Entries by halyard
July 2025 – Monthly Commentary
Liberation Day, the April 2nd date on which President Trump unilaterally imposed across-the-board tariffs on all trading partners of the United States created several dislocations in the economy and the capital markets. Initially, it prompted importers to buy inventory in advance of the tariffs, causing a huge spike in the monthly trade deficit prior to that imposition. As expected, in the months that followed the deficit contracted when buyers, swelled with inventory, paused their buying.
June 2025 – Monthly Commentary
In the early days of June, economic growth seemed to be stalling with retail sales declining, led by a slowdown in auto sales, and the housing sector was stuck in a multi-year slump. Moreover, investors weren’t sure about the effect President Trump’s tariffs were going to have on inflation. The bright spot in that otherwise gloomy backdrop was that the equity market had shaken off the sharp selloff it had experienced during the first days of tariff implementation and was within striking distance of the all-time high it had hit in February.
May 2025 – Monthly Commentary
May was a tumultuous month, but not in the way it was expected to be. Since the chaotic implementation of the global tariffs by the Trump administration market participants had been waiting for the consequences, mainly the duality of rising inflation and rising unemployment. The expectation had been that the bad news would be fully felt, starting six weeks after the so-called liberation day, falling squarely in the month of May. Surprisingly, that bad news never arrived.
April 2025 – Monthly Commentary
Was it a clever strategy or a caving of conviction for the U.S. and China to come to a quick resolution to their trade war? Did Donald Trump acquiesce to market stress, or did China want a quick resolution to avoid a further disruption to their economy? Regardless of the catalyst, the news that the U.S. is going to sharply reduce the proposed tariff on Chinese goods was welcome news to the capital markets. The S&P 500 closed at 5,670 on April 2nd, the so-called liberation day. Three days later it closed nearly 15% lower as fear of stagflation crippled investor appetite for risk. As of May 12th, the index has regained all that loss and is now trading above the level touched when tariffs were first implemented.
March 2025 Monthly Commentary
It’s been just over three months since Donald Trump was inaugurated as President and he has so far avoided significant criticism of Fed Chairman Powell. But everyone knew it was coming! It finally came on Thursday April 17th when Trump messaged that “Powell’s termination cannot come fast enough,” followed by Powell “is always TOO LATE AND WRONG.”
While he didn’t directly cite the catalyst for his ire, the obvious culprit was Powell’s speech to the Economic Club of Chicago the previous day in which he said there’s a “strong likelihood” that tariffs would cause consumers to face higher prices and that unemployment would rise, at least in the short run.
February 2025 Monthly Commentary
Inflation last month continued to move lower. The Consumer Price Index for February showed a 3.1% year-over-year rise, the smallest in nearly four years, and well off the 6.6% peak hit in the third quarter of 2022. Even more encouraging, the month-over-month rate was 0.2%, which if sustainable would bring the annualized rate closer to the Fed’s stated target of 2.0%. However, the February measure was a relatively clean comparison, as it took place before the global tariff battle was launched. Much discussion has been had regarding the impact tariffs will have on prices, with the main contention being whether the impact on prices is inflationary or more of a one-time tax. Those believing a tariff to be a tax cite tariffs as a tool of the Trump administration to “level the playing field” regarding trade and, in the case of Mexico, halt the flow of illegal immigration into the United States.
January 2025 Monthly Commentary
Since the first of January, fixed income portfolio managers have been tasked with the challenge of how to position their portfolios for the coming year. The Summary of Economic Projections (SEP) issued by the Federal Reserve members in September were out of date almost immediately, as economic growth reaccelerated. Concurrent with that reacceleration, the stock market roared higher at the prospect of President Trump rolling back business-hampering regulation and enacting pro-growth policies. By the December FOMC meeting the Federal Reserve was tacitly signaling their error. With that change, market participants are now expecting a 25-basis point cut by this summer and a 50% chance of another 25 basis-point cut by the end of this year.
December 2024 – Monthly Commentary
As we start the new year, the consensus is that investors face a most uncertain future. That statement would raise the ire of most writing professors because the future is always uncertain. We can plan for an expected outcome, but the certainty of that outcome, no matter how high a probability we place on it, is never a certainty. Nevertheless, as we start the new year, the forecast for what lies ahead for the economy and the capital markets has never been cloudier.
November 2024 – Monthly Commentary
Despite the extraordinary cycle of shocking world news that has come seemingly every day this December, the capital markets have been relatively stable as investors and traders continued with a laser focus on whether the Federal Reserve would cut interest rates later this month. Specifically, close attention has been paid to the employment report and the inflation report for November.