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The Markets
A correction and a bounce.
Last week, the Standard & Poor’s (S&P) 500 Index moved into correction territory. The Nasdaq Composite Index (Nasdaq) was already in a correction, and the Dow Jones Industrial Average (Dow) was close, reported Paul R. LaMonica of Barron’s.1
A correction occurs when the value of an index drops 10 percent below its most recent peak. The S&P 500 correction occurred remarkably quickly. Just three weeks ago, the index was at a record high1 amid easing inflation pressures2 and solid earnings growth.3
In fact, from December 15 through March 6, the number of companies mentioning the word “recession” on earnings calls was the lowest it had been in more than five years, reported John Butters of FactSet.4 There is another word that was mentioned frequently on earnings calls though: tariffs.5
Tariffs on tariffs on tariffs
The tariff war escalated last week as the European Union (EU) and Canada introduced retaliatory tariffs in response to those of the United States, reported Joe Light of Barron’s.6 Brendan Murray and Alex Newman of Bloomberg have been tracking the tariffs. Through the end of last week, the United States government has imposed the following tariffs:7
- 10% on all goods imported from China (February 4)
- An additional 10% on all goods imported from China (March 4)
- 25% on some Canadian imports (March 4)
- 25% on some Mexican imports. (March 4)
- 10% on Canadian energy and potash (March 4)
- 25% on steel and aluminum from major exporting countries (March 12)
“As Americans debate the wisdom of the administration’s on-again, off-again trade barriers…a few broad points are worth bearing in mind,” wrote The Editorial Board at Bloomberg. “One is that these measures are a tax on Americans. Foreign countries don’t simply pay up; US companies do when they import a product. This means that the costs are ultimately borne by consumers and by companies that use imported inputs. The effect of those higher prices is to eat into household budgets, push down real wages and reduce economic growth.”8
Consumers are feeling salty
The trade war has raised questions about the path of the U.S. economy, and some economists have lowered their forecasts for economic growth in 2025, reported Brian Swint of Barron’s.9
The primary driver of U.S. economic growth is consumer spending and consumers – anyone and everyone who buys things – are feeling less optimistic. Last week, the University of Michigan Survey of Consumers reported that sentiment fell 10.5 percent from February to March.10 Surveys of Consumers Director Joanne Hsu wrote:
“Sentiment has now fallen for three consecutive months and is currently down 22 [percent] from December 2024. While current economic conditions were little changed, expectations for the future deteriorated across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions, and stock markets. Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future.”10
Major U.S. stock indices fell over much of last week before recovering some losses on Friday. The S&P 500, Nasdaq and Dow all finished the week more than two percent lower.11 U.S. Treasury yields bobbed lower before finishing the week close to where they were the previous Friday.12
Data as of 3/14/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -2.3% | -4.1% | 9.5% | 10.6% | 18.8% | 10.5% |
| Dow Jones Global ex-U.S. Index | -1.0 | 6.0 | 5.7 | 4.4 | 10.2 | 2.9 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 4.3 | 2.1 | 0.7 | 2.1 |
| Gold (per ounce) | 1.6 | 14.1 | 37.8 | 15.1 | 14.9 | 10.0 |
| Bloomberg Commodity Index | 0.1 | 6.2 | 5.9 | -5.4 | 10.9 | 0.8 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
KEEP YOUR EYES ON YOUR FINANCIALS GOALS. While it is never comfortable to watch the value of savings and investments fall, as they do during a market correction, it’s important to remember that the decisions you make today can have a significant effect on the value of your portfolio over the long-term. During market downturns, investors generally have three choices. They can:
- Sell and take a loss. The thinking behind selling is usually something like this: If I sell, I will cut my losses and preserve what I have. Investors who do this realize a loss of principal. “A lesson many investors have learned is that if they sit tight and wait for the upturn to come, they won’t realize a loss. In fact, they may even see their portfolios gain more value than they had before the downturn,” wrote Richard Bet of Investopedia.13
- Sit tight. Investors who stay invested recognize that a market decline is not the same as a loss of principal. These investors understand that staying invested through market ups and downs can help them reach their long-term financial goals. The odds of a positive return increase with the amount of time an investor holds a stock or stock portfolio, explained Trevor Jennewine via Nasdaq. Historically, the chance of the S&P 500 Index delivering a positive return were:14
- 59 percent over a month period.
