vowed a “harsh response” to“ an act of war”.

US stocks opened in the red on Friday and stayed there as the air strikes put geopolitical, inflationary and supply chain risks front and center again and triggered a flight to safety. The indexes closed near session lows with the S&P 500 falling back below 6000 as traders chose to take chips off the table going into a potentially very unstable weekend. The day’s declines pushed stocks into negative territory for the week.

There’s no doubt that there’s now something new for markets to digest and it was interesting that the week’s steady decline in interest rates reversed somewhat on Friday on fears surrounding the inflation ramifications of this geopolitical twist.

Legendary investor Paul Tudor Jones went on Bloomberg TV last week and likened the the US national debt to pro wrestling and its concept of “Kayfabe” , the unspoken contract between wrestlers and spectators .. we'll present you something that is very clearly contrived and fake under the false insistence that it's real and in return for blindly accepting this obvious fabrication, you get to experience genuine emotion and gratification. Both sides choose to ignore reality and neither party acknowledges the bargain or else the magic is ruined.

Retail investors, institutional traders, hedge funds, pundits, analysts and politicians all know at their core that the massive US budget deficit is a huge problem and will unquestionably be exacerbated by the current terms of the tax and spending bill, but it suits all parties’ purposes to apply Kayfabe to the issue at this time, it’s just too toxic.

Jones postulated that this premeditated deliberate ignorance will one day become unsustainable, likely prompted by the actions of bond vigilantes, but it’s impossible to know when.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

This time it may actually be different.

.. AND I QUOTE ..

“I used to think that if there was reincarnation, I wanted to come back as the President or as a .400 baseball hitter. But now I think I would want to come back as the bond market. You can intimidate everybody.”

James Carville, political consultant

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) ⬆︎ 5.8% for the week

Last week’s worst performing US sector: Financials (two biggest holdings: Berkshire Hathaway, JP Morgan) ⬇︎ 2.5% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 0.3% last week, is up 1.9% so far this year and ended the week 2.6% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price fell 1.5% last week, is down 5.4% so far this year and ended the week 13.8% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.45% (4.43% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.96% (4.04% a week ago)

* 5 YEAR TREASURY ⬇︎ 4.02% (4.13% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.41% (4.51% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.93% (4.99% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.90% (4.97% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.84%

One week ago: 6.85%, one month ago: 6.78%, one year ago: 6.95%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on June 18th?

* Unchanged from now .. ⬌ 100% probability (100% a week ago)

* 0.25% lower than now .. ⬌ 0% probability (0% a week ago)

What is the most commonly-expected number of remaining…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

US/China trade tensions flared up over the weekend with both sides aggressively accusing the other of violating the Geneva agreement that is currently capping tariffs between the two countries. US manufacturing data pre-market on Monday confirmed the slowdown in the economy with both imports and exports falling sharply. One analyst described the tariff policy as “raising hell” right now among American manufacturers who are increasingly unwilling to take any inventory risk or make hiring decisions due to the colossal uncertainty.

Along with an intensification in both the Russia-Ukraine and Gaza conflicts, this all caused stock prices to stumble to start the second half of 2025 when markets opened. The recent resilience of the indexes shone through again however and the BTFD crowd carried them to Tech/AI-fueled gains by the close. This was the tenth day so far this year that the S&P 500 has been lower intraday by at least 0.85% only to close the session higher.

The stock indexes struggled to find direction on a quiet Tuesday morning before eventually deciding to grind north, closing nicely higher. As everyone knew it would, the Trump/Musk bromance finally crashed and burned as the former head of DOGE described the president's beloved signature tax and spending bill as a "disgusting abomination" and urging Americans to “KILL the BILL”. Interestingly, the tirade came right after the Tesla chief had failed to secure any preservation of the Biden-era electric vehicle tax credits in the legislation.

The non-partisan Congressional Budget Office then released an estimate that, in its current form, the bill will spiral the budget deficit by over $2.4 trillion over the next decade. This revelation is unlikely to help ease its passage through the Senate, despite Trump’s best efforts to strong-arm its many Republican opponents in the chamber.

Trump’s additional steel and aluminum tariffs took effect on Wednesday and were touted by White House Press Secretary Leavitt as an example of the president “walking the walk”, clearly an attempt to push back on the widely-held TACO narrative. Trump also resumed barking at Fed chairman Powell about the lack of Fed Funds interest rate cuts on the part of the central bank.

But the stock indexes barely moved all day, finishing slightly higher as evidently Wall Street is finally learning to no longer fear the president’s attempts at shock-and-awe trade tactics and capitalized social media insults aimed at Powell.

