The Markets
American companies did well in the first quarter.
During earnings season, publicly held companies tell investors how they performed during the previous quarter with a particular focus on earnings, which reflect company profits.
Currently, we’re more than halfway through earnings season, and companies in the Standard & Poor’s (S&P) 500 Index have reported solid performance results overall.1 “Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year averages,” reported John Butters of FactSet.1
As of last Friday, 72 percent of S&P 500 companies had reported earnings, and the blended earnings growth rate was 12.8 percent. If earnings stay at this level, we will see a second consecutive quarter of double-digit earnings growth for the S&P 500, reported Butters. 2
While first quarter earnings were strong, it’s unclear whether future earnings growth will be as robust. “During the month of April, analysts lowered EPS [earnings-per-share] estimates for the second quarter by a larger margin than average…Analysts also continued to lower EPS estimates for [calendar year] 2025,” reported Butters.2
The reasons for changing expectations may be related to two words that have been popping up more than usual on earnings calls: “tariffs” and “uncertainty”.3
“Several companies noted that the uncertainty surrounding tariffs is making businesses hesitant about investment decisions. That means they are delaying stocking up on inventory (or in some cases, overstocking), hiring, and dealmaking,” reported Sabrina Escobar of Barron’s. “All the uncertainty has made it hard for companies to make accurate projections for the year ahead.”3
Last week, major U.S. stock indexes rose. “As of Friday, the S&P 500 index had risen nine days in a row, its longest streak since 2004. It jumped 10.2% in that span – 2.9% of that in the past week – a remarkable performance given the cloud of uncertainty hanging over American businesses,” reported Avi Salzman of Barron’s.4
Yields on most maturities of U.S. Treasuries moved higher over the week.5
Data as of 5/2/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 2.9% | -3.3% | 12.3% | 11.0% | 14.9% | 10.4% |
| Dow Jones Global ex-U.S. Index | 3.0 | 8.7 | 9.6 | 5.8 | 8.4 | 2.5 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 4.6 | 3.0 | 0.6 | 2.1 |
| Gold (per ounce) | -0.8 | 24.5 | 42.0 | 20.2 | 13.7 | 10.5 |
| Bloomberg Commodity Index | -1.1 | 2.7 | 0.6 | -7.7 | 10.7 | -0.2 |
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.
HONEY, I SHRUNK THE ECONOMY! Last week, there were a lot of headlines about the U.S. economy after the Commerce Department shared information showing the U.S. economic expansion stuttered in the first quarter of this year. From January to March, the U.S. economy contracted, -0.3 percent annualized, as measured by gross domestic product (GDP) adjusted for inflation.6
The reasons for an economic contraction weren’t obvious. Many companies were doing well, and business investment was solid. Consumer spending slowed but remained healthy. Government spending dropped a bit, but the fly in the economic ointment was imports from other countries.6
“An enormous surge in imports was the big outlier in this GDP report. Normally, big increases in imports rarely coincide with outright declines in headline GDP because stronger imports usually mean more spending, not less,” reported a source cited by Megan Leonhardt and Matt Peterson of Barron’s.7
Why are imports part of U.S. productivity?
You may be scratching your head, wondering why imports – goods produced in other countries – are included when determining the value of all goods and services produced in the United States.8 The short answer is: They’re not.9
Broadly, U.S. GDP is measured by adding up:
- Personal consumption expenditures (consumer spending)
- Investment (business expenditures, household purchases of homes)
- Government spending (mandatory and discretionary)
- Exports (goods made in the U.S. and shipped elsewhere)
The final step is subtracting imports, which are goods that were made elsewhere. Imports are deducted because they’re in consumption, investment, and government spending numbers. To understand what was produced in the United States, imports must be subtracted.9 The St. Louis Federal Reserve offered an example of how that works.
