Blog
The Markets
Will the bull market in stocks continue?
There is always a diversity of opinion about whether stocks are headed higher or lower. Last week, investors were feeling more bearish than bullish about where the stock market may be headed over the next six months. The American Association of Individual Investors (AAII) Sentiment Survey showed:1
| Investor outlook | Week ending August 27, 2025 | Historic average |
| Bullish | 34.6% | 37.5% |
| Bearish | 39.4% | 31.0% |
| Neutral | 26.0% | 31.5% |
While investors who participated in the survey were leaning toward pessimism, some economists and analysts had a sunnier view of what might be ahead. They were optimistic about:
Strong company performance. Profits for companies in the Standard & Poor’s (S&P) 500 Index have been growing steadily. From April through June of this year, earnings grew by about 11.9 percent. It was the third consecutive quarter of double-digit earnings growth. In addition, analysts increased their estimates for earnings of S&P 500 companies over the July through September quarter, according to John Butters of FactSet.2
Solid consumer spending. The primary driver of the United States economy is consumer spending. Last week, data showed consumer spending rising. “Inflation ticked up slightly in July, but that didn’t stop shoppers from opening their wallets. Consumer spending grew by 0.3 [percent] last month, the Bureau of Economic Analysis reported Friday, the strongest gain in four months. The increase, fueled by rising compensation, shows households are still willing to spend even as inflation remains elevated,” reported Nicole Goodkind of Barron’s.3
In addition, some Americans may find their wallets are a little fatter next year when tax refunds are issued. In August, “…the IRS announced that, as part of its phased implementation of the OBBBA [One Big Beautiful Bill Act], it would not be adjusting W2 or 1099 forms for the current calendar year…This seemingly innocuous statement confirms that we will see an even larger crop of personal income tax refunds early in 2026 than was anticipated when the OBBBA was passed. These higher income tax refunds should work much like a new round of stimulus checks, adding to consumer demand and inflation pressures early next year,” wrote economist David Kelly.4
Lower borrowing rates. Many on Wall Street are optimistic the Federal Reserve will begin to lower the federal funds rate in September. Major financial firms “…now expect a 25-basis-point U.S. Federal Reserve rate cut in September following Chair Jerome Powell’s shift in tone at Jackson Hole toward rising risks in the labor market,” reported Rashika Singh of Reuters.5
It is impossible to know how the stock market will perform over the short term. That’s why it’s important to hold different types of investments in various asset class. Holding a well-allocated and diversified portfolio helps investors manage risk while pursuing financial goals.
Last week, major U.S. stock indexes moved lower.6 U.S. Treasuries rallied as yields declined on all but the longest maturities of Treasuries.7
Data as of 8/29/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -0.1% | 9.8% | 15.5% | 17.0% | 13.0% | 12.6% |
| Dow Jones Global ex-U.S. Index | -0.9 | 19.3 | 13.5 | 12.0 | 6.3 | 4.9 |
| 10-year Treasury Note (yield only) | 4.2 | N/A | 3.9 | 3.1 | 0.7 | 2.2 |
| Gold (per ounce) | 2.9 | 31.3 | 36.2 | 25.6 | 11.7 | 11.6 |
| Bloomberg Commodity Index | 1.1 | 4.1 | 6.0 | -6.5 | 7.0 | 1.2 |
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.
WHAT’S THE SECOND BIGGEST SPORTS LEAGUE IN THE WORLD? The National Football League is #1, but who is #2? Here’s a hint: it’s not Major League Baseball, the National Basketball Association, or the English Premier League (soccer). With $19 billion in revenue, the answer is the National College Athletic Association (NCAA), stated The Economist.8
“Hidden behind the pageantry of marching bands, fight songs and century-old rivalries with names like ‘the Backyard Brawl’ lies what is, in effect, the second-biggest sports league in the world (after the NFL)…In 2024 college sport generated twice as much revenue as the English Premier League. Nearly all that came from American football and men’s basketball. For decades the system was lucrative because the labor was free.”8
The economics of college sports is changing again this year.
