Market Commentary: June 2025
This ends another quarter, and it has been an eventful one. 2025 is living up to the saying, “May you live in interesting times.” And a lot of the trends that I have been writing about this year remind me of the Ernest Hemmingway quote “How did you go bankrupt? Two ways. Gradually, then suddenly.” A lot of the events that are occurring are the result of the slowly building imbalances over the last few decades. Whether that be from capital flows, investment flows, or geopolitical power balances, it appears that the 2020’s are the decade that these imbalances are being addressed. The 2020’s are shaping up to be continually interesting. So far, we have had a global pandemic, the largest non-war fiscal spending, the highest inflation since the 1970’s, the fastest rate hiking cycle ever, a boom in Artificial Intelligence spending, two assassination attempts on President Trump, Russian Ukraine war, Israeli Hamas war, and now Israeli Iran war. This is not an exhaustive list, but these alone are enough to fill the history books for the decade.
In markets, one can say that we ended the decade of the 2010’s as one of the lowest volatility decades ever and have rolled into the 2020’s with volatility everywhere. The markets began 2025 assuming that the U.S. was going to seriously cut spending through the Big Beautiful Bill and DOGE. This quarter we have learned that the fiscal spending will not actually be slowing anytime soon, and to quote Lyn Alden “nothing stops this train”. The market reacted about like you’d think. We had a quick 20% drop that was immediately reversed as the tariffs were delayed. Some developments that have stuck are elevated interest rates, the value of the dollar falling versus most other currencies, ex-U.S. markets outperforming, business uncertainty from tariff policies, and volatility remaining elevated. With all that being said, if you were to have gone to sleep on January 1st and woke up today, you would undoubtedly wonder what all the fuss is about with the S&P 500 up yet again for the year.
After such a bounce in markets, it is natural for there to be a pause and a time of consolidation. Who knows what will happen? I sure don’t. It does appear that we will have continued turbulent markets, both up and down, and continued interesting times. Staying invested with a diversified portfolio has proven a good strategy when uncertainty rises, hopefully this time will be no different. Stay diversified and stay invested.
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