- 69 percent over a year.
- 79 percent over five years.
- 88 percent over 10 years.
- 100 percent over 20 years.
- Look for opportunities. A lot of investors recognize that market downturns create opportunities to purchase shares of attractive companies at lower prices. These investors work with their advisors to identify opportunities that may benefit their portfolios should the market recover. The goal of investing, after all, is to buy low and sell high.
If you’re feeling fearful, remember that corrections are a normal part of investing. The S&P 500 Index has experienced 56 corrections since 1929, reported Saqib Iqbal Ahmed of Reuters.15 Corrections tend to occur when share prices become overvalued. They wring out the excess and often create opportunities for investors.
Weekly Focus – Think About It
“The dark does not destroy the light; it defines it. It’s our fear of the dark that casts our joy into the shadows.” 16
–Brené Brown, Author
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.barrons.com/articles/s-p-500-correction-what-next-03225182 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-17-25-Barrons-S&P-in-a-Correction%20-%201.pdf
3 https://insight.factset.com/earnings-insight-infographic-q4-2024-by-the-numbers
6 https://www.barrons.com/articles/canada-eu-tariffs-retaliation-60d1890d or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-17-25-Barrons-Canada-and-EU-Retaliate%20-%206.pdf
7 https://www.bloomberg.com/news/articles/2025-03-12/trump-tariff-list-here-s-a-running-tally-of-what-s-been-hit-so-far?srnd=homepage-americas or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-17-25-Bloomberg-Running-Tally-Tariff-Threats%20-%207.pdf
8 https://www.bloomberg.com/opinion/articles/2025-03-12/trump-s-tariffs-can-anyone-say-what-the-goal-is?srnd=phx-opinion or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-17-25-Bloomberg-Tariffs-are-Terrible-Idea%20-%208.pdf
9 https://www.barrons.com/livecoverage/stock-market-today-031025/card/goldman-sachs-jpmorgan-raise-europe-growth-forecasts-while-cutting-those-for-the-u-s–jeU7Q3yD2QHUzBd6ilCI or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-17-25-Barrons-Raise-Europe-Growth-Forecasts%20-%209.pdf
10 http://www.sca.isr.umich.edu
[1]1 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-17-25-Barrons-DJIA-S&P-Nasdaq%20-%20%2011.pdf
13 https://www.investopedia.com/articles/investing/021116/3-reasons-not-sell-after-market-downturn.asp
14 https://www.nasdaq.com/articles/heres-the-average-stock-market-return-in-every-month-of-the-year
[1]5 https://www.reuters.com/markets/wealth/sp-500-correction-six-charts-2025-03-13
[1]6 https://www.goodreads.com/author/quotes/162578.Bren_Brown
The Markets
What do weather and investing have in common?
From 1991 to 2020, the average temperature of the United States was 54.7° Fahrenheit.1 Of course, that doesn’t mean the temperature in every state on every day was 54.7°F. The weather varied dramatically from place to place and month to month.
The same is true of investment averages. At the end of February, the average annual total return* for the Standard & Poor’s (S&P) 500 Index over the past 10 years was 12.98 percent.2 That doesn’t mean the S&P 500 returned 12.98 percent every year – it didn’t. The index’s total return varied dramatically from year to year.
| Standard & Poor’s 500 Index2 Average annual total returns | |||||||||
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
| 1.38% | 11.96% | 21.83% | -4.38% | 31.49% | 18.4% | 28.71% | -18.11% | 26.29% | 25.02% |
The stock market doesn’t provide level returns. In some years returns are positive, and in other years returns are negative. After two years, of stellar returns from U.S. stocks, the market has been experiencing a pull back.