Over the last few years, college athletes had the right to profit from their names, images and likenesses (NIL). For example, it’s estimated that Texas Longhorns quarterback Arch Manning had NIL deals worth $6.8 million, while Livvy Dunne, a gymnast at Louisiana State University, had NIL earnings worth an estimated $4.1 million, according to Nate Cunningham of Sports Illustrated.9 (Until recently, college athletes gave up their NIL rights when they signed with a college sports team.)
This year, colleges and universities will begin paying their athletes directly. As of July 1, 2025, institutions of higher learning are allowed – but not required – to spend about $20.5 million on athletes, reported Dan Murphy of ESPN. That amount is expected to grow.10
“This new era will force athletic-department heads to act more like portfolio managers, balancing returns across a basket of sports. Many have indicated that they will mirror the recent federal court settlement. It allotted three-quarters of retroactive compensation to former football players, 15% to men’s basketball, 5 [percent] to women’s basketball and 5 [percent] to the rest,” reported The Economist.8
WEEKLY FOCUS – THINK ABOUT IT
“A teacher told my mother that I would never become successful, which illustrates the difficulty of long-run forecasting on inadequate data.”11
– Clive Granger, Nobel Prize-winning econometrician
* 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 stocks 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.
Sources:
[1] https://www.aaii.com/sentimentsurvey or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/09-02-25-AAII-What-Direction-Do-AAII-Members-1.pdf
2https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_082925.pdf or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/09-02-25-Earning-Insights-2.pdf
3 https://www.barrons.com/articles/pce-inflation-july-federal-reserve-interest-rates-66e4a5c5?mod=hp_LEDE_C_4 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/09-02-25-Barrons-Consumer-Spending-Comes-In-Strong-3.pdf
6 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/09-02-25-Barrons-Charts-6.pdf
8 https://www.economist.com/united-states/2025/08/28/a-19bn-industry-is-about-to-pay-its-workforce-for-the-first-time or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/09-02-25-The-Economist-A-$19bn-Industry-8.pdf
9 https://www.si.com/college-basketball/highest-paid-college-athletes-via-nil-deals
[1]0 https://www.espn.com/college-sports/story/_/id/45469454/after-house-settlement-approval-here-next
The Markets
Will the Fed lower rates?
Last week, in a much-anticipated speech, Federal Reserve (Fed) Chair Jerome Powell said, “In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation…Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”1
Investors celebrated and financial markets rallied.
“Powell’s speech sparked the strongest cross-asset rally since April…,” reported Rita Nazareth of Bloomberg. On Friday, “The S&P 500 climbed 1.6 [percent], with tech megacaps rebounding. The Russell 2000 of small firms jumped about 4 [percent]. Two-year yields sank 11 basis points to 3.68 [percent]. Traders boosted bets on a Fed cut next month, pricing in an 85 [percent] chance of a move. The dollar fell.”2
Monetary policy – the steps the Fed takes to maximize employment and keep prices stable3 – can be:
- Restrictive when the federal funds rate is high enough to restrain economic activity and curb inflation.4
- Neutral when the federal funds rate is at a level that does not stimulate or restrain the economy.5
- Accommodative when the federal funds rate is low enough to stimulate economic activity and reduce unemployment.4
Recent economic data showing a slowdown in employment and an uptick in inflation complicate the upcoming rate-setting decision, reported Joseph E. Gagnon of the Peterson Institute for International Economics.5
When the Fed lowers the federal funds rate, the cost of borrowing moves lower as rates on home equity loans, auto loans, and credit cards typically follow the Fed. Lower borrowing costs may create opportunities for businesses to invest in new ventures and hire more workers. A rate cut also can boost consumer spending, reported Sarah Foster of Bankrate.6 The exception to this rule is mortgage loans. The rate for 30-year fixed mortgages typically tracks the benchmark 10-year Treasury note.7
Last week, after the Fed Chair’s speech, the Dow Jones Industrial Average closed at a record high, and U.S. Treasuries rallied as yields moved lower, reported Karishma Vanjani of Barron’s.8
Data as of 8/22/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.3% | 10.0% | 16.1% | 16.1% | 13.5% | 13.1% |
| Dow Jones Global ex-U.S. Index | 0.6 | 20.3 | 15.4 | 11.7 | 6.5 | 5.3 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 3.9 | 3.0 | 0.7 | 2.0 |
| Gold (per ounce) | 0.0 | 27.7 | 34.3 | 24.1 | 11.4 | 11.1 |
| Bloomberg Commodity Index | 1.3 | 2.9 | 6.7 | -6.3 | 7.2 | 1.7 |
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.