Pre-market on Thursday, the European Central Bank (ECB) made an entirely anticipated 0.25% cut in local interest rates. It was a cautious start to the day for stocks with attention beginning to turn to the following day’s Jobs Report. The news then broke that Trump and Chinese premier Xi Jinping had held what was apparently a positive phone call with the promise of an upcoming in-person meeting and that briefly pulled the indexes from slightly red to slightly green.

The box-office Trump/Musk spat descended into a surreal tweet-storm as Musk chose to highlight the president’s connection to Jeffrey Epstein and call for his impeachment. MAGA-world suddenly started openly questioning the legitimacy of the South African’s US immigration credentials. But Wall Street only began to care when Trump threatened to terminate billions of dollars in federal contracts and tax subsidies for all of Musk’s companies.

Just like its CEO, Tesla’s stock melted down, losing more than $150 billion in value in a matter of minutes to bring its losses from the all-time high of just six months ago to over 35%. Musk’s personal wealth dumped by $34 billion in less than three hours. As one analyst put it; “we are witnessing the rapid dismantling of Musk’s empire in real time”. More importantly, TSLA’s high weighting in the major indexes caused broad markets to spin lower into the close.

The Jobs Report dropped pre-market on Friday and came in slightly better than expected but with small downward revisions to previous data. The unemployment rate held steady at 4.2%. In other words, a complete nothing-burger. Traders breathed a huge sigh of relief at what was perceived to be a dodged bullet and stock indexes skyrocketed. But interest rates also raced higher (see INTEREST RATES below) as the “nothing to see here” numbers give the Fed additional cover to wait even longer before making any cuts.

Adding to the general sense of enthusiasm, imminent US/China trade talks in London were announced and a very solid week (despite the TSLA drag) came to an end with further gains and the S&P 500 returning to an official bull market above 6,000 and the NASDAQ closing in on 20,000.

Markets are very noisy right now. Retail investors are uneasy. What they need to try to do, particularly those with extended time horizons, is tune out the noise, remaining focused on the longer term fundamentals that ultimately drive markets and create wealth and suppressing the emotional anxiety brought about by scary political headlines or fear of shorter term drawdowns.

It’s worth remembering that in the midst of all the tariff chaos and market volatility, global stocks (that’s US plus international equities, as measured by the MSCI All-Country World Index) reached new all-time record highs last week, rewarding investors who have stuck with geographically-diversified portfolios.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

Trump announced new travel bans last week including a country-specific one and a Harvard-specific one. My good friends at D&S Immigration have published a detailed analysis and guide to anyone who may be affected.

.. AND I QUOTE ..

“The whole thing is idiotic. People in these kinds of positions should know better than to act like kids in junior high. What makes this especially hard for Tesla is that you can’t separate the value of the company from Musk .. If there was huge intrinsic value in Tesla, it wouldn’t be plunging the way it is now. It has never traded on fundamentals.”

Wayne Kaufman, chief market analyst, Phoenix Financial Services (06/05/2025)

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Technology (two biggest holdings: Nvidia, Microsoft) ⬆︎ 3.3% for the week

Last week’s worst performing US sector: Consumer Defensive (two biggest holdings: Costco, Walmart) ⬇︎ 1.6% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price rose 1.7% last week, is up 2.2% so far this year and ended the week 2.2% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 3.5% last week, is down 4.1% so far this year and ended the week 12.6% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.43% (4.36% a week ago)

* 2 YEAR TREASURY ⬆︎ 4.04% (3.89% a week ago)

* 5 YEAR TREASURY ⬆︎ 4.13% (3.96% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.51% (4.41% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.99% (4.93% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.97% (4.92% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.85%

One week ago: 6.89%, one month ago: 6.76%, one year ago: 6.99%

Data courtesy of: FRED Econo…

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To the surprise of absolutely no-one on Sunday, Trump backed down on his threat of a massive June 1st blanket 50% tariff on the European Union. The supposed effective date is now July 9th, which is the same day that the current pause on the April 2nd tariffs is set to expire.

The deferral of this particular tariff risk injected some optimism into European markets while the US and the UK both enjoyed a holiday on Monday. A potentially busy shortened trading week on Wall Street began on a very positive note on Tuesday with stocks snapping back hard after a four day slide on hopes that US/EU fast-track trade talks may be on the cards following the tariff deferral.

The stock rally accelerated on the back of the late-morning release of consumer sentiment data showing that a lot of the doom and gloom from last month’s reading had evaporated due to Trump’s subsequent multiple walk-backs since so-called “Liberation Day” and recession fears have subsided. The indexes closed solidly higher. Interest rates moved sharply lower with the 30 year Treasury rate back below 5.0%.