Last week, U.S. financial markets were volatile. “A roller-coaster week for markets ended on that same note, with stocks whipsawing as traders tried to make sense of a myriad of headlines around the economy, tariffs and geopolitical developments. Just minutes after a slide that drove the S&P 500 down over 1 [percent], the gauge staged an ‘oversold bounce’ as Federal Reserve Chair Jerome Powell said the economy is fine. The Nasdaq 100 briefly breached the threshold of a correction. Bonds fell,” reported Rita Nazareth of Bloomberg.3
In contrast, some European stock markets moved higher last week. “President Donald Trump’s drive to shake up the world order is creating some surprising winners. As the U.S. stock market reels from tariff fears, German stocks are surging because the government has committed to almost $1 trillion in new spending on infrastructure and defense…The sea change in policy is creating a giddy optimism in German markets not seen in decades,” reported Brian Swint of Barron’s.4
The divergence in performance brings home the value of a diversified portfolio.
When markets are volatile, remain confident and resist the impulse to react to short-term performance. The assets in your portfolio were carefully chosen to help you reach your financial goals. Unless your goals and risk tolerance have changed, your asset allocation shouldn’t. The weight of evidence accumulated over previous decades supports the idea that staying the course – holding a well-allocated and diversified portfolio and rebalancing periodically – is a sound way to pursue long-term financial goals.
Last week, major U.S. stock indices finished the week lower despite a rebound on Friday.5 U.S. Treasury yields were mixed last week with yields for shorter maturities dropping while yields on longer maturities rose.6
*Total return includes reinvested dividends.
Data as of 3/7/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -3.1% | -1.9% | 11.9% | 11.2% | 16.0% | 10.8% |
| Dow Jones Global ex-U.S. Index | 2.6 | 7.0 | 6.8 | 4.9 | 6.8 | 2.9 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 4.1 | 1.8 | 0.5 | 2.2 |
| Gold (per ounce) | 3.4 | 12.3 | 36.1 | 12.9 | 11.9 | 9.6 |
| Bloomberg Commodity Index | 2.0 | 6.1 | 6.6 | -7.6 | 9.1 | 0.4 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
THE SPOTLIGHT WAS ON THE REAL FEDERAL RESERVE OF ATLANTA. You may have seen a headline or two about GDPNow last week. It’s the Atlanta Federal Reserve (Fed)’s unofficial economic growth forecasting model – and it’s been delivering twists and turns worthy of a reality TV show.
GDP, or gross domestic product, is the value of all goods and services produced in the United States. “The percentage that GDP grew (or shrank) from one period to another is an important way for Americans to gauge how their economy is doing. The United States’ GDP is also watched around the world as an economic barometer,” reported the Bureau of Economic Analysis.7
At the end of January, the Atlanta Fed’s GDPNow model estimated the United States economy would expand by 2.9 percent in the first quarter of 2025. Since then, the estimate has moved sharply lower.8 Last week, GDPNow projected the U.S. economy will shrink in the first quarter, contracting by 2.4 percent.9
It’s a remarkable swing that captured a lot of media attention.
How should investors weight this bit of unofficial data? Probably not too heavily because GDPNow can be volatile. “These estimates are published regularly as new economic data is released…There were 11 [releases] in February alone. Friday’s [February 28’s] shock reading of -1.5% was led by a record-high $153 billion trade deficit in January, most likely as firms front-loaded imports ahead of tariffs, and Monday’s decline was driven by soft manufacturing activity. There’s every chance -2.8% turns into a positive reading in a few weeks,” reported Jamie McGeever of Reuters.10
| GDP growth estimate 1Q2025 annualized (after inflation) | Atlanta Fed GDPNow9 | New York Fed Staff Nowcast11 | Dallas Fed Weekly Economic Index12 |
| Week of January 26 | 2.9% | 2.9% | 2.4% |
| February 2 | 3.9 | 3.1 | 2.5 |
| February 9 | 2.3 | 3.0 | 2.5 |
| February 16 | 2.3 | 3.0 | 2.4 |
| February 23 | -1.5 | 2.9 | 2.2 |
| March 2 | -2.4 | 2.7 | NA |
Other Federal Reserve Banks also have economic growth forecasts. These models also have been moving lower, but they haven’t shot into negative territory like GDPNow. The New York Nowcast dropped from an estimated 2.94 to an estimated 2.67 percent for the first quarter, and the Dallas Fed’s Weekly Economic Index moved from 2.4 percent to 2.2 percent.11,12
The average absolute error of final GDPNow forecasts is 0.77 percentage points.13 The final forecast is expected in April.