“…if $10,000 in imported parts are used in the production of a car in a U.S. factory (an “American” car) and the car is sold in the United States for $30,000, then the $30,000 counts as personal consumption expenditures; but $10,000 is subtracted to account for the value of the imported parts, so the effect on U.S. GDP is $20,000.”9
The GDP report raised some interesting questions
The report about U.S. economic performance raised some questions that have yet to be answered. Why didn’t U.S. GDP reflect the purchase of imports? What happened to the imported goods? It’s possible the surge in imports was overestimated. It’s also possible spending and investment were underestimated, opined the source cited by Leonhardt and Peterson.7
We may have answers over the next two months. Last week’s report was the first estimate of economic growth, and it may have included data that was incomplete or will be updated. We’ll see two more estimates before the end of June.10
For now, it may be enough to know that first quarter GDP appears to reflect “the anticipated impact of tariffs rather than an actual downturn,” as Randall Forsyth of Barron’s reported.11
Weekly Focus – Think About It
“It’s funny: I always imagined when I was a kid that adults had some kind of inner toolbox full of shiny tools: the saw of discernment, the hammer of wisdom, the sandpaper of patience. But then when I grew up I found that life handed you these rusty bent old tools – friendships, prayer, conscience, honesty – and said ‘do the best you can with these, they will have to do’. And mostly, against all odds, they do.”12
– Anne Lamott, 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://insight.factset.com/sp-500-earnings-season-update-may-2-2025
3 https://www.barrons.com/articles/tariffs-earnings-calls-stock-ccab0e3b or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-05-25-Barrons-CEOs-Are-Saying-These%20-%203.pdf
4 https://www.barrons.com/articles/stock-market-rally-risk-91fd1c10?refsec=the-trader&mod=topics_the-trader or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-05-25-Barrons-Stock-Market-Winning-Streak%20-%20%204.pdf
6 https://www.bea.gov/sites/default/files/2025-04/gdp1q25-adv.pdf [report, Table 1)
7 https://www.barrons.com/livecoverage/inflation-gdp-economy-pce-data/card/why-the-u-s-economy-isn-t-as-weak-as-it-looks-0WgAY8LrRIT8X8X3fZQ1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-05-25-Barrons-Why-The-US-Economy-Isnt-as-Weak%20-%207.pdf
8 https://www.investopedia.com/terms/r/realgdp.asp
9 https://www.stlouisfed.org/publications/page-one-economics/2018/09/04/how-do-imports-affect-gdp
10 https://www.bea.gov/sites/default/files/2024-10/relia.pdf
11 https://www.barrons.com/articles/stock-market-economy-tariffs-0e9bf1d5?refsec=up-and-down-wall-street&mod=topics_up-and-down-wall-street or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-05-25-Barrons-Stocks-Are-Back%20-%2011.pdf
12 https://www.goodreads.com/quotes/159902-it-s-funny-i-always-imagined-when-i-was-a-kid
The Markets
How’s everybody feeling?
If you said, “Not great,” you’re not alone. There is an abundance of negative sentiment today. Many people – from consumers to small business owners, and from asset managers to investors – are feeling less optimistic. Here’s the data.
- The University of Michigan’s Consumer Sentiment Survey’s final data for Aprilshowed that sentiment tumbled for the fourth month in a row. “While this month’s deterioration was particularly strong for middle-income families, expectations worsened for vast swaths of the population across age, education, income, and political affiliation…Labor market expectations remained bleak. Even more concerning for the path of the economy, consumers anticipated weaker income growth for themselves in the year ahead. Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warning signs perceived by consumers,” wrote Surveys of Consumers Director Joanne Hsu.1
- The National Federation of Independent Business (NFIB) Small Business Optimism Index fell from February to March, settling just below its long-term average. “The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months. Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them,” stated NFIB Chief Economist Bill Dunkelberg.2
- The Bank of America Global Fund Manager Survey showed that, in April, asset managers were the most bearish they’ve been in three decades with sentiment around economic growth particularly low. “Fund managers are extremely gloomy, with 82 [percent] of respondents…expecting the global economy to weaken,” reported Michael Msika of Bloomberg.3
- The American Association of Individual Investors (AAII) Sentiment Survey found that 55.6 percent of investors were feeling bearish about how the stock market will perform over the next six months. That is well above the historic average of 31 percent bearish.4
It’s fair to say that sentiment has been at extremely low levels. A contrarian would point out that this could be a positive development. When everyone is bearish, contrarians are bullish. They tend to look for opportunities to augment portfolio holdings with attractively priced investments that may help achieve long-term goals.