The last major event of Q1 earnings season, Nvidia’s report, was scheduled for Wednesday after the close. Stocks and bonds opened steady but drifted gently lower into the close with traders unwilling to place any big bets ahead of the Nvidia news.

When it came out the news was pretty good. Revenues and earnings were somewhat higher than expected, although significant problems in China were identified. But the biggest story of the evening was still to come.

Hours later, the US Court of International Trade ruled that Trump had overstepped the limits of his presidential powers with his emergency decree and that most of the administration’s global tariffs were illegal (you can read a detailed explanation of the court ruling here). Asian stocks and US stock index futures exploded higher on the dramatic news.

Within minutes, the decision was appealed by the administration and by the time Wall Street opened on Thursday, the euphoria had died down as the realization dawned that the administration probably has other tariff pathways and this development actually has the potential to inject even further uncertainty and turn up the trade noise volume. But any bad news for tariffs is always good news for markets and there was still some green on the screen at the open.

The rally faded though as a hold was put on the ruling by an appeals court and the second estimate of Q1 Gross Domestic Product (GDP) confirmed the findings of first one; that US economic growth has gone negative for the first time since 2022. This indicated that the discernible gap between the still-broadly-positive hard data (official economic numbers) and the dismally despondent soft data (sentiment readings) may be narrowing. The indexes finished the session with only fractional gains.

The final trading day of the month on Friday began with a pre-market release of the key Personal Consumption Expenditures (PCE) annualized inflation reading of 2.1%, right on the cusp of the Fed’s 2% target. But Trump started barking wildly contradictory stuff about China (detail-free as usual) and it was this that led to a slightly weaker session for stocks although it brought to an end what was a positive week and the S&P 500 experienced its strongest May since 1990, rising by more than 6%. The NASDAQ showed a monthly gain of nearly 10%.

It's true that the theatrical, game-show aspects of continual tariff pauses and the (clearly exaggerated) narrative of potentially promising bilateral trade talks all over the place have created a steady drip of good news for financial markets.

Wall Street even has a name for it now, “the TACO trade” .. Trump Always Chickens Out. This is based on the idea that the president makes an outlandish and significant tariff proposal on a major US trading partner (China, the EU, Mexico, Canada etc.) providing shock and awe but then swiftly backtracks and either delays the implementation or exempts enough goods so that the tariff becomes toothless.

We got more of this after the close on Friday when out of nowhere he announced a doubling of steel tariffs at a rally in Pittsburgh attended primarily by .. US steel workers. Who knows if we will ever see that? Wall Street has no idea but is pretty much past worrying about it, given the TACO concept.

This buy-after-every-tariff-announcement trading strategy has worked so well lately that some market professionals even seem to think it means we can largely dismiss tariff threats going forward and that any associated selloff is just an opportunity to BTFD. Trump’s policy aspirations are also getting upended in courtrooms up and down the country.

‌But I don’t think it’s as simple as that and that the TACO trade ignores the fact that the train has probably already left the station in terms of the fundamental changes and shifting alliances that are taking place in global markets as a result of US trade policy and clumsy, belligerent international diplomacy.

Attention New York and Brooklyn readers:

I will be part of an in-person panel speaking in Brooklyn tomorrow (June 2nd) called “Get Your Act Together”, talking about protecting the value of your assets, navigating family dynamics and legacy considerations as you or your parents age.

It’s still not too late to sign up. I’d love to see you there! RSVP at the link above.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

“You can’t invest in what is, because the market trades on what could be. Trust the process, not your gut.”

Callie Cox’s five mind-blowing market facts that will make you a better investor.

.. AND I QUOTE ..

"It's not just about tech any more. That sector led global equities for a decade and a half, and now we're starting to get a wider spread. By diversifying, investors will get a better return."

Peter Oppenheimer, Chief global equity strategist, Goldman Sachs

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Real Estate (two biggest holdings: Prologis, American Tower) ⬆︎ 2.7% for the week

Last week’s worst performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) for the third week in a row ⬇︎ 0.4% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price rose 1.8% last week, is up 0.6% so far this year and ended the week 3.8% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 1.3% last week, is down 7.1% so far this year and ended the week 15.4% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬌ 4.36% (4.36% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.89% (4.00% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.96% (4.08% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.41% (4.51% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.93% (5.03% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.92% (5.04% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve Open Market Committee which meets eight times a year. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.89%

One week ago: 6.86%, one month ago: 6.77%, one year ago: 7.03%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Wher…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

As anticipated, the powerful symbolism of US sovereign debt being stripped of its final AAA credit rating the previous week weighed on stocks and unnerved the bond market on Monday morning.