Weekly Focus – Think About It
“Courage is willingness to take the risk once you know the odds. Optimistic overconfidence means you are taking the risk because you don’t know the odds. It’s a big difference.”14
– Daniel Kahneman, Nobel Prize-winning psychologist
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.weather.gov/media/slc/ClimateBook/Annual%20Average%20Temperature%20By%20Year.pdf
2 https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview [See USD factsheet] or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-10-25-S&P-Dow-Jones-Indices%20-%202.pdf
3 https://www.bloomberg.com/news/articles/2025-03-06/stock-market-today-dow-s-p-live-updates?srnd=phx-markets or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-10-25-Bloomberg-Stocks-Bounce-Back%20-%203.pdf
4 https://www.barrons.com/articles/trump-stocks-germany-bonds-spending-0b93d778?refsec=europe&mod=topics_europe or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-10-25-Barrons-Trump-Slash-and-Burn%20-%204.pdf
5 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-10-25-Barrons-DJIA-S&P-Nasdaq-Graphs%20-%205.pdf
7 https://www.bea.gov/resources/learning-center/what-to-know-gdp
8 https://www.atlantafed.org/cqer/research/gdpnow
9 https://www.atlantafed.org/cqer/research/gdpnow/archives
10 https://www.reuters.com/markets/europe/atlanta-fed-shock-sounds-trumpcession-warning-mcgeever-2025-03-03/ or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-10-25-Reuters-Atlanta-Fed-Trumpcession%20-%2010.pdf
11 https://www.newyorkfed.org/research/policy/nowcast#/nowcast
12 https://www.dallasfed.org/research/wei
13 https://www.atlantafed.org/cqer/research/gdpnow#Tab2
[1]4 https://www.brainyquote.com/quotes/daniel_kahneman_567096
The Markets
Is it supposed to be doing that?
At the end of last year, economists believed the chance of a recession in 2025 was relatively low. In December, economist Torsten Sløk wrote, “The outlook for the US economy remains strong with no signs of a major slowdown going into 2025.”1
The economy has not been performing as expected, though.
“The U.S. Citi Economic Surprise Index, which tracks the difference between economic data and expectations, has fallen to its lowest level in almost six months. The index rises when the surprises are favorable, so the decline means the data are showing a less robust U.S. economy than expected,” reported Jacob Sonenshine of Barron’s.2
One surprising piece of data is the slump in U.S. consumer confidence.
The University of Michigan Consumer Sentiment Survey reported that consumers have become less optimistic. Sentiment declined by 9.8 percent from January to February.3 The Conference Board Consumer Confidence Index showed a 7.0 percent drop over the same period.4
“The decrease was unanimous across groups by age, income, and wealth…Year-ahead inflation expectations jumped up from 3.3 [percent] last month to 4.3 [percent] this month, the highest reading since November 2023 and marking two consecutive months of unusually large increases,” reported Surveys of Consumers Director Joanne Hsu.3
The slump in sentiment is concerning because consumer spending is the primary driver of U.S. economic growth – accounting for about two-thirds of gross domestic product (GDP), which is the value of all goods and services produced in the country over a certain period. In general, when consumers are uneasy, spending tends to slow and so does economic growth.5
Currently, one consumer group has more influence than others do.
