Jim Streight

Weekly Market Commentary

by Jim Streight | Apr 3, 2025 | Carson

The Markets

Risk-on. Risk-off.

If you read the financial press, you may have seen the terms “risk-on” and “risk-off”. When investing, there is a risk-return spectrum. Stocks typically have higher risk and higher return potential than high-quality bonds. High-quality bonds have lower risk and lower return potential than stocks, although they typically have higher risk and higher return potential than cash.

In financial speak, investors are:

Risk-on when they are excited about investing in stocks (and other types of assets that have higher risk profiles). “Risk-on environments can be carried by expanding corporate earnings, optimistic economic outlook, accommodative central bank policies, and speculation. As the market displays strong influential fundamentals, investors perceive less risk about the market and its outlook,” reported Adam Hayes for Investopedia. A risk-on environment may lead to rising stock prices.
Risk-off when they become cautious and concerned about losses. Risk averse investors may sell some types of stocks (and other types of assets that have higher risk profiles) in favor of dividend-paying stocks and more stable types of investments that can help preserve principal. Risk-off environments may arise when economic growth slows, economic uncertainty rises, company earnings slide lower, consumer confidence wavers, or financial markets experience other kinds of disruptions. A risk-off environment may lead to falling stock prices.

Last week, investors moved from a risk-on to a risk-off outlook. The change in attitude resulted from concerns about:

Tariffs. Concerns about tariffs intensified last week when “An unexpected move against car imports this week renewed warnings from economists that tariffs will almost surely raise consumer prices and harm economic growth,” reported Jeran Wittenstein and Ryan Vlastelica of Bloomberg.
Sticky inflation. Last week, the personal consumption expenditures (PCE) index, which is one of the Federal Reserve’s preferred inflation gauges, showed that headline inflation remained steady month to month and year to year. However, core inflation, which excludes food and energy prices, rose month to month and year to year.
Consumer sentiment. The final reading for consumer sentiment in March did not improve. “This month’s decline reflects a clear consensus across all demographic and political affiliations; Republicans joined independents and Democrats in expressing worsening expectations since February for their personal finances, business conditions, unemployment, and inflation,” wrote University of Michigan Surveys of Consumers Director Joanne Hsu.

During periods of market volatility, it’s important to keep a long-term perspective. Having an asset allocation strategy that reflects your risk tolerance and financial goals helps insulate your assets from market turbulence. Asset allocation helps manage risk, but it does not prevent losses

THE SILVER LINING OF MARKET DOWNTURNS. Volatile markets are challenging. Watching the value of your assets bounce higher and lower can be frustrating. In times like these, it can be helpful to focus on the opportunities that can be created by market volatility. One of those opportunities is tax-loss harvesting.

Investors “harvest” tax losses by selling an asset for less than they purchased it. Unfortunately, not every investment delivers stellar returns. Almost every investor has either owned an asset that loses value due to company underperformance or a market downturn. When the asset is sold at a lower value than its purchase price, the investor realizes a capital loss.

From a tax perspective, losses are quite valuable. They can help:

1. Minimize capital gains tax. Capital losses can be used to offset capital gains, dollar for dollar. For example, if an investor sells shares of Company A for a gain of $1 and sells shares of Company B for a loss of $1, then the loss offsets the gain.
1. Reduce taxable income today. When tax losses aren’t used to offset gains, the losses can reduce taxable income by up to $3,000. So, if an investor has a capital loss of $6,000 and a capital gain of $3,000, the capital loss could offset the capital gain and the $3,000 loss that is leftover could be used to reduce the investor’s taxable income.
1. Reduce capital gains and taxable income tomorrow. When capital losses are greater than capital gains and income reductions combined, the extra losses can be carried forward and used to offset capital gains and taxable income in the future.

The key to tax loss harvesting is that the money from the asset sale must be invested in a new opportunity – perhaps capitalizing on the chance to invest in a strong company at an attractive price, which is another benefit of market downturns. In general, the new investment should fill a similar role in the investor’s asset allocation strategy to the investment that was sold.