If you don’t share a contrarian outlook, stay focused on the importance of remaining invested as stock and bond markets move higher and lower. “All of this chaos underlined something that is historically true for the stock market – the sharpest percentage drops and largest percentage gains are often not far apart. For that reason, walking away from the market after a big drop could mean missing out on the market’s best days,” reported Gordon Gottsegen of MarketWatch.5
For example, major U.S. stock indexes fell by more than two percent last Monday but, by the end of the week, the indexes had recovered those losses and moved higher. There were two drivers behind last week’s gains. The first was hope for a resolution in the U.S.-China trade war and the second was renewed confidence that Federal Reserve Chair Jerome Powell will remain in his position, reported Connor Smith of Barron’s.6,7 Yields on longer maturities of U.S. Treasuries moved lower over the week.8
Data as of 4/25/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 4.6% | -6.1% | 9.4% | 8.8% | 13.9% | 10.1% |
| Dow Jones Global ex-U.S. Index | 2.7 | 5.5 | 7.8 | 4.5 | 7.6 | 2.1 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 4.7 | 2.8 | 0.7 | 1.9 |
| Gold (per ounce) | -0.9 | 25.5 | 39.9 | 20.0 | 13.8 | 10.6 |
| Bloomberg Commodity Index | -0.3 | 3.9 | -0.4 | -6.8 | 11.5 | 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.
STORIES HAVE INFLUENCE AND SO DO STORYTELLERS. Anyone who reads (or listens to) a lot of books, blogs and stories knows that the narrator is important. Sometimes, a story is told from a single point of view and other times it will have multiple perspectives. No matter how many narrators tell the story, each one presents the situation (or series of events) they are describing in a way that reflects their point of view and/or values.9
The stories that are told about an economy or events that may affect that economy can be powerful because they also can influence human behavior and affect investment decision-making.
“The idea that emotional states may affect the economy has a long intellectual history. John Maynard Keynes regrettably missed his chance to coin ‘vibe-cession’, but he wrote extensively about how peoples’ instinctive ‘animal spirits’ drove crashes and recoveries. Taking this idea one step further, economist Robert Shiller has advocated for a more detailed study of economic narratives, or contagious stories that shape how individuals view the economy and make decisions,” according to Joel Flynn and Karthik Sastry of VoxEU.10
Tariff turmoil has offered some insight into the influence of storytellers and narratives on investors. For example, last week, Tracy Alloway and Joe Weisenthal of Bloomberg’s Odd Lots reported that the head of economics research at a market research company compared recent ups and downs of the Standard & Poor’s (S&P) 500 Index with the presidential advisor or cabinet member who was telling the administration’s story.11 He found that:
“…since the beginning of March, the S&P has lost a total 719 points on days when [Commerce Secretary] Lutnick and [Senior Counselor for Trade and Manufacturing] Navarro have been the biggest stories. On days where [Treasury Secretary] Bessent is in the news, we’ve seen the S&P 500 go up by a total of 52 points.”11
Flynn and Sastry’s research concluded, “…contagious narratives are an important driving force in the business cycle…Not all narratives are equal in their potential to shape the economy, and the fate of a given narrative may rest heavily on its (intended or accidental) confluence with other narratives or economic events.”10
Weekly Focus – Think About It
“Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing.”12 –Abraham Lincoln, Former U.S. President
* 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.sca.isr.umich.edu or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-28-25-U-o-M-Survey-of-Consumers%20-%201.pdf
2 https://www.nfib.com/news/monthly_report/sbet/
3 https://www.bloomberg.com/news/articles/2025-04-15/investors-haven-t-been-this-bearish-in-30-years-bofa-poll-shows or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-28-25-Bloomberg-Investors-Havent-Bean-This-Bearish%20-%203.pdf
4 https://www.aaii.com/sentimentsurvey or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-28-25-AAII-Investor-Sentiment-Survey%20-%204.pdf
6 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-28-25-Barrons-DJIA-S&P-Nasdaq%20-%206.pdf
7 https://www.barrons.com/livecoverage/stock-market-today-042225?mod=hp_LEDE_C_1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-28-25-Barrons-Dow-Finishes-Up-More-Than%20-%207.pdf
9 https://www.merriam-webster.com/dictionary/narrative
10 https://cepr.org/voxeu/columns/macroeconomics-narratives
11 https://www.bloomberg.com/news/newsletters/2025-04-23/today-s-a-bessent-day-and-stocks-are-up? or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-28-25-Bloomberg-Todays-a-Bessent-Day%20-%2011.pdf
The Markets
As the market turns…
When investor preferences shift and money flows from one sector, industry, investment style or geographic region into another, it is called a market rotation.1
For years, stock markets in the United States have outperformed stock markets elsewhere. “The outperformance is attributed to U.S. exceptionalism fueled by a strong culture of innovation and entrepreneurship; more flexible labor markets; higher productivity; stronger consumer consumption driving demand for goods and services; a more favorable regulatory environment; lower corporate taxes; stronger intellectual property rights; and more open markets and trade policy,” reported Larry Swedroe of Morningstar.2
One consequence of U.S. outperformance is that investors outside of the United States own a lot of U.S. stocks, about $18.4 trillion, reported Tracy Alloway and Joe Weisenthal of Bloomberg. The percent of European investors’ total equity portfolios invested in U.S. stocks has more than tripled since 2011, in part due to strong performance.3
Now, Europe’s financial markets are outperforming those in the United States.
