First Half Results - Handicapping Rest of Year

 

General Stock Market Commentary, 2^nd Quarter and Year-to-Date, 6/30/25

Stock prices generally fell during the 1^st quarter; between 4% for the S&P 500 and down 10% for the Nasdaq stocks. The Dow Jones lost 1%. Then the
landscape changed.

If you were out-of-touch or asleep for all of April, you would not have noticed the tumultuous month starting the 2^nd quarter as President Trump announced his initial trade tariffs on April 2^nd. The quick 12% sell-off in stock prices lasted just 5 trading days! The monster stock rally of +10% on April 9^th should show you that timing the market accurately is very difficult.

April ended about break-even for stocks (S&P 500 down 1%). The paper losses have now been erased, and stock prices had a superb May and June. With those ups and downs, stocks are ahead +6% this year through June 30^th.

Bonds likewise had a wild ride post tariff maneuvering but are essentially unchanged since year-end as of June 30^th. The 10-year Treasury yield only declined 1/3rd of 1% this year to 4.22%. The Federal Reserve is not compelled to lower interest rates, while inflation and employment numbers continue to improve. The results of the tariffs have not translated to higher inflation in the US Economy - yet. The last Fed interest rate cut was last November, and the stock market has advanced about 5% since then. I would keep cash not invested in shorter term (3-6 month) U.S. Treasury bills or money market accounts; those pay 4% to 4.3% annually, and have been steady income for all of 2025. Warren Buffet’s Bershire Hathaway company owns $328 Billion of US Treasury debt in their last reporting. Let’s follow Warren!

In the commodity area, Gold continues to add to its gains from last year. It was up $500 an ounce in the 1^st quarter, and then added $180 more in the April - June stretch. That’s $680 by my calculation, or +27% so far this year, greatly helping your portfolios. No major stock category (sector) beat Gold this year; the closest challengers were Industrial’s, +11%, Telecom, +10%, Utilities, +9%, and Financials (banks), +9%. I’ve harped on this for 10+ years now, and continue to believe a weighting in Gold, or the precious metal investments that own physical Gold, can offset risks in the stock and bond markets. Three years ago; Gold was $2,000 or so; 5-years ago, near $1,700. Gold prices ended June at $3,303 per ounce. As I pen this on 7/21; Gold's within a dollar or two from $3,400!

What’s in store here as we enter the third quarter? Earnings are in focus now. Can they deliver as expected, or beat the estimates? First quarter numbers were fabulous. Management’s commentary on the second quarter results, and for the rest of the year will no doubt impact share prices up or down.

Then there’s the Federal Reserve’s decision – on if and when to lower interest rates. Inflation has been declining steadily for 3+ years (see chart for year-over-year inflation), signaling broad labor market stability.

 

Will the recently passed "Big Beautiful Bill" and its tax policy ignite our economy and raise the tax revenue, or will the tariffs offset or mitigate those benefits? 

As I say, there’s always something to worry about with the stock market, bond market, and other investments.

Controlling my anxiety and handicapping this all are my goals; in effect, I am a financial odds-maker, to benefit my family and my clients. 

Contact me if you have questions or comments.

~Barry
(954) 560-3622.

 

 

Markets Update; Challenges for 2025; Bright Spots

A lot has occurred since my last post in mid-March. If you were asleep for all of April, you would not have noticed the tumultuous month starting the 2^nd quarter as President Trump announced the initial tariffs on April 2^nd. The quick 15% sell-off in stock prices has now been erased and stock prices have stabilized and show a small loss of 1-2% year-to-date on the S&P 500 and Dow. Stock sectors that  have bested the general market (S&P 500) this year include Utilities, Financials, Staples and Telecom. Under-performers include HealthCare, Energy, Technology and Consumer Discretionary stocks.

Bond prices likewise had a wild ride post tariff maneuvering but are essentially unchanged since year-end. Shorter maturity U.S. Government debt (Treasury Bills) pay 4.25% or so on your cash not used for other investments.

Interest rates are not falling either, which is not favorable for borrowers for cars and homes. Housing and shelter costs are still elevated at +4% over one year.

Overall inflation is coming down for many items; the latest report last week showed an annual rise at +2.3% rate. Gasoline prices fell for each of the last 3 months, and are down 12% year-over-year, and the most affordable since Memorial Day, 2020 (see table below). Medical care is +3% over the same time period. The just approved budget bill by our Congress calls for more spending and some tax cuts, so we’ll see how that affects our economy and interest rates.

The one bright spot making money this year is Gold, as it continues to add to its gains from last year. It increased $500 an ounce in the 1^st quarter, and another $230 since then as of this writing. That’s $730 by my calcs, or +27% so far this year, greatly helping your portfolio during stock and bond price stagnation.