WHAT DO YOU KNOW ABOUT FASHION? The fashion industry is an important part of the global economy. It employs 300 million people and is expected to have global revenue of $2 trillion by 2026, reported Elaine Ritch for Economics Observatory.9
Like all industries, fashion has hits and misses. There are trends that shine and trends that perplex. Consider Big Red Boots (BRBs), which were introduced at New York Fashion Week in 2023. The cartoon-style boots looked like they’d been pulled from Mario’s closet and retailed for $350. Their popularity was tempered by suction issues – the grippy rubber boots proved difficult to remove, reported Christian Allaire of Vogue.10
See what you know about fashion trends today, and in the past, by taking this brief quiz:
- The Communist Party reportedly does not approve of the latest fashion trend in China, but demand for a particular type of sun protection gear has been on the rise.11 What are Chinese women wearing to the beach?
- Glare goggles
- Sunuits
- Shade sleeves
- Facekinis
- People of a certain age may remember platform shoes as a disco-era wardrobe necessity. The 70’s weren’t the first time thick-soled shoes trended, though. In 16th century Venice, “chopines” – boots with platforms that were up to 20 inches tall – were popular.12 The boots were worn to:
- Strengthen ankles and calves.
- Provide protection in combat.
- Protect shoes and dresses from muck.
- Wade across shallow canals.
- In the 1960s, dresses made of an unusual material that was printed with geometric patterns became very popular.12 What were the dresses made of?
- Polyester
- Paper
- Chocolate
- Vinyl
- Which of the following is NOT an iconic fashion piece, according to Glam Observer?13
- Little black dresses
- Poodle skirts
- Denim jeans
- Trench coats
WEEKLY FOCUS – THINK ABOUT IT
“The best fashion show is definitely on the street. Always has been and always will be.”14
— Bill Cunningham, Photographer
Answers: 1) d; 2) c; 3) b; 4) b
* 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.federalreserve.gov/newsevents/speech/powell20250822a.htm
2 https://www.bloomberg.com/news/articles/2025-08-21/stock-market-today-dow-s-p-live-updates?srnd=phx-markets or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-25-25-Bloomberg-Wall-Street-Has-Best-2.pdf
3 https://www.investopedia.com/terms/m/monetarypolicy.asp
5 https://www.piie.com/blogs/realtime-economics/2025/feds-september-dilemma
6 https://www.bankrate.com/banking/federal-reserve/how-federal-reserve-impacts-your-money/
7 https://www.fanniemae.com/research-and-insights/publications/housing-insights/rate-30-year-mortgage
8 https://www.barrons.com/livecoverage/stock-market-news-today-082225/card/dow-marks-first-record-close-of-the-year-as-s-p-500-nabs-new-high-3FEYOjg5CcgmPAwTmvae or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-25-25-Barrons-Dow-Markets-First-Record-8.pdf
9 https://www.economicsobservatory.com/fast-fashion-what-are-the-true-costs
10 https://www.vogue.com/article/everyone-is-wearing-mschf-big-red-boots or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-25-25-Vogue-Why-Is-Everyone-10.pdf
11 https://www.economist.com/business/2025/08/21/chinas-hottest-new-look-the-facekini or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-25-25-Chinas-Hottest-New-Look-11.pdf
12 https://www.bbc.co.uk/bitesize/articles/zd8rvwx
13 https://glamobserver.com/8-iconic-fashion-pieces-in-the-history-of-fashion/
14 https://www.brainyquote.com/authors/bill-cunningham-quotes
The Markets
Was inflation higher, lower, or steady?
Perspective has a tremendous influence on how we perceive the world around us. If you saw any three-dimensional chalk drawings on sidewalks this summer, you understand how perspective affects understanding. When seen from one direction, a chalk drawing looks flat. When seen from another, a winged dragon surges from a hole in the pavement.