“Across assets of all stripes, the Old Continent is collectively trouncing America in a way that’s rarely been seen before…German bonds last week beat Treasuries by the most ever. And while European shares have been knocked by the trade war, they’re turning out to be far more resilient than American ones,” reported Alice Gledhill, Abhinav Ramnarayan, and Julien Ponthus of Bloomberg last week.4
Over the last two months, global investors have backed away from United States markets. Bank of America’s monthly global fund manager survey found that asset managers have reduced U.S. allocations by more than half since February. “A majority think a trade war that triggers global recession is the biggest risk for markets,” reported Reuters.5
The recent geographic market rotation was a reminder of the importance of diversification. While diversification won’t prevent losses, it can help investors effectively manage risk. Investors who held a geographical diversified portfolio may have fared better this year than those who invested only in the United States.
Last week, which was shortened by a holiday, major U.S. stock indices moved lower, reported Teresa Rivas of Barron’s.6 Yields on U.S. Treasuries were mixed over the week.7
Data as of 4/17/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -1.5% | -10.2% | 5.2% | 6.4% | 12.9% | 9.8% |
| Dow Jones Global ex-U.S. Index | 3.4 | 2.7 | 6.2 | 2.3 | 7.0 | 2.0 |
| 10-year Treasury Note (yield only) | 4.5 | N/A | 4.6 | 2.9 | 0.7 | 1.9 |
| Gold (per ounce) | 2.3 | 26.6 | 38.3 | 19.0 | 14.3 | 10.6 |
| Bloomberg Commodity Index | 1.4 | 4.2 | 0.7 | -8.7 | 10.6 | 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.
THE CURIOUS PATH OF THE U.S. DOLLAR. It’s easy to overlook the importance of the U.S. dollar. Many people have a few bills tucked in their wallets to buy sodas from vending machines, purchase vegetables at a farmer’s market, or pay their babysitters at the end of an evening out.
A lot of the currency issued by the United States is not held by U.S. citizens and U.S. companies. It is tucked away in central banks around the world. For decades, the U.S. dollar has been the world’s primary reserve currency, reported The Economist.8 The newspaper explained:
“For decades investors have counted on the stability of American assets, making them the keystones of global finance. The depth of a $27trn market helps make Treasuries a haven; the dollar dominates trade in everything from goods and commodities to derivatives. The system is buttressed by the Federal Reserve, which promises low inflation, and by America’s sturdy governance, under which foreigners and their money have been welcome and secure.”9
The U.S. dollar is not as dominant as it once was. In the early 2000s, many central banks began to diversify their holdings into Australian and Canadian dollars, Swedish krona, and Swiss francs, reported The Economist.8
Regardless, the reason other countries keep their reserves in U.S. dollars is because the U.S. has large and open financial markets and other countries can access their reserves when needed, reported Anshu Siripurapu and Noah Berman of CFR.10
Is the U.S. dollar a safe haven?
Normally, when markets become volatile and investors flee to perceived “safe havens”, the U.S. dollar strengthens. But that isn’t what happened recently. Since the start of the year, the United States dollar has weakened despite market volatility, reported Randall Forsyth of Barron’s.11
“…the chaotic rollout of…tariff policy has resulted in declines in the dollar and prices of longer-term U.S. government securities in tandem with declines in risky assets such as stocks—a reaction contrary to the currency’s and Treasuries’ usual performance as havens during episodes of market volatility. Markets stabilized in the latest week but remain on edge,” wrote Forsyth.11
One market concern is that falling demand for the U.S. dollar and rising U.S. Treasury yields could spell trouble for the United States. High demand makes it possible for the U.S. to borrow money at a low cost, reported CFR. If demand falls, that could change.12
“…rising Treasury yields also cloud the outlook for U.S. government spending, and by extension economic growth. Higher yields mean the U.S. government will owe more interest on any debt it rolls over or issues for new spending, exacerbating worries about the federal deficit,” reported Jesse Pound of CNBC.13
The federal deficit is the difference between what the government receives and what it pays out. Each annual deficit is added to the national debt.