The silver lining of market downturns is that investment losses can be tax wins.

Weekly Focus – Think About It
“Courage is the price that life exacts for granting peace.”
– Amelia Earhart, Aviation pioneer

Sources:

https://www.investor.gov/additional-resources/information/youth/teachers-classroom-resources/risk-and-return https://www.investopedia.com/terms/r/risk-on-risk-off.asp

https://www.bloomberg.com/news/articles/2025-03-28/market-rout-starts-with-big-tech-as-tariff-inflation-fears-hit?srnd=homepage-americas or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-31-25-Bloomberg-Market-Rout-Intensifies%20-%203.pdf

https://www.bea.gov/sites/default/files/2025-03/pi0225.pdf [Tables 5 and 7]

http://www.sca.isr.umich.edu

https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/03-31-25-Barrons-DJIA-S&P-Nasdaq%20-%206.pdf

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202503

https://www.irs.gov/taxtopics/tc409

https://www.today.com/life/quotes/strong-women-quotes-rcna66486

Sunny Side Down: Egg Prices Fall

by Jim Streight | Apr 2, 2025 | Carson, Most Popular

Forget the Fed frenzy and take a timeout from tariff talk. Let’s focus on what’s really scrambling the markets right now: egg prices.

After reaching an all-time high of $8.17 a dozen in early March, prices have trended lower and may drop below $3 in the coming weeks. What’s behind the sudden fall? The three main reasons are weaker consumer demand, the bird flu coming under control, and ramped-up supply.

So, when will you start to see relief at the checkout line? Soon perhaps. However, grocery store prices remain unpredictable because retailers are still a bit concerned about supply chains.

In recent months, economists have paid more attention to the price of eggs than to other constituents of the Consumer Price Index.

Why have egg prices become a proxy for inflation?

One theory is that eggs symbolize something bigger about the U.S. economy. Not only are eggs a critical, inexpensive source of protein and nutrients for millions of consumers, but they are also a core part of many other foods made at home or mass-produced. So, eggs have become a tangible symbol of how consumers believe the broader economy is doing.

The Inside Coop: Chicken prices have remained stable despite the bird flu because broilers (chicken raised for meat) tend to have a shorter lifespan than egg-laying hens (6-8 weeks compared to 2 years). Shorter life spans mean flocks are less susceptible to outbreaks, and supply-and-demand issues can be resolved quickly.

I hope today’s email provided some insights into the egg market. It’s not often such a small part of our daily life that takes center stage in economics.

^Sources:^{TradingEconomics.com, March 19, 2025. “Eggs US”}^{TheHill.com, February 13, 2025. “Egg prices are surging, so why are chicken prices stable?”}

Weekly Market Insights | Investors React to Tariff News

by Jim Streight | Mar 31, 2025 | Weekly Stock Market Commentary

Stocks moved lower last week as investors swung from exuberance to disappointment on news over tariffs and inflation.

The Standard & Poor’s 500 Index fell 1.53 percent, while the Nasdaq Composite Index retreated 2.59 percent. The Dow Jones Industrial Average slid 0.96 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, declined 1.29 percent.^1,2

An Up and Down Week
Stocks started the week with a sharp rally after the White House said it may “give a lot of countries breaks” on reciprocal tariffs. The positive momentum continued into Tuesday, with the Nasdaq and S&P 500 outpacing the Dow.³

Then, midweek, news that the White House was planning additional tariffs on all cars made outside the U.S. rattled markets.^4,5

On Friday, investors reacted to a warmer-than-expected inflation report and lower consumer sentiment, putting further pressure on stocks as the week closed.⁶

Noise vs Signal

There can be a lot of noise in the market from time to time. This can make it hard for investors to interpret information as they search for the actual signal.

Last week, investors were trying to interpret the White House decision to impose tariffs on all cars and some car parts made outside of the U.S. While some automakers are domestic and others are foreign-based, the question is whether companies will absorb the additional costs, pass them on to consumers, or look to build factories in the United States.⁷

Separating the noise from the signal may take time, which can be more challenging when the markets react to new tariff updates as they are announced.