When analysts took a closer look at consumer spending, they found a growing wealth gap. “The wealthiest 10% of American households—those making more than $250,000 a year, roughly—are now responsible for half of all US consumer spending and at least a third of the country’s gross domestic product,” reported Amanda Mull of Bloomberg. “In the 1990s, spending by top-decile earners usually constituted a third or so of annual consumer spending overall. Now, their spending constitutes the largest share of the consumer economy in data going back to 1989.”6
Last Friday, we learned that consumer spending declined 0.5 percent month to month, after inflation, in January. It was the biggest monthly decline in almost four years. “US consumers unexpectedly pulled back on spending on goods like cars in January amid extreme winter weather, and a slowdown in services, if sustained, may raise concerns about the resilience of the economy,” reported Augusta Saraiva of Bloomberg.7
While we’ve seen a lot of uncertainty and some softer-than-expected economic data, the likelihood of a recession over the next 12 months remains low. Economists polled by The Wall Street Journal’s Economic Forecasting Survey put the odds at 22 percent, reported Andy Serwer of Barron’s.8
No matter where the economy is headed, investors can manage the risks associated with market volatility through asset allocation and diversification. If you have not reviewed your portfolio recently, this is a good time to make sure your asset allocation is appropriate for your financial goals and risk tolerance. If you would like help, let us know.
Last week, the Dow Jones Industrial Average moved higher, while the Standard & Poor’s 500 and Nasdaq Composite Indexes moved lower.9 Treasuries rallied and the yield on the benchmark 10-year U.S. Treasury moved lower over the week.10
Data as of 2/28/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -1.0% | 1.2% | 17.45% | 10.8% | 15.1% | 10.9% |
| Dow Jones Global ex-U.S. Index | -2.0 | 4.4 | 6.6 | 1.6 | 4.9 | 2.4 |
| 10-year Treasury Note (yield only) | 4.2 | N/A | 4.3 | 1.8 | 1.1 | 2.1 |
| Gold (per ounce) | -3.4 | 8.6 | 39.5 | 14.1 | 12.0 | 8.9 |
| Bloomberg Commodity Index | -3.8 | 4.0 | 6.3 | -3.6 | 7.7 | 0.1 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
ARE YOU BUNCHING? The Tax Cuts and Jobs Act (TCJA) introduced a higher standard deduction – $15,000 for single filers and $30,000 for people who are married and filing jointly in 2025.11 While the higher deduction was beneficial to many taxpayers, those who are near the cutoff for itemizing may employ an approach known as “bunching”, which makes it possible for taxpayers to itemize every other year, reported Adam Nash of Kiplinger’s.12
Here’s how it works: taxpayers condense two years of tax-deductible expenses into a single tax year. Then, they itemize taxes for that year. In general, three types of expenses can be bunched. They include:
Charitable gifts. Some people choose to bunch charitable gifts into a single year by donating in January and then again in December. This increases the amount that can be itemized in a single year. There are other approaches that can help maximize charitable contributions into a single year, as well.12
Medical expenses. Taxpayers can deduct qualified healthcare costs that are not reimbursed, as long as the amount exceeds 7.5% of their adjusted gross income.13 So, when you know a big medical expense is ahead, if it is possible plan the procedure for a year when you are itemizing.14
Property taxes. If a municipality allows it, homeowners can make the previous year’s property tax payment in January and make the current year’s property tax payment in December.14 Currently, there is a $10,000 cap on state and local government taxes (SALT), which include property taxes, reported the Tax Foundation.15
Some provisions of the TCJA are set to expire at the end of this year, including the cap on SALT. The administration has yet to decide how SALT deductibility will be modified. The options under consideration include:16
- Repealing the SALT deduction, which would raise $1 trillion over 10 years.
- Making the $10,000 cap permanent and doubling it for married couples.
- Raising the cap to $15,000 for individuals and $30,000 for married couples.
- Eliminating income and sales tax deductibility while keeping property tax deductibility.
- Eliminating the SALT deduction for businesses.
This information is not intended as tax, legal or accounting advice. It is offered for informational purposes only. Talk with a tax professional and your financial advisor before taking action.