Weekly Focus – Think About It
“All that you touch You Change.
All that you Change Changes you.
The only lasting truth Is Change.”14
–Octavia Butler, 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.morningstar.com/markets/how-sustainable-is-us-exceptionalism
3 https://www.bloomberg.com/news/articles/2025-04-16/trump-s-trade-war-boosts-european-stocks-and-bonds-eur-usd or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-21-25-Bloomberg-Worlds-Biggest-Pain-Trade%20-%203.pdf
4 https://www.reuters.com/business/finance/global-investors-dump-holdings-us-stocks-record-pace-bofa-survey-says-2025-04-15/ or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-21-25-Bloomberg-End-of-America-First%20-%204.pdf
6 https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202504 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-21-25-Barrons-Stock-Market-Another-Rough-Week%20-%206.pdf
7 https://www.federalreserve.gov/paymentsystems/coin_currcircvalue.htm
8 https://www.census.gov/library/stories/2024/12/new-year-population.html and https://www.federalreserve.gov/paymentsystems/coin_currcircvalue.htm or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-21-25-Economist-Trump-Might-Topple%20-%208.pdf
9 https://www.economist.com/finance-and-economics/2025/04/16/how-trump-might-topple-the-dollar or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-21-25-Economist-How-Dollar-Crisis-Would-Unfold%20-%209.pdf
[1]0 https://www.economist.com/leaders/2025/04/16/how-a-dollar-crisis-would-unfold
[1]1 https://www.barrons.com/articles/usd-us-dollar-604de403 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-21-25-Barrons-US-Spending-Threatens%20-%2011.pdf
[1]2 https://www.cfr.org/backgrounder/dollar-worlds-reserve-currency
[1]4https://www.goodreads.com/quotes/7567950-all-that-you-touch-you-change-all-that-you-change
The Markets
All eyes on the bond market.
The scale of the tariffs introduced by the administration shocked investors, sparking a roller coaster of a week for stock markets. Last week, U.S. stocks:
- Rallied on a rumor.1
- Fell when the rumor was recognized as a rumor.1
- Rose when President Trump paused reciprocal tariffs on most countries for 90-days.1
- Fell as investors considered how the remaining baseline tariffs (10 percent on all countries, steel and aluminum tariffs, and 100%+ tariffs on China) might affect companies and economies.1,2
- Rallied after the Federal Reserve assured investors it was prepared to step in, if needed.
“Economic angst enveloped every corner of Wall Street as U.S.-China trade tensions escalated, sparking a slide in stocks, the dollar and oil, with liquidations in U.S. assets pointing to disorder in the financial system,” reported Rita Nazareth, Isabelle Lee, Denitsa Tsekova, and Vildana Hajric of Bloomberg.”3
Disorder in the financial system
Some of the disorder was found in the United States Treasury market where yields were moving higher when many expected them to move lower. Investors who are concerned about risk and sell stocks tend to seek financial shelter in investments that are perceived to be steady in a storm. For many years, United States Treasuries have been a “safe haven”.4
So, last week, there was an expectation that, as investors sought shelter from the tariff storm, rising demand would push Treasury yields lower.5 That wasn’t the case. Investors sold U.S. Treasuries, pushing yields higher, reported Sydney Maki and Carter Johnson of Bloomberg.6
“Billed as so rock-solid safe they’re risk-free, US Treasury bonds have long been the first port of call for investors during times of panic. They rallied during the global financial crisis, on 9/11 and even when America’s own credit rating was cut…But this time may be different. As President Donald Trump unleashes an all-out assault on global trade, their status as the world’s safe haven is increasingly coming into question…Yields, especially on longer-term debt, have surged in recent days while the dollar has plunged,” reported David Rovella of Bloomberg.7
The Federal Reserve (Fed) soothed the market
On Friday, Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins both discussed ways the Fed can “manage a dislocation, or pricing disruption, in the Treasury market…[the moves] are instruments designed to keep markets running smoothly by making sure there is enough liquidity, meaning financial institutions have access to the short-term funding they need to operate,” reported Nicole Goodkind of Barron’s.8
