July 11th, 2025: Weekly Market Review

1. Tariff Turmoil and Economic Shifts: Jobs, Trump’s Big Beautiful Bill, and GDP Outlook in July 2025

In July 2025, global markets face “tariff turmoil” or “Liberation Day 2.0” as U.S. President Donald Trump’s trade policies disrupt economies, impacting jobs, legislation, and growth. U.S. jobs data reflects caution, with 133,000 jobs added in April (down from 228,000 in March) and ADP reporting 62,000 private sector jobs, while jobless claims hit 1.974 million by June’s end, the highest since November 2021. Trump’s tariffs, including a paused 10% universal levy and a 145% tariff on Chinese goods (later cut to 30%), raise costs and uncertainty, slowing hiring. The “One Big Beautiful Bill” (OBBB), passed July 4, extends 2017 tax cuts, offers full equipment expensing, and boosts investment, with the Tax Foundation estimating a 1.2% long-term GDP rise, though adding $2.7 trillion to deficits. Altering this complex political and economic infrastructure, shaped by entrenched interests and global trade dynamics, requires far more than one individual’s effort, demanding coordinated action from policymakers, businesses, and stakeholders to navigate its far-reaching implications.

Despite a 0.3% Q1 2025 GDP contraction, driven by a 41.3% import surge as firms stockpiled goods, Q2 is set to rebound with a projected 2.0% annualized GDP increase as imports ease. Consumer spending slowed to 1.8% in Q1 from 4% in Q4 2024, but equipment investment rose 22.5%. Consumer confidence fell 32% since April, risking stagflation if tariffs persist. The OBBB’s R&D credits and manufacturing incentives could add 4–7 million jobs over four years, per the Council of Economic Advisers, but cuts to Medicaid and SNAP may strain low-income workers. Reforming this intricate economic framework to balance growth and stability requires collective effort beyond any single leader, as trade tensions with China and others threaten inflation and global supply chains, making the economic outlook a high-stakes challenge.  Click onto picture below to access video.  REF: CNN, OBBB, Tariffs

2. The Dual-Edged Impact of AI: Opportunities for Businesses and Investors, Challenges for Workers – Artificial Intelligence (AI) is transforming the global economy, offering significant benefits for businesses and investors while posing serious risks for workers facing job displacement. 

For businesses, AI enhances efficiency, reduces costs, and drives innovation. Companies adopting AI can automate repetitive tasks, optimize supply chains, and leverage data analytics for better decision-making, as seen in industries like manufacturing and retail where AI streamlines operations. Investors are equally enthusiastic, with AI-driven firms like Nvidia seeing stock surges due to demand for AI infrastructure. A 2025 McKinsey report estimates AI could add $15.7 trillion to global GDP by 2030, fueling optimism for market growth and profitability. This creates a favorable environment for businesses to scale and for investors to capitalize on high-growth AI sectors, from chip manufacturing to software development, positioning AI as a cornerstone of economic expansion.

However, the same automation that benefits businesses threatens workers, particularly those in routine or data-driven roles. The article from Prof G Markets (July 10, 2025) highlights that while human skills like creativity, emotional intelligence, and complex problem-solving remain irreplaceable, many jobs—such as data entry, basic coding, and customer service—are at high risk of AI replacement. A 2023 OECD study estimated that 27% of jobs in advanced economies face automation risks, with low-skill workers most vulnerable. This displacement could widen inequality, as reskilling lags behind AI’s rapid adoption. Workers without access to training in uniquely human skills or advanced technical expertise may face unemployment or underemployment, creating social and economic challenges. While AI drives prosperity for businesses and investors, it demands urgent workforce adaptation to mitigate its adverse effects on labor markets.  REF: ProfG

“It has to do with doubling down on the things humans do especially well — the skills that don’t scale, that require curation, curiosity, and connectivity.”

3. Elon Musk announced that Grok, xAI’s AI chatbot, will be integrated into Tesla vehicles by next week, marking the first U.S. vehicle with interactive conversational AI. 