This Week: Key Economic Data

Tuesday: ISM Manufacturing Index. PMI Manufacturing. Construction Spending. Job Openings.

Wednesday: ADP Employment Report. Motor Vehicle Sales. Factory Orders. Fed Official Adriana Kugler speaks.

Thursday: Jobless Claims. ISM Services Index. Fed Balance Sheet. International Trade in Goods & Services. Fed Officials Philip Jefferson and Lisa Cook speak.

Friday: Employment Situation. Fed Officials Michael Barr and Christopher Waller speak.

^{Source: Investors Business Daily – Econoday economic calendar; March 28, 2025}^{The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

No major companies are reporting this week.

^{Source: Zacks, March 28, 2025.}^{Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

“The greatest danger to our future is apathy.”

– Jane Goodall

Things You Can Do on the IRS Website

While the IRS website might not be in your top bookmarks, the website is helpful for a lot of things regarding taxes. Here are just a few things you can do on the site:

Use Free File to access brand-name tax software and online fillable forms.
Use the IRS e-file system: a safe, easy, and common way to file your tax return.
Check the status of your tax refund.
Find out how to make payments electronically to pay your federal taxes. You can use a credit or debit card or enroll in the US Treasury’s Electronic Federal Tax Payment System to pay your taxes.
Get tax forms and publications, including helpful tips for frequently asked questions.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁸

Improve Your Swimming with Masters Swim

Swimming is a fantastic full-body, low-impact workout for people of all ages. Check out US Masters Swimming for a club near you as the weather warms up! USMS is an organized swimming club for swimmers of all levels. Swimming with a Masters club is a great way to build camaraderie, meet new friends, get better at swimming, and enjoy a great workout. There are clubs all over the country, likely at a pool near you, which you can find through the Club Finder tool on the USMS website. The coaches will help you start (and stick with) a swimming routine, improve your stroke, and learn more about the sport.

Tip adapted from US Masters Swimming⁹

It can only be broken with force, yet it can be dulled by contact with a piece of paper. What is it?

Last week’s riddle: Out of the 100 years in the 20th century, there is only one that reads the same upside down as it does right side up. What year is it?
Answer: 1961.

Llama Guanaco
Torres del Paine National Park, Chile

Footnotes and Sources

^{1. The Wall Street Journal, March 28, 2025}

^{2. Investing.com, March 28, 2025}

^{3. CNBC.com, March 25, 2025}

^{4. CNBC.com, March 26, 2025}

^{5. CNBC.com, March 27, 2025}

^{6. The Wall Street Journal, March 28, 2025}

^{7. MarketWatch.com, March 27, 2025}

^{8. IRS.gov, August 22, 2024}

^{9. US Masters Swimming, October 3, 2024}

Weekly Market Commentary

by Jim Streight | Mar 27, 2025 | Carson

The Markets

The market whisperer…

Last week, the Federal Reserve (Fed) left the federal funds rate unchanged, and Fed Chair Jerome Powell soothed markets. He explained that conditions in the labor market were broadly in balance and inflation had eased significantly over the past two years. Overall, the possibility of recession, while rising, remained low.

Markets rallied following his comments.

The economic outlook for 2025
The Fed’s current median forecast for economic growth in 2025 is 1.7 percent, a bit lower than it was in December. In addition, the Fed’s current median estimate for inflation is 2.7 percent, a bit higher than in December. While he was reassuring, Powell explained there is a lot of uncertainty about the economic outlook in the United States. He stated:

“Looking ahead, the new administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of all monetary policy. While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their effects on the economic outlook is high. As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves.”

Consumer spending and the wealth effect
Powell also said that it remains to be seen how consumer and business spending and investment will respond to heightened uncertainty about the economic outlook. It’s an important point because of the “wealth effect”.