Weekly Focus – Think About It
“Normal is an illusion. What is normal for the spider is chaos for the fly.”17
~ Charles Addams, Cartoonist
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
2 https://www.barrons.com/articles/stocks-tariff-fall-outlook-3a9c1131?mod=hp_LEDE_C_1_B_2 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-03-25-Barrons-Stock%20Markets%20Fall-2.pdf
3 http://www.sca.isr.umich.edu or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-03-25-Survey%20of%20Consumers-UoM-3.pdf
4 https://www.conference-board.org/topics/consumer-confidence
6 https://www.bloomberg.com/news/articles/2025-02-28/wealthy-americans-fuel-half-of-us-economy-consumer-spending? or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-03-25-Bloomberg-Rich%20People%20Cash%20Cannon-6.pdf
7 https://www.bloomberg.com/news/articles/2025-02-28/fed-s-favored-inflation-gauge-rises-at-mild-pace-spending-falls or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-03-25-Bloomberg-US%20Spending%20Drops-7.pdf
8 https://www.barrons.com/articles/recession-could-be-coming-this-year-97e58b6f or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-03-25-Barrons-Recession%20That%20Never%20Was-8.pdf
9 https://www.barrons.com/market-data or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-03-25-Barrons-DJIA-SP-Nasdaq-9.pdf
[1]1 https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025
12 https://www.kiplinger.com/personal-finance/charity-bunching-tax-strategy-could-save-you-thousands
14 https://smartasset.com/data-studies/deduction-bunching
[1]5 https://taxfoundation.org/taxedu/glossary/salt-deduction/
[1]6 https://subscriber.politicopro.com/article/2025/01/leak-of-gop-reconciliation-menu-causes-a-political-headache-00199150 and https://www.politico.com/f/?id=00000194-74a8-d40a-ab9e-7fbc70940000
[1]7 https://www.goodreads.com/author/quotes/52274.Charles_Addams
The Markets
A difference of opinion.
Broadly speaking, there are two types of investors: individual investors and institutional investors.
Individual investors buy and sell investments to grow their personal wealth. This group of investors often works with financial advisors as they pursue their financial goals. Individual investors tend to invest smaller amounts of money than institutional investors do.
For the last three weeks, sentiment among individual investors has been leaning bearish. Last week, 40.5 percent of investors in the AAII Investor Sentiment Survey were feeling pessimistic about the direction of stocks over the next six months. That was an improvement from the prior week’s reading when 47.3 percent of participants were bearish.1 Here’s what the survey has found since the week of January 20.2
| AAII Investor Sentiment Survey results: | |||
| Bullish | Neutral | Bearish | |
| February 19 | 29.2% | 30.3% | 40.5% |
| February 12 | 28.4 | 24.3 | 47.3 |
| February 5 | 33.3 | 23.8 | 42.9 |
| January 29 | 41.0 | 25.0 | 34.0 |
| January 22 | 43.4 | 27.1 | 29.4 |
The AAII Investor Sentiment Survey is considered a contrarian indicator, meaning that people look at the survey to identify potential turning points in the market. In some instances, when investors have been pessimistic, the market has moved higher, and vice versa, reported Edward Harrison of Bloomberg.3
Institutional investors are very large investors, such as banks, mutual funds, exchange traded funds, college endowments, state pensions, insurance companies, and other organizations that buy and sell investments, usually in very large volumes, to meet the goals of the group for whom they’re investing.
