Quarterly Market Review: April 2025
An Overview of ETFs
March 1, 2025
By Brett Freese
Every year since my boys were little, we would take a week in late summer to enjoy time together at the beach. Most days are spent on the beach either in the water, at the ocean’s edge, or in a shaded chair looking out at the ocean. Those three locations provide different perspectives especially when the ocean is rough and “angry.” From the chair, you can admire the view of the fierce ocean and hear the nonstop sound of crashing waves, but you are basically unaffected. When at the ocean’s edge, the view is much more present; the sound of the crashing waves is louder, and you can feel the waves complete their ascent on the sand and on your feet and legs. If you move into the ocean up to your chest, not only are you present in the view, but you become a part of the view; the sound is amazingly intense, and the push and pull of the ocean leaves you feeling almost out of control.
In everyday life, we need to take the time to have perspective. Be present and informed to understand and feel the current environment, but know that there is so much noise that you can sometimes get caught up in other’s agendas. We need to focus on a wise, long-term plan where the ultimate goal is little impacted by the current short-term political and economic conditions. As I tell my sons, be more focused on wise responses and less focused on emotional reactions.
Economic and political uncertainty and market corrections are normal, so what steps will you take today to focus on a healthier, more joyful, purposeful and impactful life? Take the time to assess your life plan and return on life (ROL) and please know that we are here to travel that journey with you.
Economic & Investment Highlights:
In the midst of the First 100 days (uncertain transition period) of the Trump Administration – In our January Newsletter we asked a few questions about Trump 2.0. Let’s review where we are in those questions and what we have learned:
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- What will we see in early 2025? Whether you like the new Administration or not, they have a full-focused, 100-miles-an-hour drive towards their initiatives. While many people are excited about their initiatives, there’s also many people that are confused. Regardless, their initiatives have intentionally put folks who oppose them on their heels. Those folks are now trying to “play defense” over an overwhelming multitude of areas.
- Will Trump talk of tariffs come to fruition or were they mostly negotiating statements? This is not just talk. Tariffs have become Trump’s “bring everyone to his table” strategy. World trade needs to be both free (Nations and businesses provide the world’s market with what they do and produce best) and fair (elimination of constraints and market manipulations) in policy and in practice. My hope is that we get both over the long-term.
- “Drill Baby Drill!” Will oil and natural gas prices decrease dramatically? This talking point has taken a back seat to tariffs. This administration seems to be focused on U.S. energy independence and stable energy prices, not necessarily lower prices.
- Massive changes in deregulation and heightened number of mergers and acquisitions? Maybe even moreso than the energy policies, this seems to be kicked down the priority list. We assumed we would see more deregulation and mergers & acquisitions than we have.
- Immigration rule changes, enforcement, and what will the overall labor condition look like? The intermediate and long-term impact of changes made and ones to come are still to be determined; but the disruption from immigration changes to public sector payroll reduction are significant already.
- What will the changes in tax law and rates look like? Not yet communicated, but a new tax bill is likely not going to be pushed hard until after the current tariff uncertainty becomes more certain.
- How will Trump work with a razor thin Republican majority in the House of Representatives where many Republicans do not have exactly the same agenda? So far, they have been able to work to together.
- How does the Trump Administration interact with an “Independent” Federal Reserve Chairman? Trump wants rates lower, but has not significantly gone after the Federal Reserve in his rhetoric this year. The credit market has done all the work for him by lowering bond yields.
Important note: There are so many Trump agenda items to keep track of, but always keep in mind that 100% of the House of Representatives and 1/3 of the Senate are running for re-election in two years (2026 Election is already in the mix of motivations). Additionally, good or bad, Trump does seem to look at the “Stock Market” as a scorecard (unlike President Biden).
- International Watch and global diversification: Each country has so much in play right now and ideas and data are changing daily. On the whole, international investing has outperformed the U.S. for the first time in a long time. This does not mean the investing landscape has changed from the U.S. to international as a long-term directional change, but it does show the importance of diversification. In the U.S., the nightly news consistently focuses on the U.S Stock Market performance, but generally very little on the rest of the world. Thankfully, we invest in a global market for our clients. If you look below at the U.S. and International equity returns for the first quarter, you will notice that the U.S. Equity Markets are mostly down and International Equities are up.
- The Federal Reserve (Fed): Many of the Fed members, including Chairman Powell, are stating that they are data dependent when it comes to the next move in rates. In remaining independent from the Administration and Congress, they will likely take a wait and see approach until there is more clarity in the data (labor, inflation, consumer spending and growth) and in what may be proposed and implemented for future fiscal policy. Always keep in mind that The Federal Reserve has a dual mandate to achieve both stable prices and maximum sustainable employment.
Historical Stock Market Declines:
Market declines and inclines rarely look the same or even feel the same, but they do happen, and the ups and downs are a part of the process – It is important to have a plan/strategy so emotions don’t dictate buying or selling.
A 5% or greater loss occurs about 3 times a year
A 10% or greater loss occurs about once a year
A 15% or greater loss occurs about once every 2 years
A 20% or greater loss occurs about once every 3.5 years
Please know that when stock prices go down the “market collapse gurus” receive the most air time. Likewise, when stock prices go up all the “bull market gurus” talk about how the market will continue to be up BIG. Please know that most “gurus” are great with hindsight to justify how important it is to have their voice heard.
Market Scorecard for the last 13 weeks ending 03/31/2025:
U.S. Equities:
– 4.27% S&P 500 (Index of the largest U.S. publicly traded companies)
– 8.57% Large Cap Growth – Morningstar Category
+ 1.50% Large Cap Value – Morningstar Category
– 11.12% Russell 2000 Growth (Index of Small-cap growth U.S. publicly traded companies)
– 7.74% Russell 2000 Value (Index of Small-cap value U.S. publicly traded companies)
International Equities:
+ 2.80% Foreign Large Growth – Morningstar Category
+ 9.51% Foreign Large Value – Morningstar Category
+ 0.11% Foreign Small/Mid Growth – Morningstar Category
+ 6.72% Foreign Small/Mid Value – Morningstar Category
Bonds:
+ 2.92% U.S. Aggregate Bond (Index representing intermediate term investment grade bonds in the U.S.)
+ 2.25% Corporate Bond – Morningstar Category
+ 1.77% Short Government – Morningstar Category
– 0.10% Muni National Bond Intermediate Index – Morningstar Category
Other:
+ 18.21% Gold Price
– 11.72% Bitcoin
+ 7.25% Commodities Broad Basket – Morningstar Category
Current Annual Money Market Rates ending 03/31/2025:
4.17% Schwab Value Money Market
3.99% Schwab Treasury Money Market
Market Indicators:
Inflation:
2.8% as of February (Up 0.05% from 2.75% on 11/01/24)
Unemployment:
4.1% as of 3/7/25 (Down 0.1% from 4.2% in November 2024)
Fed Funds Target Rate:
4.25-4.50% as of 3/27/25 (Unchanged from 12/26/24)
Suggested Next Steps:
- Understand that market cycles are normal. The markets go up and down in mostly unpredictable directions and amounts. Many times, the ups and downs of investments seem to make sense only after they happen, however, market prediction is very difficult. (i.e. the next stock market crash has been predicted every year since 2008).
- Your investments are just one factor in the success of your life, money, and purpose. Make sure that you are confident in your full financial plan, so you can successfully have an amazing ROL (Return on Life).
- Your investment allocation and diversification are important factors in both risk management and future returns. Therefore, if you have questions about your investment plan, please schedule a phone or in-person meeting with your TrustWell Financial Advisor(s).