The wealth effect is a theory in behavioral economics. It holds that people spend more when the stock market is rising and the value of their assets is growing. Conversely, people spend less when the stock market is falling and the value of their assets is declining. It’s difficult to quantify the effect as Mike Bird of The Economist explained:

“Estimates of the ‘wealth effect’ – the amount that rising or falling stocks can support or hurt consumer activity – vary wildly. One academic study in 2019 suggested that a dollar increase in stock market wealth boosted American spending by about three cents. [A large financial-services firm] suggests that the pass-through has risen significantly in recent years, coming up with an extraordinary figure of 24 cents. Whatever the true number, a declining stock market matters for the broader economy.”

Last week, major U.S. stock indices finished higher, while yields on most maturities of U.S. Treasuries moved lower.

IF YOU LOSE YOUR WALLET, DO YOU EXPECT IT TO BE RETURNED? Here’s some good news from the 2025 World Happiness Report: “People are too pessimistic about the kindness of their communities.”

As usual, the 2025 World Happiness Report offered insights to the countries where citizens are happiest. Once again, Nordic nations dominated. The United States landed in 24^th place. The countries where the happiest people live are:

Finland,
Denmark,
Iceland,
Sweden, and

Where are people most benevolent?
The 2025 report also tracked a trend that surprised researchers during the Covid-19 years. In 2020, there was an upsurge in benevolent acts – people doing kind things for one another. Researchers theorized that helping others may have “…offset the negative effects felt by many of those whose lives were changed, endangered, and sometimes harmed during the pandemic.”

For the 2025 report, researchers asked how often people performed acts of kindness, specifically donating, volunteering, and helping strangers. The most benevolent countries varied, depending on the type of kindness.

For donations, Indonesia, Myanmar, and Ukraine ranked first, second, and third.
For volunteering, Indonesia, Liberia, and Kenya took top honors.
For helping strangers, Jamaica, Liberia, and Trinidad & Tobago were the leaders.

The United States was 12^th for donations, 15^th for volunteering, and 12^th for helping a stranger.

What about lost wallets?
The study also asked participants how likely it was that a lost wallet would be returned. They compared the data to studies where researchers “lose” wallets to see how often they are returned. Overall, expectations that wallets would be returned were far lower than actual returns.

For example, the actual return rate for lost wallets was 1.8 times higher – almost double – the average estimated return rate. In addition, wallets were more likely to be returned if they contained money.

By the way, the best place to lose your wallet is in a Nordic nation. These countries had both the highest expected and the highest actual rate of return for lost wallets.

Weekly Focus – Think About It
“No act of kindness, no matter how small, is ever wasted.”
–Aesop, Storyteller

Weekly Market Insights | Fed Happy Talk Breaks Bad News Streak

by Jim Streight | Mar 24, 2025 | Weekly Stock Market Commentary

Stocks notched a solid gain last week as upbeat comments from the Fed helped stocks snap their four-week losing streak.

The Standard & Poor’s 500 Index rose 0.51 percent, while the Nasdaq Composite Index picked up 0.17 percent. The Dow Jones Industrial Average led, gaining 1.20 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, rose 0.75 percent.^1,2

A Solid Week
Stocks opened the week higher despite weaker-than-expected retail sales. On Tuesday, stocks pulled back on disappointing economic data and renewed Middle East tensions.^3,4

Stocks roared higher Wednesday as investors looked forward to the Federal Reserve’s meeting. As widely expected, the Fed kept rates steady, but Fed Chair Powell’s comments buoyed investors’ spirits.⁵

Stocks dipped Thursday and opened lower Friday, but investors showed some confidence by pushing prices higher into Friday’s close.⁶

The Fed Stays Positive

Amid all the market turbulence of late, the Fed was a steadying influence.

At his post-meeting press conference, Fed Chair Powell stressed that the economy remained strong and suggested that any impact from tariffs on inflation would be short-term.

But the primary reason investors cheered came down to this: most Fed officials still penciled in two interest rate cuts for this year. In late January, Powell said the central bank was in no hurry to adjust its policy stance, which unsettled the markets.⁷