Shared via X, this aligns with Musk’s vision to blend Tesla’s automotive technology with xAI’s AI expertise, enhancing the driver experience. Launched in November 2023 to rival ChatGPT, Grok delivers real-time, context-aware responses with a humorous, “truth-seeking” style inspired by The Hitchhiker’s Guide to the Galaxy and Marvel’s JARVIS. In Tesla vehicles, Grok will act as a hands-free voice assistant, enabling access to navigation, diagnostics, and information through natural language, integrated into the Tesla interface. Following Grok 4’s release, which Musk claims surpasses OpenAI’s GPT-4o, this move underscores Tesla’s focus on innovative software to differentiate its vehicles, particularly for Full Self-Driving subscribers.

Despite recent controversy over Grok 4’s antisemitic posts on X, prompting tighter content filters, the integration could strengthen Tesla’s market position amid sales challenges, with shares rising 1.1% on July 10. The Tesla-xAI synergy, with xAI’s $198.3 million in 2024 expenses tied to Tesla agreements, signals deeper collaboration. As the first U.S. vehicle with such AI, Tesla sets a new industry benchmark, but success depends on regulatory compliance, user trust, and safe interactions. Implications include enhanced driver convenience, potential sales boosts, and a competitive edge, though risks like public backlash over AI errors or Musk’s political ties could undermine perception. Failure to deliver reliable AI could also erode trust, while success could accelerate AI adoption across automotive markets.  Click onto picture below to access video on the newest Grok model.  REF: Bloomberg

NOTE: Not investment advice or recommendations. Investor should consider the investment objective, risks, charges and expenses carefully before investing.  For additional information about securities mentioned above or in the video, please visit the companies’ websites of referenced securities mentioned above.  Read carefully before investing.

With the current macro-economic backdrop, below are areas we currently favor:

• Fixed Income – Short-term Corporates (Low-Beta)
• Fixed Income – Corporates High Yield as Opportunistic Allocation (Low-Beta)
• Businesses that contribute to and benefit from AI & Automation (Market-Risk)
• Cyber-Security & Software (Market-Risk)
• Fintech & Financials (Market-Risk)
• Digital Asset – Bitcoin (Market-Risk/Hedge)
• Cloud Computing (Market-Risk)
• Biotechnology (Market-Risk)

4. World Watch

4A. Xi Jinping’s Absence from the 2025 BRICS Summit: Health Speculation and Political Ramifications

Xi Jinping’s unexpected absence from the 2025 BRICS Summit in Rio de Janeiro, represented by Premier Li Qiang, has triggered speculation about his health and leadership stability. China’s official claim of a “scheduling conflict” is overshadowed by Xi’s sparse public appearances since June 2025 and unverified social media reports of a stroke, though a July 2024 Reuters fact-check debunked similar claims. The opacity of China’s political system fuels such rumors, and Xi’s absence from the influential BRICS platform, amid domestic issues like economic challenges and a military purge, raises concerns about his leadership capacity in the face of global pressures, including U.S. tariffs.

The political implications of Xi’s absence and potential health issues are profound yet uncertain. Reports hint at growing influence among allies of former President Hu Jintao, with figures like Wang Yang as possible successors, but Xi’s tight control over the CCP suggests no immediate challenge. A serious health decline could prompt a managed transition to ensure stability, though the absence of a clear rival faction makes this unlikely soon. Xi may delegate more duties while prioritizing domestic goals like the 15th Five-Year Plan. Nonetheless, his absence risks diminishing China’s influence within BRICS, potentially ceding ground to rivals like India at a pivotal geopolitical moment. Click onto picture below to access video (from Hindustan Times).  REF: CNN

4B. Brazilian President Luiz Inácio Lula da Silva recently rejected U.S. President Donald Trump’s threat of a 50% tariff on Brazilian goods, asserting Brazil’s sovereignty and refusing to “take orders,” as reported by The Wall Street Journal. 