Trump of course deflected by blaming Biden, but the fact is that a downgrade like this results from the potential fiscal recklessness of this administration and also from foreign investors being driven to look towards their home markets rather than funding US deficits with their money.

The bond vigilantes are definitely beginning to stir. As one analyst put it; “The US government deficit isn’t a problem until the bond market decides it is.”

The day began with a toxic brew of stocks and the US Dollar selling off and interest rates shifting higher thereby pushing bond prices lower (see INTEREST RATES below). But stock indexes staged a comeback, mostly spurred by BTFD activity and inched back into the green by early afternoon and stayed just about positive through the close.

Attention began to switch on Tuesday from the Moody’s downgrade to the painfully slow progress of the massive tax and spending bill lumbering through Congress. Stocks took a big step back from their recent run up, closing lower (dragged down mainly by Tech/AI) and snapping a six-day winning streak for the S&P 500. The Healthcare sector was hurt again by the astounding decision by the newly-conspiracy theory-inspired Federal Drug Administration (FDA) that it was going to restrict Americans’ access to new COVID vaccines.

Interest rates surged higher on Wednesday and into a couple of “semi-danger zones” with the 30 year Treasury rate now above 5.00% and the 10 year (from which mortgage rates pivot) over 4.50%. Target badly missed on earnings, citing shopper pullback and the retailer slashed its forward guidance in the face of tariffs.

Stocks dumped and the US Dollar fell to its lowest level in two years, confirming another dose of the toxic brew. The more the stock and bond markets learn about how this tax and spending bill is shaping up with a lot of new spending in it but only a highly uncertain and ever-declining amount of spending cuts, the more their worries are shifting from it not being passed to the possible consequences of it actually going through.

Accordingly, when the House passed the deficit-expanding bill on Thursday morning and sent it to the Senate for what will likely be a big edit, interest rates jumped again, propelling the 30 year Treasury rate to levels not seen since 2007. While glancing nervously at the bond market, stocks just about managed to remain steady, closing the session unchanged.

Friday marked the half-way point in the tariff pause which is scheduled to end on July 9th. Interest rates pulled back, with the bond market somewhat comforted by the Supreme Court reiterating that the president cannot fire Fed chairman Powell.

But Trump seemed to wake up in a belligerent mood, tossing out a barrage of pre-market social media threats aimed at Apple, Samsung, Harvard and the European Union.

Stocks took an “uh-oh, here we go again” attitude and tumbled at the open. The indexes made a half-hearted attempt at a rally later on but still finished down on the session to end what was a rather miserable week.

It’s important to recognize that financial markets are always forward-looking. As stock prices decline, market professionals look for a “stop-getting-worse” moment to start to accumulate rather than waiting for some kind of actual all-clear, which is when most retail investors start to nibble, by which time it’s too late to catch the wave.

Staying invested, steadily buying low-cost diversified ETFs and not trying to pick spots is the only rational course of action for long term non-professional investors. The timeline varies, but the stock market has never once failed to reward patience and long term consistent buying.

Attention New York and Brooklyn readers:

I will be part of an in-person panel speaking in Brooklyn on the evening of June 2nd called “Get Your Act Together”, talking about protecting the value of your assets, navigating family dynamics and legacy considerations as you or your parents age.

I’d love to see you there! RSVP at the link above.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

Bye-bye to the penny. But will it actually save money?

.. AND I QUOTE ..

“If you imagine yourself more powerful than Mr. Market, take just him on directly and see what happens. Imagine yourself as smarter, more powerful, able to direct events with greater alacrity and influence? ..You’ll quickly learn who is the market’s b***h.”

Barry Ritholtz, author and founder/chief investment officer of Ritholtz Wealth Management

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Consumer Defensive (two biggest holdings: Costco, Walmart) ⬇︎ 0.3% for the week

Last week’s worst performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) for the second week in a row ⬇︎ 4.1% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 2.5% last week, is down 1.2% so far this year and ended the week 5.6% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price fell 3.6% last week, is down 8.4% so far this year and ended the week 16.5% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬇︎ 4.36% (4.37% a week ago)

* 2 YEAR TREASURY ⬆︎ 4.00% (3.98% a week ago)

* 5 YEAR TREASURY ⬆︎ 4.08% (4.06% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.51% (4.43% a week ago)

* 20 YEAR TREASURY ⬆︎ 5.03% (4.92% a week ago)

* 30 YEAR TREASURY ⬆︎ 5.04% (4.89% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.86%

One week ago: 6.81%, one month ago: 6.82%, one year ago: 6.94%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on June 18th?

