July Market Update

A challenging quarter ended with U.S. stocks at or near record levels! An interesting development since it was only April since the tariff announcement pushed stocks almost into bear territory (20% from their high).

Greetings from the Rock Cut Investment Group!

A challenging quarter ended with U.S. stocks at or near record levels! It was only April since the tariff announcement pushed stocks almost into bear territory (20% from their high). Since then, solid corporate earnings, economic data suggesting continued economic growth, inflation trending toward the Fed’s targeted 2% and rising stock market estimates have investors feeling pretty good.

The “big beautiful bill” legislation was passed over the Fourth of July. Here are some of the highlights – good and bad (taxfoundation.org):

Extends the 2017 tax cuts for individuals and corporations that were set to expire and increase at year-end.
Increases the SALT deduction (state, local and property taxes) – increases the deduction to $40,000 (from $10,000) from 2025-2029 before reverting back to $10,000.
Makes permanent an increase in the federal estate and gift tax to $15 million per individual beginning in 2026.
Projected to increase the federal budget deficit, but excludes any tariff revenue in that estimate. Tariffs continue to be a “fluid topic” with President Trump extending the tariff deadline again to August 1, 2025.

Noteworthy:

Social Security – The Board of Trustees annual report will be depleted in 2034, one year earlier than expected. This is partly due to the “Social Security Fairness Act, “ which boosted benefits for millions of retirees (SSA.gov). This means that with no changes, social security will be required to cut benefits by 20% to recipients.
Americans are filing for Social Security benefits at a record rate this year. Many believe this reflects the growing concern people have about the financial stability of the system and cutbacks under the Trump administration. Filing rates are up 17% in May compared to this same time last year (CBSnews.com).

Global Insight 2025 Midyear Outlook:

International equities: A world of opportunities? – We have seen a dramatic shift in the appetite for equity and fixed income securities issued outside of North America emerge in 2025. We examine what that might mean for investors.
U.S. debt: Changing facts, updating views –We believe the U.S. government fiscal outlook can no longer be ignored by investors when building portfolios.
Global equity: Certain uncertainty – We expect major equity markets to post new highs in the months ahead, but with caveats.
Global fixed income: A short fuse on long bonds – While fixed income markets have weathered outside factors reasonably well so far this year, we believe the next source of market volatility could come from the global bond market.

Click here for the full report

From the “Personal” File:

The Montalbano family took a trip to Italy! They spent time in Rome, Florence, Liguria (western Mediterranean coastline) and Milan. It was the family trip of a lifetime. Pictures below: Portofino (water), St. Peter’s Basilica, and the Roman Colosseum.