Trump’s letter cited Brazil’s prosecution of Jair Bolsonaro for an alleged 2022 coup attempt and attacks on free speech as reasons for the tariffs, escalating tensions rooted in his support for Bolsonaro. Lula convened an emergency cabinet meeting, invoking Brazil’s Economic Reciprocity Law to counter unilateral trade actions. He disputed Trump’s claim of a trade deficit, highlighting a $7.4 billion U.S. surplus with Brazil in 2024. This standoff intensifies U.S.-Brazil trade friction, with Lula defending judicial independence.

Despite heightened uncertainty, global and Brazilian stock markets remain optimistic. The Brazilian real did slump nearly 3% against the US dollar after the announcement, and the iShares MSCI Brazil ETF was down almost 2% in post market trading. The proposed tariffs, up from 10% in April, threaten exporters like Embraer and Petrobras, with the real dropping over 2% on July 9. Yet, the MSCI Asia Pacific Index rose 0.2% on July 8, reflecting hopes for negotiations. Brazil’s Congress is readying countermeasures, and Lula’s delegation aims to engage the U.S. before August. Investors seem confident in Brazil’s trade leverage and diplomatic efforts, though unresolved tensions could disrupt U.S. consumers reliant on Brazilian goods like coffee. Click onto picture below to access video.  REF: WSJ

4C. An updated snapshot of the current global state of economy.

According to TradingEconomics as of 7/7/2025 (REF: TradingEconomics):

• The US unemployment rate edged down to 4.1% in June 2025 from 4.2% in May, defying market expectations of a rise to 4.3%. 
• The unemployment rate in Italy surged to 6.5% in May of 2025 from the upwardly revised 6.1% in the previous month, well above market expectations that it would have eased to 6%, to mark the highest proportion of joblessness in nearly one year.
• Russia’s unemployment rate fell to 2.2% in May of 2025 from 2.3% in the prior month, below market forecasts of 2.3% to record a new record low.
• Eurozone consumer price inflation rose slightly to 2.0% year-on-year in June 2025, up from May’s eight-month low of 1.9% and in line with market expectations, according to a preliminary estimate.

5. Quant & Technical Corner – A selection of quantitative & technical data we monitor on a regular basis to help gauge the overall financial market conditions and the investment environment.

5A. Most recent read on the Fear & Greed Index with data as of 7/7/2025 – 7:59PM-ET is 75 (Extreme Greed).  Last week’s data was 65 (Greed) (1-100).  CNNMoney’s Fear & Greed index looks at 7 indicators (Stock Price Momentum, Stock Price Strength, Stock Price Breadth, Put and Call Options, Junk Bond Demand, Market Volatility, and Safe Haven Demand).  Keep in mind this is a contrarian indicator!  REF: Fear&Greed via CNNMoney

5B. St. Louis Fed Financial Stress Index’s (STLFSI4) most recent read is at –0.7036 as of July 3, 2025.  Previous week’s data was -0.6635.  A big spike up from previous readings reflecting the turmoil in the banking sector back in 2023.  This weekly index is not seasonally adjusted.  The STLFSI4 measures the degree of financial stress in the markets and is constructed from 18 weekly data series: seven interest rate series, six yield spreads and five other indicators. Each of these variables captures some aspect of financial stress. Accordingly, as the level of financial stress in the economy changes, the data series are likely to move together.  REF: St. Louis Fed

5C. University of Michigan, University of Michigan: Consumer Sentiment for February [UMCSENT] at 52.2, retrieved from FRED, Federal Reserve Bank of St. Louis, June 27, 2025.  Back in June 2022, Consumer Sentiment hit a low point going back to April 1980.  REF: UofM

5D. The Chicago Fed National Activity Index (CFNAI) increased to –0.28 in May from –0.36 in April. Two of the four broad categories of indicators used to construct the index increased from April, but three categories made negative contributions in May. The index’s three-month moving average, CFNAI-MA3, decreased to –0.16 in May from +0.06 in April. REF: ChicagoFed, May’s Report

