As we reach the midpoint of the year, this one reminds us in some ways of birthdays. When we are little, they seem to come once a decade, as we get older, they seem to come quarterly. Similarly in some ways, this year seems to go in slow motion in some ways, and then in other ways it is difficult to believe we are at the halfway point.
So, let’s review, fast and slowly.
A surprisingly larger than expected Tariff announcement rattled through the financial hallways with market participants running for the doors, only to immediately turn tail and come back to the party. In our post on street-cents, “Reinforcing Bad Habits”, while we are very happy markets have returned to better form, we do have concerns that those taking excessive risk are reinforcing very bad habits in the form if new investors risk profiles.
Market participants take in data from many different sources.
As the slow to get passed Tax Bill has taken form, less severe budget balancing and greater Tax Incentives seem to have filtered into market repertoire. The long-awaited tax changes, which many of you know have had us on hold for some times have finally passed on July 4th! Since we wait for law rather than make detailed analysis on less than law facts. This being the case we are FINALLY excited to share detailed analysis with you, for the record at first reading this bill is far less complicated than expected, let the work begin.
Back to capital markets directly. Our friends across the pond in almost every direction, also known as International Markets, while being somewhat muted for years, have taken the reins as the leaders. In our street-cents post “International Markets Perk Up” diversification calls for a toe in those waters. Long undervalued and left behind, continued increases would not be surprising.
Did we mention Geopolitical Events?
We remind ourselves constantly of the speed and detail at which information travel can at times magnify reactions to events. This being the case, there are certainly many headlines that have garnered attention and reaction. In a somewhat callous manner, it is worth remembering that markets, and their participants are only focused on one item, and that is Economic growth.
In closing, what would be a review without a comment on interest rates!
While there has been banter about lowering rates, our main research providers are seeing higher inflation, aka CPI (Consumer Price Index) and as such would likely limit the possible a major lowering of rates, Time will tell in this, but a higher probability of higher for longer exists.
Enjoy your summer and remember it’s never as good as we think, or as bad as we think, but somewhere in between!
Talk at the end of the summer as we enter the fall.
John A. Kvale CFA, CFP
AI Content Authenticity: AI created the splash image. All of the following text content has been completed by myself and has not been edited or created by AI. Occasionally we do use AI for images and will note when appropriate.
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