Last week, major news sources had varied perspectives on inflation. Here are a few of the headlines we saw:
“Core Inflation Rises to 3.1 [percent]” (Barron’s)1
“Inflation holds steady…” (CNN)2
“Inflation cools slightly in July from prior month” (Fox Business)3
Remarkably, all were correct. The news sources simply highlighted different aspects of the Consumer Price Index (CPI). Here’s what the CPI showed for June and July of this year.4,5
| June 2025 (month to month) | July 2025 (month to month) | June 2025 (year over year) | July 2025 (year over year) | |
| Headline inflation (all items measured) | 0.3% | 0.2% | 2.7% | 2.7% |
| Core inflation (excludes volatile food and energy prices) | 0.2% | 0.3% | 2.9% | 3.1% |
Headline inflation moved slightly lower, on a month-to-month basis (from June to July). It remained steady year over year, which is the 12-month period through July 2025. In contrast, core inflation, which excludes volatile food and energy prices, moved slightly higher on a month-to-month basis (from June to July). It increased year over year.4,5
The Federal Reserve (Fed)’s target for inflation is 2 percent.6
The Producer Price Index (PPI) came out last week, too. It tracks how prices have changed for groups that produce and sell goods and services. It was up 3.3 percent in July, year over year, which was higher than June’s 2.4 percent increase.7
“U.S. wholesale inflation accelerated in July by the most in three years, suggesting companies are passing along higher import costs related to tariffs. The producer price index increased 0.9 [percent] from a month earlier, the largest advance since consumer inflation peaked in June 2022…,” reported Augusta Saraiva of Bloomberg.8
Last week, major U.S. stock indexes continued to rally.9 U.S. Treasury yields were mixed. Yields for some shorter maturities of Treasuries moved lower, while yields on longer maturities rose.10
Data as of 8/15/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.9% | 9.7% | 16.4% | 14.5% | 13.8% | 11.9% |
| Dow Jones Global ex-U.S. Index | 1.8 | 19.7 | 17.8 | 10.3 | 6.4 | 4.3 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 3.9 | 2.8 | 0.7 | 2.2 |
| Gold (per ounce) | -1.7 | 27.8 | 36.3 | 23.4 | 11.1 | 11.5 |
| Bloomberg Commodity Index | -0.4 | 1.6 | 4.4 | -6.1 | 6.9 | 1.1 |
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.
WHERE ARE INTEREST RATES HEADED? One of the drivers behind the recent stock market rally has been an expectation that the U.S. Federal Reserve (Fed) will respond to softening economic data by lowering the federal funds rate, reported Saeed Azhar, Johann M Cherian and Sanchayaita Roy of Reuters.11
Fed rate cuts are intended to stimulate economic growth by making it less expensive to borrow money. When it’s cheaper to borrow, companies’ expenses may fall and profits can increase, lifting stock prices, reported Mary Hall of Investopedia.12
After last week’s Consumer Price Index was released, expectations for a September Fed rate cut soared above 90 percent, according to CME FedWatch.13 “Inflation is still higher than the Federal Reserve would like — but not high enough to stop the central bank from cutting interest rates next month. That’s investors’ takeaway from yesterday’s consumer price index report,” reported Phil Serafino and Edward Bolingbroke of Bloomberg. 14
The catch is that a Fed rate cut doesn’t always have the intended effect. Sometimes, the Fed reduces or increases the federal funds rate and other interest rates don’t follow suit. Bloomberg Economics Chief Economist Tom Orlick explained:
“Let’s cast our minds back briefly to the early 2000s, to [former Fed Chair] Ben Bernanke and to the famous savings glut hypothesis. So, back then, the Fed was hiking [the federal funds rate] but long-term Treasury rates weren’t going up. Bernanke said it’s because there’s a glut of global savings. All of this money is coming from China and Saudi into the U.S. Treasury market…that situation is reversed and we’re no longer in a world with a savings glut. We’re in a world with a savings shortage. And that means it doesn’t matter who President Trump appoints as the next Fed chair…that savings shortage is going to mean that long-term rates, the 10-year Treasury yield stays high and…we think 4 to 5 percent for the 10-year Treasury is the new normal.”15
The 10-year U.S. Treasury note yielded 4.27 percent at the start of last week. By week’s end it was at 4.33 percent.10