* Unchanged from now .. ⬆︎ 96% probability (91% a week ago)

* 0.25% lower than now .. ⬇︎ 4% probability (9% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts in 2025?

* ⬌ 2 (unchanged from a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market close on Friday. Data courtesy of CME FedWatch Tool.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffet.

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand.

Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment.

Extreme Greed readings can be associated with possibly too-frothy…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Early on Monday morning, Treasury Secretary Bessent confirmed a 90-day “cooling-off period” between the US and China with both countries slashing their tariffs on each other. The US levy on China was taken down from 170% to 30% and China will now charge 10% on US goods instead of 125%.

Wall Street took a victory lap, taking credit for having taught the administration the harsh lesson that high tariffs just don’t work.“They touched the stove and found out that it really hurts” gloated one analyst.

Stock indexes exploded higher as the worst of the apocalyptic recession scenarios appeared to have been taken off the table and the session ended with spectacular gains on massively-increased trading volume. The technology sector provided the most of the jet fuel and pushed the tech-heavy NASDAQ index back into official bull market territory.

As recession fears fade though, so does the perceived likelihood of imminent rate cuts from the Fed to combat such a downturn. Interest rates moved higher as a result and rate cut bets were pulled back (see INTEREST RATES and FEDWATCH INTEREST RATE TOOL below).

A distortion of upcoming economic data is inevitable with the whiplash tariff narrative making backward-looking data much less meaningful. So there was little of the usual anticipation about the pre-market Consumer Price Index (CPI) measure of retail inflation release on Tuesday morning. It came in a touch softer than expected at a 2.3% annualized rate.

Stocks shrugged and opened unchanged but prices then drifted steadily higher over the course of the session on the continued afterglow from the US/China deal, once again led by a Tech/AI sector boosted by Middle East chip deals, to cement Monday’s tremendous gains.

The S&P 500 moved back into the green for 2025 for the first time since late February on the back of a 19% rocket ride from the lows of April 8th (the day after I published my note “THIS MARKET. YOUR INVESTMENTS. MY BRAIN DUMP”) with the NASDAQ up an astonishing 24% over the same period. It’s the fastest recovery from any year-to-date losses of 10%+ since the 1980s.

The S&P 500 experienced a more muted session on Wednesday, closing a smidge higher although the NASDAQ continued to outperform. The healthcare sector lagged, however, battered from all sides by the potential slashing of prescription drug prices, frightful turmoil at UnitedHealth, the nomination of an unqualified Surgeon-General without a medical license and Health Secretary Kennedy’s continuing promotion of crackpot nonsense over science.

The Thursday pre-market was all about retail. Walmart issued a solid earnings report for Q1 but warned that it will be raising prices this month on American consumers as a result of the tariffs. Retail Sales for April came in a little weaker than expected, but this data obviously was not yet inclusive of any effects of the tariff policy.

Stocks initially moved lower at the opening bell but recovered to finish the day narrowly positive on a degree of revived optimism that maybe the Fed might cut interest rates over the summer after all, with Tech/AI lagging more defensive names a bit this time.

A disastrous day for Coinbase. Just hours after it was admitted into the exclusive S&P 500 index club and the stock price rocketed on day one, it was revealed that hackers had access to very detailed Coinbase client account data for months and made ransomware demands. The company also learned that it was being investigated by the Securities and Exchange Commission (SEC) for misrepresenting its number of users as well as for the marketing of illegal securities. The stock price reversed heavily downwards.

A fifth up-day in a row for stocks looked on the cards on Friday but pre-market data showed consumer sentiment falling to the second lowest level in history and those consumers expect inflation to break 7.0% over the coming year, that’s the highest level of expectation since 1981. The good news though is that there has been very little correlation over the years between how Americans feel about the economy and how they shop.

The stock indexes stumbled out of the gate as a result but made up ground as the day went on and a sensational week came to a close with yet more solid gains.

There was, however, a dampener after the close on Friday when Moody’s joined the other two credit rating agencies by downgrading the United States from its highest credit rating of Aaa to its second-highest Aa1, saying it did not expect the Trump administration’s current policies to improve the country’s fiscal outlook at all. After-market stock prices fell on the news and interest rates shifted higher.

This will certainly be a market concern when traders return to their posts this week.

Attention New York and Brooklyn readers:

I will be part of an in-person panel speaking in Brooklyn on the evening of June 2nd called “Get Your Act Together”, talking about planning ahead with the future in mind when it comes to financial asset protection, family dynamics and legacy considerations. I’d love to see you there!

