June In-Review

Market Musings 7/1/2025

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

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Markets fully rebound and more in June finishing the first half of 2025 at new all-time highs.

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The S&P 500 rallied another 5% in June as the economy is still largely not showing impact from ongoing #Tariffs uncertainty and brief escalating #GlobalTension in the Middle East.

While economists (and the Fed) are still concerned with #Tariffs, investors seem to have fully embraced the “taco” trade. They’re essentially ignoring any new drama expecting someone will cave and the #Tariffs will never actually go into effect. While economists will still point out even the uncertainty could slow economic growth, with recent data showing minimal impact, investors are mostly shrugging off any concerns.

In addition, #RateCuts expectations are growing with expectations for three cuts this year. That’s more than the two the Fed forecasted a few weeks ago.

Meanwhile, the Fed still remains steadfast in its ‘wait and see’ stance. Powell continues stress it’s too early to see #Tariffs impact on #Inflation yet and reiterates the Fed can afford to wait as long as #LaborMarkets continue to hold up.

Obviously, #Tariffs are likely to continue to dominate headlines, but if investors are ignoring them, what are they looking for?

We see investors looking for confirmation bias that the #Tariffs aren’t impacting the economy and the Fed’s resistance is just posturing. They’ll likely be looking for:

• More #Inflation progress to confirm little to no impact from #Tariffs.
• #LaborMarkets continue to hold. (Investors are probably ok with a little weakness to push the Fed towards #RateCuts).
• And, they’ll want to see #ConsumerConfidence and spending rebound.

However, we expect a lot of glass half full takes. It’d likely take pretty big whiffs for any sustained hit to the market optimism. Meaning, markets could pullback for a day on a bad datapoint, but rebound quickly without a streak of poor data. Again, glass half full.

What’s our take?

While we’re cautiously optimistic, we also agree with the Fed that the #Tariffs impact are not fully felt yet. As of this point, only certain industry #Tariffs have actually been imposed plus the 30% blanket tariff on China and 10% on everyone else. We expect most businesses have managed so far with pre-existing inventory while they wait for more clarity.

We’re still keeping a close eye on macro data with a focus on the consumer－#ConsumerConfidence, spending and #LaborMarkets employment.

We’ll also be interested in Q2 earnings kicking this month. Outlooks were weak in Q1, but shrugged off as investors figured management were taking advantage of the uncertainty to lower the bar. We’ll be interested to see if that was true and if they continue to project weakness into Q3.