CEO Message
When I finish sending this email I’m going to start filling up the kiddie-pool in the backyard. Summer time is officially here.
But first let’s catch up on what’s been happening with that silly trade war.
-Kevin
The Market’s Mood: Cautiously Optimistic
May started off with a whimper and ended with a mix of relief and confusion. The headline story? Tariffs were announced, rolled back, then declared illegal. Markets cheered like someone just told them inflation was “just a phase.” Semiconductor stocks surged on the news, since fewer tariffs mean lower costs and less risk of supply chain chaos. But while that gave the market a short-term boost, the broader economic picture is looking cautiously optimistic (which is a phrase I think I’ve repeated in these emails about 20 times over the past six months).
The global economy is clearly losing some steam. The IMF now expects 2025 global growth to hover around 2.8–3.0%, down from the earlier 3.2–3.3% forecast. A lot of that slowdown is being pinned on ongoing trade friction and a generally murky policy environment. China’s recovery is sputtering, Europe’s still digesting rate hikes, and U.S. data has been mixed – decent labor market strength, softening consumer spending, and inflation that is still edging lower. The Fed’s still in a holding pattern, talking tough on inflation while watching bond markets for direction.
The S&P 500 inched higher in May, up about approximately 4%, powered mostly by tech. Nvidia broke hearts and records after earnings crushed expectations. But under the surface, sectors like utilities and small caps looked a bit winded. Bonds didn’t offer much of a safe haven either.
The courts ruled that Trump doesn’t actually have the power to upend global trade single handedly. While the headline was dramatic, the fact that the ruling came after they had already been rolled back makes it more relevant for the next time a president tries to impose them. (The ruling is currently stayed on appeal anyway.)
About that tax bill…
In a narrow 215–214 vote, the House passed the “One Big Beautiful Bill Act,” which includes extensions of the expanded standard deduction and child tax credit. Along with that it would increase from $10,000 to $40,000 for individual filers starting in 2025, with gradual annual adjustments and income-based phaseouts. But don’t pop the champagne yet—the bill still has to clear the Senate, where support is more fragmented and modifications are expected.
Also on the table: making 100% bonus depreciation permanent and modifying capital gains treatment through indexing or phase-ins—ideas that continue to circulate but haven’t been locked in.
Meanwhile, a proposal to temporarily lift caps on net operating loss (NOL) carry forwards for small and midsize businesses has gained momentum, pitched as post-pandemic relief. Critics, of course, warn of tax gaming.
As I said last time, don’t spend too much time reading the current version, as there are still a ton of changes to come. For now just assume its mostly status quo as current law (with a possible benefit to taxpayers in high SALT states like New York and New Jersey). We’ll keep you posted.