Market Commentary - May 2025

Monthly Update

The rally in stocks that began in earnest on April 9^th off the post April 2^nd “Liberation Day” lows continued into May. The S&P 500 in particular rallied 6.2%¹, almost recapturing all that it lost after the tariff battle started. The NASDAQ rallied almost 10%² while the small cap Russell 2000 was higher by 5.2%³. International markets were up as well pretty much across the board. That April 9^th day was when the US administration put a pause on the reciprocal tariffs except for China. On May 12^th, China also got relief as did we as both countries lowered sharply the tariff rates on each other, giving some room for eventual negotiations. Staying on the tariff theme, this was then followed on May 28^th when the United States Court of International Trade ruled that the President’s use of the International Emergency Economic Powers Act was an unlawful application of the Congressional statute. To finish up on this, the very next day an appeals court put an injunction blocking the removal of the tariffs until the arguments on the appeal are heard. Eventually this could end up at the Supreme Court and it could be months before there is finality on this.

There has been a lot of tariff induced zigs and zags both for the markets and certainly the economy. Economically, businesses of all shapes and sizes are having to dance through all the hoops on trade, especially those that directly import finished products and/or intermediate term goods. The market’s reaction, with the S&P 500 back near the record highs, is more sanguine believing that the worst-case scenarios are off the table and even with a higher tariff rate at the end of day, the economy will still be able to persevere through this. Overall, there is a general lack of visibility from a business perspective on how this will all play out while markets seem more confident.

Of note too in markets there was another rise in longer term interest rates with the 10 yr yield higher by 24 basis points in May, closing the month at 4.40%⁴. For perspective, over the past year the yield has averaged 4.25%⁵ with a high back in January of 4.80%⁶ and the low last September at 3.60%⁷ just as the Fed was about to cut interest rates. Watching long term rates in not just the US but in Japan and broadly around the world, has become a full-time sport and an important one at that. The one thing the US Treasury market shares with other bond markets is a growing worry about ever rising debts and deficits and the bond police has been driving through different neighborhoods calling out those that are most indebted.

There is though another important aspect to the US Treasury market that makes it quite unique right now and that is the move in the US dollar. Using DXY as a measure of it, with a heavy weighting toward the euro and yen, it has fallen by about 10%⁸ off its mid-January high as of this writing. This even as interest rates are higher on the year. I think it’s the result of a major foreign rethink of the extent at which they want to own US assets. Understand that foreign holders became massive buyers of US assets over the years, including US stocks, corporate bonds and US Treasuries. According to Torsten Slok, the chief economist at Apollo, foreigners owned about $30⁹ trillion of these three asset classes as of a few months ago.

I think the first catalyst for the rethink was the DeepSeek news in late January. This is the Chinese company that revealed it had created a generative AI model that was almost as good as the US hyperscale models. For the last few years, the Mag 7 stock group generally became in essence a global reserve asset owned not just by US retail and institutional investors but investors around the world, including a few central banks like the Norges Bank in Norway and the Swiss National Bank. This was followed by the tariff battle where foreigners were essentially incentivized to find new homes around the world with their capital and not to be so overly exposed to US markets. We can then throw in foreign worries about excessive US debts and deficits that could also be a catalyst for a weaker dollar that would hurt the dollar denominated assets owned by foreigners.

After years of underperformance, international stock markets have been robustly higher this year as a corollary to the foreign reallocation of money, particularly in US dollar terms because of the dollar weakness. In euro terms, the German DAX is up by 22.5%¹⁰ year to date as of this writing but due to the euro strength, it is up 35%¹¹ in US dollars. The Canadian TSX is up 6.5%¹² in Canadian dollars but 12.2%¹³ in US dollars. The Mexican IPC is higher by 26%¹⁴ in US dollars and 16%¹⁵ in pesos. And to highlight one more, the Brazilian Ibovespa has rallied by 25%¹⁶ in US dollars and 13.9%¹⁷ in reals.

The US economy continues to be mixed and the data over the past few months have been distorted by the tariffs with them on and off and the pull forward behavior seen with both consumers and businesses. Strength is still seen with upper income spending; anything tied to the AI ecosystem spend and the contribution from government spending. On the flip side, lower to middle income spending has been subdued, manufacturing has been in a recession for more than two years (globally too), housing turnover for existing homes is at 30 yr lows, global trade ex the tariff impact has been muted, capital spending ex AI has been flat lining, and the pace of hiring has slowed. My advice on analyzing the economic data so far this year is to average out Q1 and Q2 to smooth out the impacts of the tariffs.