RSVP at the link above.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

If it hasn’t happened yet, you will likely soon be tempted by the siren song of the possibility of investing in private equity via public markets. But it’s “an uphill—and unnecessary—battle”. Don’t fall for it.

.. AND I QUOTE ..

“J. P. Morgan once had a friend who was so worried about his stock holdings that he could not sleep at night. The friend asked, “What should I do about my stocks?” Morgan replied, “Sell them down to the sleeping point.”

Burton Malkiel, A Random Walk Down Wall Street

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Technology (two biggest holdings: Microsoft, Apple) ⬆︎ 6.4% for the week

Last week’s worst performing US sector: Healthcare (two biggest holdings: Eli Lilly, UnitedHealth Group) for the second week in a row ⬇︎ 0.6% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price rose 4.3% last week, is up 1.4% so far this year and ended the week 4.0% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 3.1% last week, is down 5.0% so far this year and ended the week 13.5% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.37% (4.34% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.98% (3.88% a week ago)

* 5 YEAR TREASURY ⬆︎ 4.06% (4.00% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.43% (4.37% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.92% (4.86% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.89% (4.83% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.81%

One week ago: 6.76%, one month ago: 6.80%, one year ago: 7.02%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on June 18th?

* Unchanged from now .. ⬆︎ 91% probability (83% a week ago)

* 0.25% lower than now .. ⬇︎ 9% probability (17% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts in 2025?

* ⬇︎ 2 (dow…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

Trump couldn’t help himself at the weekend and took another one of his regular juvenile potshots at Fed chairman Powell, this time he’s apparently “a total stiff”. But he graciously conceded that he’s not about to fire him (because by law he can’t). Wall Street just rolled its eyes and got on with the important stuff like focusing on earnings reports, economic data and the Fed meeting/Powell’s press conference on Wednesday.

After nine straight days of gains that had raised stock prices by more than 10% and erased the massive losses caused by the tariff announcements on April 2nd, a wave of profit-taking finally overwhelmed markets at the open on Monday and stocks dropped meaningfully.

This was compounded by Trump’s bizarre movie tariff proposal (apparently inspired by a quick chat with Angelina Jolie’s dad) which impacted stocks like Netflix, Paramount and Disney and confirmation of Warren Buffett’s retirement from Berkshire Hathaway. Dip-buyers emerged in the afternoon, however, and took the indexes off the lows, but fell short of carrying the S&P 500 to a tenth day of green in a row.

Earnings reports from the likes of Ford and Palantir were mostly disappointing, Rite Aid filed for bankruptcy (again!) and the Tesla brand continues to get more and more toxic in Europe as sales there cratered further and this was all reflected in lower stock prices when markets opened on Tuesday and the indexes closed the session lower. After the bell, intriguing reports began to leak of upcoming trade talks in Switzerland between the US and China.

Everyone knew that the Fed wasn’t going to change interest rates the next day, but whether this meeting was going to be positive or negative for stocks was always going to depend on; a) how forcefully, if at all, would the central bank signal a June or July rate cut - the more forceful the better, and b) how would Trump react to no rate cut - the less of a reaction, the better.

The answers began to arrive on Wednesday lunchtime when, as anticipated, the Fed statement confirmed no change in interest rates but unexpectedly attached a warning that the economy faced growing risks of higher unemployment and higher inflation. Powell’s press conference was a masterclass in saying nothing, despite the best efforts of the financial press pack to tease out a soundbite. He used the word "wait" more than twenty times.

Those searching for a firm signal that a June or July interest rate cut will happen were left disappointed but at least Trump did not throw a public tantrum about the Fed’s inaction. Inspired by more solid earnings reports, including from Disney, stocks had moved higher going into the announcement and maintained those gains through the close.

The president’s boast of a US/UK trade deal provided an early assist to stock markets on Thursday morning. However, despite Trump and Starmer’s gaslighting attempts to talk it up as “full and comprehensive”, it soon became clear that it was neither. The deal maintained the baseline 10% tariff on UK goods (despite the fact that the US actually has a trade surplus with the UK) and simply tweaked a few mutual sector and product exemptions here and there, doing nothing to bring any jobs to the US.

All eyes will be on Switzerland over the weekend where the US/China negotiations will be of far more consequence and it was in anticipation of events in Geneva that stocks ended the session higher, not the piddling UK deal.