We advocate owning some physical gold coins and some exchange traded funds you buy like stocks; GLD or SGOL that track the gold price daily. Gold trading ended today at $3,357 per shiny ounce.

  

Using a model portfolio of $100,000, if you were allocated this year at 50% stocks, 30% bonds (Treasury bills paying 4.25%), and 20% Gold-related holdings, you would be up 6% year-to-date to $106,000.  This allocation is mainly based upon my position that stocks and Gold are very unlikely to both decline together over the longer (6-12  months) time-frame, and gains in both Gold and stocks are likely if held long-term. 

I wish everyone a safe and joyous Memorial Day weekend.

~ Barry Unterbrink, C.R.P.C.

 
Memorial Day gasoline futures prices (market price, no taxes).
  2017   $1.57
  2018   $2.14
  2019   $1.80
  2020   $1.03
  2021   $2.21
  2022   $4.02
  2023   $2.43
  2024   $2.49
  2025   $2.13  close (5/23/25)

 

 

 

2024 Markets Recap and Review

Dear Clients and Friends,

Here's my 2024 Year-End Financial Markets Review. I'm rather late posting this, as I traveled to China for 6 weeks and returned in early March. Reach out to me at Unterbrink@usa.net with any questions and comments, please.

The financial markets in 2024 returned nice gains for most investors. Stocks logged their second double digit gain of +13% for the Dow Jones and +23% for the S&P 500 index. The technology-laden NASDAQ increased even more at +29%. You have to look back to the late 90’s euphoric years of 1997-1998 to find the last back-to-back gains like these. History shows that the average gain for the S&P 500 following consecutive +20% gains is +6.7%, so that would still be positive, but lower and perhaps expected given the stellar performance.

The talk of the new technology called Artificial Intelligence, or AI, was the chief driving catalyst behind the outsized gains across other sectors also.  Microsoft and Meta Platforms (Facebook) are building data centers that will require massive power usage, so Electric Utility’s will benefit, along with natural gas pipelines, energy plays. Utilities gained +23% last year, Consumer Discretionary, (think Nike, Home Depot, McDonald’s) rose +24%, and Financial sector stocks (banks, American Express, MasterCard), up a nice +30%.

A few sectors of the stock market did not participate. Health Care stocks only could muster a 3% gain on average, and Materials stocks, (think Dupont, International Paper, US Steel) were about break-even!

Some don’t buy into this AI story-line, and suggest that it’s time to play defense in 2025, hedging your bets and taking some chips off the table so to speak. We’re in that camp somewhat, and have used cash and especially GOLD to offset – and add to – the stock market gains the past couple years. Also, we’ve added value-oriented stocks and ETF’s in place of growth names to – hopefully – lessen the impact of a downturn in stock prices.

The Bond market experienced a volatile year, as interest rates were on hold and not raised by the Federal Reserve (last hike was July, 2023). When they finally did cut rates last September, the bond market responded with HIGHER market rates, as if the bond investors didn’t believe the reason for the cut. The November and December rate cuts by the Fed totaling 0.75% also did little to change the course of interest rates that investors and consumers use. Interest rates went UP after the first and second rate cuts. Of public interest, the 30-year mortgage interest rate to borrow increase from 6.1% to 6.8% in the three months following the September 18^th cut. That’s not helping folks buy a home, is it? Here in mid-March, borrowing rates are still “sticky”, with the 10-year Treasury Note at 4.3% and the 30-year mortgage rate at 6.6%. Analysts say that a rate below 6% will spur a big rise in home-buying. We’ll see, if and when that occurs. Investors and savers can still get a positive return in the bond market, as inflation is running at 3% year-over-year and bonds yield above that.

The third leg of our investment stool is Gold. The precious metal has performed nothing short of spectacular the past few years. Gold prices rose $560/ounce last year, for a 27% gain. In 2023 they were up $250. The real breakout in price was after the Hamas invasion of Israel near $1,860. The Russian invasion of Ukraine in early 2022 set up that rally somewhat also I feel, as wars tend to create a favorable environment for Gold. The U.S. Inflation was raging also; year-over-year inflation was running at +7.8% at the time of both events. Central Governments were big buyers of Gold – and still are today – as a store of value, while Gold jewelry demand was up 9% last year, according to the World Gold Council. Gold miners can only find about 1%-2% more Gold each year; it’s that hard to mine. Lastly, all the above ground Gold in the world measures about 25 cubic yards! Talk about the scarcity and alure of the yellow metal. As I write this, Gold’s trading at $3,001 an ounce, an increase of $375 this year.

Since it's so late in the 1st quarter that ends in two weeks, I will post again sometime in April with a review of the markets and my positioning for the next few months.

Profitably Yours,

~Barry