Mid-Year Review 2025 and Market Commentary

July 7, 2025

The second fiscal quarter ended with a flurry of buying. Gone with the coming of spring were concerns of tariffs, D.O.G.E. cutbacks to essential services, or mounting federal debt. Stock market participants, at least through June, largely discounted negative news and instead drove the averages to new highs. Retail investors bought the dips and proved, at least in the near term, to be on the right side of the market. 

The second quarter mirrored the first, with many key issues still unresolved and earnings season approaching. While valuations remain uncomfortably high, what should we expect moving forward? The short answer is, we don’t know. From experience, however, we do know that companies that miss reduced estimates will get hammered. A more important consideration going into the earnings calls is, what will guidance look like? Thus far, managements have been more cautious in their commentary than investors have been with their wallets. 

Management teams across industries have had to deal with much higher levels of uncertainty- impacting inventories, supply chains and longer-term planning. In mid-quarter commentary, many companies have indicated a reluctance or unwillingness to invest, defaulting to a ‘wait and see’ position. Uncertainty, in turn, may have front-loaded shipments (pre-tariffs) in some sectors as companies’ built-up inventories. 

Betting on TACO (Trump Always Chickens Out) as it pertains to tariffs is a risky bet and could prove to be a costly mistake. It seems that one thing Trump has always believed, however misguided, is the righteousness of tariffs. In fairness, the story isn’t all tariff-related. Regulatory cuts in red tape and the advent of artificial intelligence could help bolster productivity and growth. We, however, remain cautious and more aligned with our brothers and sisters in the ‘C’ Suite (CEO’s CFO’s). The fuller impacts of D.O.G.E., tariffs, immigration round-ups, and the One Big Beautiful Bill (OBBB) haven’t yet been felt and may take some time either to raise prices, slow the economy, or both. 

We continue to believe that quality fixed income with maturities of five years and under, represent good relative value as compared to stocks. It’s not a bad place to park, in relative safety, while stocks remain expensive and face obvious headwinds. 

With cautious optimism,
Ken & Michelle

This information has been drawn from sources believed to be reliable. Every effort has been made to assure the accuracy of the information, however, the accuracy of this information is not guaranteed. All investing is subject to risk, including possible loss of money you invest. Diversification does not ensure a profit or protect against a loss. The information provided in this commentary is for informational purposes only and is not a solicitation to buy and/or sell. Investors must consider the investment objectives, risks, charges and expenses of any investment carefully before investing. Avisen Wealth Management (Member FINRA/SIPC) does not provide tax or legal advice. Please consult your accountant &/or legal counsel for guidance. Avisen Wealth Management, CA Ins License #0E52062