WEEKLY FOCUS – THINK ABOUT IT
“I don’t think there’s too much normal out there anymore. Though there’s still plenty of average to go around.”16
― John David Anderson, Author
Sources:
1 https://www.barrons.com/livecoverage/inflation-july-cpi-rate-report/card/core-inflation-rises-to-3-1–UD6vxFsucLKhK6pJYSX8 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-18-25-Core-Inflation-Rises-1.pdf
2 https://www.cnn.com/2025/08/12/economy/us-cpi-consumer-inflation-july
3 https://www.foxbusiness.com/economy/cpi-inflation-july-2025
4 https://www.bls.gov/news.release/cpi.nr0.htm
5 https://www.bls.gov/news.release/archives/cpi_07152025.htm
6 https://www.richmondfed.org/publications/research/econ_focus/2024/q1_q2_federal_reserve
7 https://data.bls.gov/timeseries/WPUFD4&output_view=pct_12mths
9 https://www.barrons.com/market-data or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-18-25-Barrons-Market-Graphs-9.pdf
11 https://www.reuters.com/world/us/sp-500-nasdaq-hit-new-closing-highs-rate-cut-hopes-2025-08-13/
12 https://www.investopedia.com/investing/how-interest-rates-affect-stock-market/
13 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-18-25-FedWatch-Market-Rate-Probabilities-11.pdf
14 https://www.bloomberg.com/news/newsletters/2025-08-13/fed-rate-cut-bets-ramping-up-after-inflation-data?srnd=phx-economics-v2 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-18-25-Fed-Rate-Cut-Bets-12.pdf
The Markets
U.S. companies have been hitting it out of the park!
Earnings season happens four times every year. It’s the period of time when publicly traded companies report how they performed during the previous quarter. So far, in aggregate, the companies in the Standard & Poor’s (S&P) 500 Index have delivered solid results for the second quarter of 2025.1
“Overall, 66 [percent] of the companies in the S&P 500 have reported actual results for Q2 2025 to date. Of these companies, 82 [percent] have reported actual EPS [earnings per share] above estimates, which is above the 5-year average of 78 [percent] and above the 10-year average of 75 [percent]. If 82 [percent] is the final number for the quarter, it will mark the largest percentage of S&P 500 companies reporting a positive EPS surprise for a quarter since Q3 2021 (also 82 [percent]),” reported John Butters of FactSet.1
While many U.S. companies had an excellent second quarter, economic clouds are shadowing investor optimism.
“Investors are struggling with a contradiction at the heart of the market as stocks move into their toughest months of the year. On the one hand, earnings have been strong. On the other, economic data are showing signs of weakness. How the two variables play out could determine whether the stock market can keep rallying to new highs—or stumbles into an end-of-summer selloff,” explained Martin Baccardax of Barron’s.2
Recent economic data show a softening labor market and weaker consumer spending. (Consumer spending is the primary driver of U.S. economic growth.)3 In addition, activity in the manufacturing and service sectors slowed.4 Nazmul Ahasan of Bloomberg reported:
“The Institute for Supply Management’s index of services declined last month to 50.1, below all estimates in a Bloomberg survey of economists. Readings above 50 indicate expansion…The data, released Tuesday, paint a picture of a sluggish service economy wrestling with the fallout of higher tariffs, cautious consumers and [policy] uncertainty…The services sector is by far the largest in the U.S. economy, and has helped drive growth this year while the manufacturing industry contracted for five straight months.”5
Last week, the major U.S. stock indexes rallied. The Nasdaq Composite Index closed at a record high, while the Standard & Poor’s 500 Index and Dow Jones Industrial Indexes finished the week close to new highs, reported Amalya Dubrovsky , Brett LoGiurato and Laura Bratton of Yahoo! Finance.6 U.S. Treasury yields generally moved higher. The 30-year Treasury bond yielding 4.85% at the end of last week.7
Data as of 8/8/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 2.4% | 8.6% | 20.1% | 15.6% | 13.7% | 11.8% |
| Dow Jones Global ex-U.S. Index | 2.6 | 17.6 | 19.5 | 10.2 | 6.5 | 3.9 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 4.0 | 2.8 | 0.6 | 2.2 |
| Gold (per ounce) | 1.4 | 30.0 | 40.8 | 23.9 | 10.7 | 12.0 |
| Bloomberg Commodity Index | 0.2 | 2.1 | 5.8 | -4.9 | 7.3 | 0.9 |
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.