Markets were soothed by the assurance that the Fed stands ready to “keep financial markets functioning should the need arise,” reported Stephen Culp of Reuters.9 By the end of trading on Friday, major U.S. stock indices were in positive territory.10 Yields on longer maturities of U.S. Treasuries also finished the week higher.11
Data as of 4/11/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 5.7% | -8.8% | 3.2% | 6.7% | 14.2% | 17.3% |
| Dow Jones Global ex-U.S. Index | -0.4 | -0.6 | -0.3 | 0.9 | 6.6 | 1.7 |
| 10-year Treasury Note (yield only) | 4.5 | N/A | 4.6 | 2.8 | 0.8 | 1.9 |
| Gold (per ounce) | 5.8 | 23.7 | 37.7 | 18.3 | 13.2 | 10.4 |
| Bloomberg Commodity Index | 1.8 | 2.8 | -0.9 | -7.0 | 9.9 | 0.2 |
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 DO YOU KNOW ABOUT MONEY? The United States began using paper money in 1690. The Massachusetts Bay Colony paid soldiers fighting military campaigns against the French in Canada with paper notes. “This was an emergency measure, but it turned out to be a solution to the long-term problem of building an economy without large reserves of precious metals. Eventually, all of the other colonies issued their own bills,” according to Smithsonian Education.12
See what you know about the history of American money by taking this brief quiz.
- Ben Franklin printed money for Pennsylvania, Delaware, and New Jersey. He often included images from nature, such as intricately detailed leaves. What was the primary reason Franklin included nature prints on notes?13
- The visually pleasing notes attracted customers
- The prints symbolized the growth of the nation
- The prints symbolized money circulating through the economy
- The prints made Franklin’s notes difficult to counterfeit
- When did the era of “lawful money” (the modern era) begin?14,15
- In 1792, when the US mint was created
- In 1893, after a bank panic
- In 1913, under the 1913 Federal Reserve Act
- In 1936, when Fort Knox was built
- United States currency is held as a reserve, and for trade, by many other countries. What percentage of our currency is held outside the United States?16
- One quarter
- One third
- Two thirds
- Three quarters
- Some denominations of U.S. paper money wear out faster than others. Which denomination has the shortest lifespan?17
- A $1 bill
- A $5 bill
- A $10 bill
- A $20 bill
Weekly Focus – Think About It
“I find television very educating. Every time somebody turns on the set, I go into the other room and read a book.”18
–Groucho Marx, Comedian
Answers: 1) d; 2) c; 3) c; 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.bloomberg.com/news/articles/2025-04-11/as-markets-sank-and-soared-a-new-fear-spread-across-wall-street or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Bloomberg-As-Markets-Sank%20-%201.pdf
2 https://www.barrons.com/livecoverage/trump-tariffs-china-us/card/trump-tariff-pause-welcomed-by-world-leaders-but-china-tensions-mount-UP7utx6ARqUB3SJx2WaJ or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Barrons-Trump-Tariff-Pause%20-%202.pdf
3https://www.bloomberg.com/news/articles/2025-04-09/stock-market-today-dow-s-p-live-updates?srnd=phx-markets or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Bloomberg-S&P-500-Tumbles%20-%203.pdf
4 https://www.investopedia.com/terms/s/safe-haven.asp
7 https://www.bloomberg.com/news/newsletters/2025-04-11/china-ups-the-ante-in-trump-s-trade-war-evening-briefing-americas?cmpid=eveus&utm_medium=email&utm_source=newsletter&utm_term=250411&utm_campaign=eveus or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Bloomberg-China-Ups-the-Ante%20-%207.pdf
8 https://www.barrons.com/articles/fed-treasuries-bond-market-yields-stocks-5aaf4f24 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Barrons-Fed-Knows-How-to-Stabilize%20-%208.pdf
[1]0 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Barrons-DJIA-S&P-Nasdaq%20-%2010.pdf
[1]2 https://www.smithsonianeducation.org/educators/lesson_plans/revolutionary_money/introduction.html
[1]3 https://www.uscurrency.gov/sites/default/files/media/podcast/noteworthy-podcast-3-transcript-en.pdf
14 https://www.federalreserve.gov/faqs/money_15197.htm
[1]5 https://www.investopedia.com/terms/f/1913-federal-reserve-act.asp
[1]6 https://www.uscurrency.gov/about-us/currency-facts#
[1]7 https://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-paper-money.htm