Friday began with a blizzard of speculation about the outcome of the upcoming weekend’s Swiss talks, with Trump himself floating an endgame of an 80% China tariff (it’s currently 170%). Wall Street, however, is becoming numbed to baseless unreliable blather on these matters from the administration and there was little market reaction. The indexes churned sideways all day on low trading volume to finish the week marginally in the red.

The tariff policy in essence forces all Americans to pay an additional tax on goods in order to maybe, possibly bring some additional manufacturing jobs to certain pockets of the country in certain industries over an uncertain timeframe. This is going to feed inflation for everyone and will be a real headwind for corporate earnings. We just don’t know how much of one yet, but we’ll start getting an idea next earnings season in early July as Q2 will have taken place entirely post-“Liberation Day” and the 90-day pause will be coming to an end.

The recent rally has been a relief and it is true that the actual events and hard data of the past month have turned out not to be as bad as feared during the crashing market of early April, as well as the Q1 earnings season providing a better backdrop than anticipated (78% of S&P 500 companies reported better-than-expected earnings for last quarter).

But “not as bad as feared” doesn’t mean good. Tariff backtracking is now priced in to stock prices. At these levels, the market is now once again susceptible to any disappointing tariff news.

Having said that, on April 3rd, it felt like we are staring down the economic abyss, but the distance between us and the edge may be wider than we first thought. For now, mind the gap. We need to closely watch jobs data and/or consumer spending (see .. AND I QUOTE .. below).

Attention New York and Brooklyn readers:

I will be part of an in-person panel speaking in Brooklyn on the evening of June 2nd called “Get Your Act Together”, talking about planning ahead with the future in mind when it comes to financial asset protection, family dynamics and legacy considerations. I’d love to see you there!

RSVP at the link above.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

More than a third of surveyed Americans view real estate as the best long-term investment, with gold in second place. They are sooooo wrong.

.. AND I QUOTE ..

“There’s a growing belief that the Trump administration will back off its aggressive tariff policy once further weakness begins to show up in jobs growth and consumer spending. But here’s the risk: By the time that happens it may be too little, too late since earnings growth is already slowing, which may trigger more selling if the economic outlook deteriorates further from here.”

Seth Merrill, Chief investment officer, Crewe Advisors

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Industrials (two biggest holdings: GE Aerospace, RTX) for the second week in a row ⬆︎ 1.4% for the week

Last week’s worst performing US sector: Healthcare (two biggest holdings: Eli Lilly, UnitedHealth Group) ⬇︎ 4.1% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price fell 0.4% last week, is down 3.8% so far this year and ended the week 8.0% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 0.2% last week, is down 9.1% so far this year and ended the week 17.2% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.34% (4.33% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.88% (3.83% a week ago)

* 5 YEAR TREASURY ⬆︎ 4.00% (3.92% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.37% (4.33% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.86% (4.81% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.83% (4.79% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home …

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com

After a scorching 7% rally in just four trading days the previous week to almost pre-”Liberation Day” levels, stocks took a breather at the open on Monday as a jam-packed week of earnings reports and economic data got under way.

The indexes spent most of the day heading slowly but steadily lower as institutional traders took some chips off the table, particularly in the tech arena, after the previous week’s run-up in prices and ahead of the imminent earnings reports from four of the Magnificent Seven companies. But a late surge, mostly driven by hopeful retail dip-buying ahead of those earnings reports, pushed the indexes slightly into positive territory by the close.

Mark Carney was narrowly confirmed on Tuesday morning as Prime Minister in the Canadian election, effectively handed victory as a crisis manager by Trump’s threats and 51st state babble. Stocks meandered aimlessly between gains and losses in a narrow range for most of the session before another late rally produced a sixth straight day of gains for the S&P 500, the longest winning streak of the year.

By the time Wall Street opened for business on Wednesday, we had seen the latest Gross Domestic Product (GDP) estimate for Q1, which came in worse than expected with a 0.3% quarter-on-quarter decline, the first time for three years that the US economy has lost forward momentum.

It was also confirmed at the same time that inflation is coming back to life and that does not bode well for Fed interest rate cuts. The Personal Consumption Expenditures (PCE) Price Index measure of inflation (the measure that the Fed really cares about) soared to a 3.6% annual rate in Q1 2025 from 2.4% the previous quarter.

After an initial move sharply lower on the back of this highly stagflationary combo, stocks reversed course as traders re-examined the fine print of the both data sets and found some nuggets of hope in the more sliced-and-diced core numbers, including what may be a temporary massive spike in specific imports. The S&P 500 just about managed to squeak out a seventh consecutive day of gains.

Stock indexes closed out a highly volatile month of April very close to where they had started it, but with a 10% drop in the S&P 500 and retracement in between, the largest such intra-month fall and recovery since 1950.