BURGERNOMICS: A LOOK AT THE BIG MAC INDEX. During the first six months of 2025, the United States dollar delivered its worst performance since 1991. “The U.S. Dollar Index, which measures the value of the greenback against the world’s six most traded currencies, has lost almost 11 [percent] of its value…,” reported Valerio Baselli of Morningstar.8
The drop in the U.S. dollar’s value hasn’t made as big a difference as some might have expected – at least when it comes to buying burgers abroad.
Since 1986, The Economist has been using the “Big Mac Index” as a lighthearted way to measure the relative value of currencies across the world. In theory, if currency exchange rates are properly aligned, a burger should cost the same no matter where it is purchased. (This is known as purchasing-power parity.) That’s rarely the case, so the index helps identify which countries’ currencies are overvalued or undervalued.9
“Purchasing-power parity suggests that, with a Taiwanese Big Mac costing 78 Taiwanese dollars and an American one $6.01, the currencies’ exchange rate should be the ratio of the two prices. Hence $1 should buy NT$13 [new Taiwan dollars]. In reality, it buys NT$29. The Big Mac index therefore concludes that the Taiwanese dollar is greatly undervalued against the greenback, by some 56 [percent],” explained The Economist.10
In July 2025, The Economist updated the Index, comparing the price of a burger in the U.S. to the price overseas. (The price of a burger in the United States rose from $5.79 in January to $6.01 in July.10) After the decline in the U.S. dollar, currencies in many Asian countries remained significantly undervalued relative to the dollar. For example, a burger costs:9
- 49.8 percent less in Hong Kong than it does in the United States.
- 41.2 percent less in Japan than it does in the United States.
- 41.1 percent less in Indonesia than it does in the United States.
- 38.5 percent less in India than it does in the United States.
In contrast, a burger costs:9
- 54.7 percent more in Switzerland than it does in the United States.
- 39.0 percent more in Sweden than it does in the United States.
- 36.1 percent more in the Euro are than it does in the United States.
- 31.1 percent more in Britain than it does in the United States.
Overall, European countries have seen their currencies become more expensive when compared to the U.S. dollar, while currencies in China, Japan, Singapore, South Korea, Taiwan and Vietnam remain undervalued relative to the U.S. dollar. “Most are now even cheaper,” according to The Economist.10
WEEKLY FOCUS – THINK ABOUT IT
“Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”11
― Adam Smith, Philosopher and economist
* 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://insight.factset.com/sp-500-earnings-season-update-august-1-2025
2 https://www.barrons.com/articles/stock-market-earnings-data-buy-sell-f3743245?mod=hp_LEDE_C_3 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-The-Stock-Market-Is-Stuck%20-%202.pdf
3 https://abcnews.go.com/Business/us-headed-recession-experts-weigh/story?id=124407347
4 https://www.bloomberg.com/news/articles/2025-08-01/us-manufacturing-contracts-at-fastest-pace-in-nine-months or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-US-Manufacturing-Contracts%20-%204.pdf
5 https://www.bloomberg.com/news/articles/2025-08-05/us-service-activity-nearly-stagnates-as-employment-contracts or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-US-Service-Activity%20-%205.pdf
8 https://global.morningstar.com/en-gb/markets/how-low-can-us-dollar-go
9 https://www.economist.com/interactive/big-mac-index or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-Our-Big-Mac-Index-Shows-How-Burger%20-%209.pdf
10 https://www.economist.com/finance-and-economics/2025/07/16/our-big-mac-index-will-sadden-americas-burger-lovers or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-Our-Big-Mac-Index-Will-Sadden%20-%2010.pdf