CEO Message
My calendar is filling up with “end of school year” events, and Memorial Day is next weekend. Spring has almost come and gone. Get ready for grilling and complaining about the heat.
Read on for some updates on trade, inflation and taxes.
-Kevin
It’s All A Matter of Perspective
One of my favorite books to read to my kids is A Squash and a Squeeze. To summarize, a lady complains that her house is too small, so the wise old man tells her to bring in her farm animals. Then he tells her take them out again.
“Take them all out” said the wise old man.
“But then I’ll be back where I first began”
So she opened the window and out flew the hen
“Thats better – at last I can sneeze again”
She shooed out the goat, and shoved out the pig
“My house is beginning to feel pretty big”
She huffed and she puffed and she pushed out the cow
“Just look at my house, it’s enormous now!”
So it is with tariffs. In the past few months we’ve applied a bunch of new tariffs, announced we were going to roll them all back, and the stock market absolutely loved it. (Going forward I’ll try to explain all geopolitical and economic events through children’s literature.)
The announcement of the broad roll backs, and specifically the China trade talks, has put the market in a much better mood. Lower tariffs mean reduced costs for businesses, especially in manufacturing and tech sectors that rely on imported materials and components.
The relief from trade tensions has investors breathing a sigh of relief (for now). That’s especially true when coupled with the other news…
Cooling of Uncertainty
Inflation cooled off in April to 2.3%—the lowest we’ve seen since February 2021—giving the Federal Reserve a little breathing room as it holds interest rates steady at 4.25%–4.5%.
However, the Fed is far from declaring victory, warning that ongoing tariff policies could brew some good old-fashioned stagflation. April job growth beat expectations, but there are hints of a slowdown, with GDP showing signs of contraction. The Fed, in classic cautious fashion, is waiting for more data before making any big moves, reminding everyone that sometimes doing nothing is still a strategy. Investors are hoping that, at least for the rest of May, the markets will be a continuing this run of gains—but with the way things are going, staying steady will be just as nice.
Tax Bill Limps Along
Yes, something resembling a tax bill was voted out of committee this week. I’ve learned my lesson over the years not to invest TOO much time/attention to the language at this stage, as that bill is going to get carved up with amendments before ever getting to the floor of the House, then the Senate will have 13 other changes, then it will need to be hashed out between the different versions.
For now it seems likely that something will pass, with probably most expiring tax cuts being extended. Other things (like SALT) are currently up in the air. More updates to come in the following weeks.
Minor Housekeeping
We’re always receptive to feedback, and so I’m happy to announce we’re in the process of rolling out a new client-portal. More details to come, but for now rest assured that it’s more user friendly and easy to access. We’ll also be making changes to our email and phone communications to ensure faster response times.
Lastly, the investment risk assessment tool I mentioned in my last email is nearly ready and I’ll be sharing details after the holiday. (But if you want a sneak peek just let me know)