March 24, 2025

“Buy not on optimism, but on arithmetic.”

Benjamin Graham

Well, another rollercoaster week, but all is well that ends well. First the numbers, The S&P 500 looked like it was setting up for a 5th straight decline but ended the week up .57%, the Dow Jones Industrial average gained 1.27%. the Nasdaq added .35%. Internationally, The FTSE 100 finished up .17% and the MSCI-EAFE added .10%. the 2-Year treasury yielded 3.954% and the 10-Year paid 4.25%.

So, what happened? U.S. stocks end higher Friday as S&P 500 snaps four straight weeks of losses. The U.S. stock market closed higher Friday, with the S&P 500 eking out a weekly gain. The Dow Jones Industrial Average rose 32.03 points, or 0.1%, to finish at 41,985.35. The S&P 500 added 4.67 points, or 0.1%, to end at 5,667.56.The Nasdaq Composite rose 92.43 points, or 0.5%, to close at 17,784.05.

The big news, The Fed held its meeting and to no one’s surprise stood pat on interest rates. The market recovery happened late last week when the Central bank stuck to its forecast for two rate cuts in 2025. For now. “Uncertainty today is unusually elevated,” Fed Chief Jerome Powell said in a press conference last Wednesday after the central bank left a key short-term rate unchanged. “We are going to have to see how things actually work out.” The Fed’s latest forecast still included two interest-rate cuts in 2025, but Powell said he and his colleagues were reluctant to make any changes until they get more clarity on how the economy responds to new tariffs. He also said Fed officials have leeway to take a wait-and-see approach given the economy is still in pretty good shape. “We are well-positioned to wait for greater clarity,” he said.

The labor market? Market Watch reports, the labor market being in good shape despite big government job cuts. The private sector was still culling very few jobs, the latest report on jobless claims shows, but more federal workers fired by the Trump administration were applying for benefits. New jobless claims excluding federal workers rose a scant 2,000 to 223,000 in the seven days that ended March 15, the government said. The burst of government layoffs early in the second Trump administration does not appear to have spilled over much into the private sector, at least not yet. Layoffs and unemployment have stayed and the labor market remains the bedrock of the four-year-old economic expansion.

Coming this week are some key economic and sentiment numbers Consumer Sentiment, Durable Goods Orders, the Gross Domestic Product (GDP) and the Federal Reserves favorite inflation gauge the Core PCE index numbers should drive the market this week. Overall, the Federal Reserve thinks the economy is still solid and remembering the market always looking ahead should start to see continued progress on the new direction in the government fiscal policies.

In the short term, you know something interesting is happening in markets when the bears on Wall Street suddenly start telling their clients that stocks are looking like a buy. And yet, no fewer than three high-profile bears have recently advised that the market could be overdue for a bounce, even as their views on the market over the long term haven’t changed. So, the obvious choice is Tesla which has been the subject of much negative attention, however longer term I would not bet against Elon Musk. Elon Musk’s involvement with DOGE impacts the national economic outlook and his own company. A new report from Edmunds reveals that Tesla owners are trading their cars at a record pace in favor of other brands. If the trend impacts Tesla’s new sales in the same way, Tesla’s 2025 earnings outlook is worthless, and its stock price is heading lower. Already down nearly 50% from the recent high, a new multi-year low is likely. So, the old adage, buy low sell high could not have a clearer example. On the down side, My mea culpa so far is the toe dip into crypto, so far it has not been good, but it may offer an opportunity to redeem my hesitant experiment. Further, with all the money that’s been sidelined during the selloff, assets in money market funds have reached record highs which should soon find its way back into the market.

Good news in housing? Existing-home sales rose 4.2% in February from January, hitting a seasonally adjusted annual rate of 4.26 million, according to the National Association of Realtors. That was quite the surprise for economists who thought signs of a slow winter for the housing market would bring the annual rate to about 3.92 million. Sales of existing homes rose in February, as some buyers — particularly those with higher incomes — are keeping the upper end of the market alive and well. The pace of sales exceeded expectations of economists surveyed by Dow Jones Newswires and the Wall Street Journal. They forecast home sales to fall to a 3.95 million pace in February.

Finally, if you like oil and gas, the environmental group Greenpeace was ordered to pay $660 million in damages for defamatory statements and damages caused by the group while protesting the construction of an oil pipeline in North Dakota, a jury found last Wednesday. Greenpeace, which vowed to appeal, said last month it could be forced into bankruptcy because of the case, ending over 50 years of environmental activism. The protests, which saw acts of violence and vandalism, started in April 2016 and ended in February 2017 when the National Guard and police cleared the demonstrators’ site. The case was brought by Texas-based Energy Transfer. Its lawyer alleged Greenpeace paid outsiders to come into the area and protest, sent blockade supplies, organized or led protester training, and made untrue statements about the project. How things have changed. However, as a capitalist environmentalist, I believe all want a cleaner planet but it seems the best way to do it is to let someone make a profit by solving the problem. It works better than this and what they are now trying to do to Tesla.

Mike