Currently, institutional investors are quite bullish. According to survey results released last week by Bank of America (BofA), many institutional investors are fully invested and holding very little cash. “Global stocks have become the most popular asset class with [institutional] investors, who are showing the biggest willingness to take risk in 15 years,” reported Sagarika Jaisinghani of Bloomberg. “About 89 [percent] of respondents in the BofA survey said US equities were overvalued, the most since at least April 2001. The faith in so-called U.S. exceptionalism — where investors bet mainly on American financial markets — has also faltered as investors rotate into European stocks.”4
Last week, major U.S. stock indices moved lower on discouraging economic data and inflation concerns, reported Connor Smith of Barron’s.5,6 The yield on the benchmark 10-year U.S. Treasury moved lower over the week.7
Data as of 2/21/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -1.7% | 2.2% | 20.7% | 11.8% | 12.5% | 11.0% |
| Dow Jones Global ex-U.S. Index | 0.4 | 6.5 | 9.3 | 1.6 | 3.3 | 2.7 |
| 10-year Treasury Note (yield only) | 4.4 | N/A | 4.3 | 2.0 | 1.5 | 2.1 |
| Gold (per ounce) | 0.4 | 12.4 | 44.8 | 15.7 | 12.3 | 9.3 |
| Bloomberg Commodity Index | 0.9 | 8.2 | 10.7 | -2.0 | 7.0 | 0.5 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
LET’S TALK ABOUT THE WEATHER. Last week, many parts of the United States set new records for low temperatures as an arctic blast swept across the country. Antelope Creek, North Dakota, saw 45 degrees below zero, which made the low in Austin, Texas (29 degrees) seem downright balmy.8 In many areas, schools closed – not because of snow, but because of the bitter cold. Meanwhile, up in Alaska, the Iditarod dog sled race moved north from Anchorage to Fairbanks due to a lack of snow and too-warm temperatures.9
See what you know about historical weather events in the United States by taking this brief quiz:
- What was the coldest temperature ever recorded in the United States?10,11
- 80 degrees below zero in Prospect Creek, Alaska
- 70 degrees below zero in Rogers Pass, Montana
- 60 degrees below zero in Tower, Minnesota
- 45 degrees below zero in Minot, North Dakota
- In 1974, the U.S. experienced the Super Tornado Outbreak. During the outbreak, two F5 tornadoes struck Tanner, Alabama, in the same 24-hour period. How many tornadoes occurred across the United States during the Outbreak?12
- 47 across 7 states
- 98 across 25 states
- 148 across 13 states
- 247 across 21 states
- In the early 1900s, steady rain caused a major river in the U.S. to overflow its banks. The floodwaters spread across 16 million acres in seven states. It “temporarily created a shallow sea over 75 miles wide and forced thousands to be evacuated by boat,” reported Evan Andrews of History.com.13 What is the name of the river that flooded?
- Ohio River
- Mississippi River
- Colorado River
- Platte River
- In 2011, a massive dust storm encompassed Phoenix, Arizona. The 6,000-foot-high wall of dust stretched more than 100 miles long and traveled 150 miles, reported Gabe Trujillo of Channel 12 News.14 What are these enormous dust storms called?
- Derechos
- Lizard stranglers
- Haboobs
- Drouths
By the end of last week, temperatures were warming up. In some places, temperature swings of 90 degrees or more were anticipated.15 That’s sure to inspire thoughts of spring blooming!
Weekly Focus – Think About It
“The beautiful spring came; and when Nature resumes her loveliness, the human soul is apt to revive also.”16
– Harriet Ann Jacobs, Author
Answers: 1) a; 2) c; 3) b; 4) c
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.aaii.com/sentimentsurvey or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/02-24-25-AAII%20Sentiment%20Survey_1.pdf
2 https://www.aaii.com/sentimentsurvey/sent_results
3 https://www.bloomberg.com/news/newsletters/2025-02-19/are-retail-investors-too-bearish-probably-not?srnd=undefined or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/02-24-25-Investors%20Too%20Bearish_3.pdf
4 https://www.bloomberg.com/news/articles/2025-02-18/investors-are-the-most-risk-on-in-15-years-bofa-survey-shows or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/02-24-25-BofA%20Survey%20Shows_4.pdf
5 https://www.barrons.com/livecoverage/stock-market-today-022125?mod=hp_LEDE_C_1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/02-24-25-Barrons-Stock%20Market%20News_5.pdf
6 https://www.barrons.com/market-data
8 https://weather.com/forecast/regional/news/2025-02-16-arctic-blast-temperature-record-week-ahead
[1]0 https://weather.com/safety/winter/news/2024-01-12-record-coldest-temperatures-in-united-states#
[1]1 https://www.weather.gov/dlh/January21_FrigidMorningLowTemperatures#
[1]3 https://www.history.com/news/worlds-most-catastrophic-floods-in-photos
[1]5 https://www.foxweather.com/weather-news/winter-warmup-weather-whiplash-us
[1]6 https://www.goodhousekeeping.com/life/g3372/spring-quotes/