The economic picture in the rest of the world is mixed too. Europe’s biggest economies, Germany and France, are seeing anemic growth while Spain, Italy and Greece too have been helped by tourism among other things. The UK is seeing modest growth. In Asia, India continues to be an economic standout while China’s is still struggling with the downturn in residential real estate and global manufacturing challenges.

Conclusion

What a year it’s been so far and we’re only five months into it. The major point of clarity the economy and markets are searching for continues to be on tariffs, not just for US households and businesses but the rest of the world that we trade with. Whether through the courts or other statutes, we’ll see how this plays out, but I believe the end result will be a higher tariff rate the US has on our trading partners vs the 2.5%¹⁸ rate we had entering 2025. Not as high as feared for sure, but still higher. Whatever it is though, it is hugely important to know as soon as possible so businesses and consumers can then adjust and move on.

We all know the saying ‘markets don’t like uncertainty’ but life is always uncertain, it’s the only given. History is replete with storms, but we’ve seen them before and do our best to power through. As stated in this piece, we are possibly amidst some major changes, both in the global economy and markets and the investing playbook that worked so well over the past few years might be transitioning from just owning the Mag 7 for example and into owning other things. Not that the Mag 7 stocks can’t do well from here but their ability to carry the broader markets on their shoulders might be waning. And this is not only about tariffs.

Whatever comes our way though, it remains vital that investors have adequate short-term liquidity over the next 2-3 years. Knowing that period is covered can help separate the balance of one’s portfolio from the ups and downs of the market. Time horizon is always crucial and is always the best friend of any investor.

Disclaimer

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Nothing in this material should be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market update is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction or investment strategy. You should speak with your own financial professional before making any investment decisions.

Past performance is not indicative of future results. Neither Bleakley Financial Group, LLC nor Peter Boockvar guarantees any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.

Certain statements contained herein are statements of future expectations and other forward-looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance or events to differ materially from those expressed or implied in such statements.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. 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. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

Investment advisory and financial planning services offered through Bleakley Financial Group LLC, an SEC registered investment adviser. Peter Boockvar is solely an investment advisor representative and Chief Investment Officer of Bleakley Financial Group.

 Approval# BFG 25-1009

^1-18 Bloomberg

Disclaimer

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

The Stoxx Europe 600 index also called the STOXX 600 is an indicator of the performance of the European stock market. It measures the performance of large mid and small-cap companies across 17 countries in Europe. The number of constituents is fixed at 600.

The Hang Seng Index is a freefloat-adjusted market-capitalization-weighted stock-market index in Hong Kong. It is used to record and monitor daily changes of the largest companies of the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong. These 82 constituent companies represent about 58% of the capitalization of the Hong Kong Stock Exchange.

Nothing in this material should be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market update is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction or investment strategy. You should speak with your own financial professional before making any investment decisions.

Past performance is not indicative of future results. Neither Bleakley Financial Group, LLC nor Peter Boockvar guarantees any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.

Certain statements contained herein are statements of future expectations and other forward looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance or events to differ materially from those expressed or implied in such statements.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. 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. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.

Precious metal investing involves greater fluctuation and potential for losses.

The information presented is for educational and informational purposes only and is not intended as a recommendation or specific advice. Cryptocurrency and cryptocurrency-related products can be volatile, are highly speculative and involve significant risks including: liquidity, pricing, regulatory, cybersecurity risk, and loss of principal. A cryptocurrency fund may trade at a significant premium to Net Asset Value (NAV). Cryptocurrencies are not legal tender and are not government backed. Cryptocurrencies are non-traditional investments, resulting in a different tax treatment than currency. Federal, state or foreign governments may restrict the use and exchange of cryptocurrency. The use and exchange of cryptocurrency may also be restricted or halted permanently as regulatory developments continue, and regulations are subject to change at any time. Cryptocurrency exchanges may stop operating or permanently shut down due to fraud, technical glitches, hackers, malware, or bankruptcy. ​

Peter Boockvar is solely an investment advisor representative and Chief Investment Officer of Bleakley Financial Group and not affiliated with LPL Financial.

Advisors associated with Bleakley Financial Group may be: (1) registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC, (2) registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC and investment advisor representatives of Bleakley Financial Group; or (3) solely investment advisor representatives of Bleakley Financial Group, and not affiliated with LPL Financial. Investment advice offered through Bleakley Financial Group, a registered investment advisor and separate entity from LPL Financial.

Approval #719807

[1] Bloomberg

[2] Bloomberg

[3] Bloomberg

[4] Bloomberg

[5] Pew Research