Microsoft and Meta/Facebook both reported their respective first quarters after the close and Wall Street liked what it saw. Their earnings and revenue topped forecasts and each reported continued high levels of capital spending.

Enthusiasm around the previous evening’s earnings reports from two of the index heavyweights helped push prices higher on Thursday morning and the momentum was maintained through the close (particularly in the tech and tech-adjacent sectors) and day eight of the S&P 500’s winning streak was comfortably in the books.

Two more Magnificent Seven companies reported after the bell but the positive vibes of the previous evening were notably absent. Apple and Amazon each reported results that matched expectations but failed to offer upbeat forecasts in the face of tariffs. Both stocks were punished in after-hours trading.

The big news overnight into Friday was that China is apparently “evaluating the possibility” of trade talks with the US. The highly-anticipated pre-market Jobs Report came out a little better than expected, with unemployment steady at 4.2%. This was viewed as a win by traders, many of whom had feared a possible nasty surprise.

Stocks jumped when the opening bell rang. More positive earnings reports, including from Exxon-Mobil, helped things along and the S&P 500 charged to its ninth consecutive day of gains, its longest winning run in more than twenty years.

Following the election, the stock market quickly laid its bets on tax cut extensions, deregulation and tariffs - but in that order. That’s not what has happened, since Trump can only unilaterally implement one of the three using legally-questionable emergency powers and executive orders and dived right into the tariffs, while the tax cuts and deregulation languish in Congress.

The result was an S&P 500 down 7% over Trump’s first 100 days (here is a cool graphic showing the breakdown of each individual stock over that time), the worst performance since Nixon in 1973, despite the fact that the index even hit an all-time record high on February 19th. Trump’s 100-day approval ratings are also the lowest of any president (including himself in 2017) since records began 80 years ago.

We were promised candy before the broccoli, but it’s being served the other way around and it’s pissing off a lot of people.

If you are not yet a client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

“Think about portfolio changes through the lens of risk and reward - not bullish or bearish .. Risk is in the eye of the time horizon.”

Ben Carlson on the perils of investing emotionally and the “Magic Formula”.

.. AND I QUOTE ..

“The risk is not that the US falls behind overnight. Rather, it is that capital markets gradually begin to price the US like any other market.”

John Zito, Co-president of Apollo Global asset-management.

LAST WEEK BY THE NUMBERS:

Last week’s market color courtesy of finviz.com

Last week’s best performing US sector: Industrials (two biggest holdings: GE Aerospace, RTX) ⬆︎ 4.4% for the week

Last week’s worst performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) ⬇︎ 0.6% for the week

* SPY, the S&P 500 Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest U.S. companies. Its price rose 3.2% last week, is down 3.3% so far this year and ended the week 7.5% below its all-time record closing high (02/19/2025).

* IWM, the Russell 2000 Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest U.S. stocks. Its price rose 2.9% last week, is down 9.3% so far this year and ended the week 17.4% below its all-time record closing high (11/08/2021).

INTEREST RATES:

* FED FUNDS * ⬌ 4.33% (unchanged)

* PRIME RATE ** ⬌ 7.50% (unchanged)

* 3 MONTH TREASURY ⬆︎ 4.33% (4.32% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.83% (3.74% a week ago)

* 5 YEAR TREASURY ⬆︎ 3.92% (3.88% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.33% (4.29% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.81% (4.75% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.79% (4.74% a week ago)

Treasury data courtesy of ustreasuryyieldcurve.com as of the market close on Friday.

* Decided upon by the Federal Reserve. Used as a basis for interbank loans and for determining high yield savings rates.

** Wall Street Journal Prime rate. Used as a basis for determining many consumer loan rates such as credit cards, personal loans, home equity, securities-based lending and auto loans.

*** Used as a basis for determining mortgage rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬇︎ 6.76%

One week ago: 6.81%, one month ago: 6.64%, one year ago: 7.22%

Data courtesy of: FRED Economic Data, St. Louis Fed as of last Thursday.

FEDWATCH INTEREST RATE TOOL:

Where will the Fed Funds interest rate be after the next rate-setting meeting on May 7th?

* Unchanged from now .. ⬆︎ 97% probability (91% a week ago)

* 0.25% lower than now .. ⬇︎ 3% probability (9% a week ago)

What is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts in 2025?

* ⬇︎ 3 (down one from a week ago)

All data based on the Fed Funds interest rate (currently 4.33%). Calculated from Federal Funds futures prices as of the market close on Friday. Data courtesy of CME FedWatch Tool.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffet.

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspect…

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com