5E. (6/20/2025) The Conference Board Leading Economic Index (LEI) for the US ticked down by 0.1% in May 2025 to 99.0 (2016=100), after declining by 1.4% in April (revised downward from –1.0% originally reported). The LEI has fallen by 2.7% in the six-month period ending May 2025, a much faster rate of decline than the 1.4% contraction over the previous six months. The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The indexes are constructed to summarize and reveal common turning points in the economy in a clearer and more convincing manner than any individual component. The CEI is highly correlated with real GDP. The LEI is a predictive variable that anticipates (or “leads”) turning points in the business cycle by around 7 months. Shaded areas denote recession periods or economic contractions. The dates above the shaded areas show the chronology of peaks and troughs in the business cycle. The ten components of The Conference Board Leading Economic Index® for the U.S. include: Average weekly hours in manufacturing; Average weekly initial claims for unemployment insurance; Manufacturers’ new orders for consumer goods and materials; ISM® Index of New Orders; Manufacturers’ new orders for nondefense capital goods excluding aircraft orders; Building permits for new private housing units; S&P 500® Index of Stock Prices; Leading Credit Index™; Interest rate spread (10-year Treasury bonds less federal funds rate); Average consumer expectations for business conditions.  REF: ConferenceBoard, LEI Report for May  (Released on 6/30/2025)

We have experienced a “rolling recession” since June 2022 and are only now emerging from it. However, authorities are not labeling it a recession due to high employment data.

5F. Probability of U.S. falling into Recession within 3 to 4 months is currently at 84.97% (with data as of 06/22/2025 – Next Report 07/07/2025) according to RecessionAlert Research.  Last release’s data was at 81.13%.  This report is updated every two weeks. REF: RecessionAlertResearch

5G. Yield Curve as of 7/7/2025 is showing Normal.  Spread on the 10-yr Treasury Yield (4.38%) minus yield on the 2-yr Treasury Yield (3.88%) is currently at 50bps.  REF: Stockcharts   The yield curve—specifically, the spread between the interest rates on the ten-year Treasury note and the three-month Treasury bill—is a valuable forecasting tool. It is simple to use and significantly outperforms other financial and macroeconomic indicators in predicting recessions two to six quarters ahead.  REF: NYFED

5H. Recent Yields in 10-Year Government Bonds.  REF: Source is from Bloomberg.com, dated 7/7/2025, rates shown below are as of 7/7/2025, subject to change.

The 10-Year US Treasury Yield… The 10-Year Yield is indirectly related to inflation. I expect the 10-Year Yield to drop further as dis-inflation kicks in.  REF: StockCharts1, StockCharts2

10-Year Real Interest Rate at 1.87166% as of 6/11/25.  Last month’s data was 1.66756%.  REF: REAINTRATREARAT10Y

ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) currently at 2.80 as of July 7, 2025.  This is a key indicator of market sentiment, particularly regarding risk and economic health.  At its core, the spread reflects the extra return investors demand to hold riskier corporate debt over safer government securities. High-yield bonds are issued by companies with lower credit ratings (below investment grade, like BB or lower), meaning they carry a higher chance of default. The spread compensates for this risk. When the spread is narrow—say, around 2.5% to 3%, as seen recently—it suggests investors are confident, willing to accept less extra yield because they perceive lower default risk or a strong economy. Narrow spreads often align with bullish markets, where cash is flowing, growth is steady, and fear is low.   REF: FRED-BAMLH0A0HYM2

5I. (7/7/2025) Today’s National Average 30-Year Fixed Mortgage Rate is 6.79% (All Time High was 8.03% on 10/19/23).   Last week’s data was 6.67%.  This rate is the average 30-year fixed mortgage rates from several different surveys including Mortgage News Daily (daily index), Freddie Mac (weekly survey), Mortgage Bankers Association (weekly survey) and FHFA (monthly survey).  REF: MortgageNewsDaily, Today’s Average Rate

The recent spike in the 30-year fixed-rate jumbo mortgage to 6.79%, compared to Freddie Mac’s rate at 6.67% and the Mortgage Bankers Association (MBA) rate at 6.79%, highlights key differences in the mortgage market. Jumbo mortgages, which exceed the conforming loan limits set by government agencies like Freddie Mac, typically carry higher interest rates because they are riskier for lenders. These loans are not backed by government entities, which increases the risk for lenders and, consequently, leads to higher rates. In contrast, Freddie Mac and MBA provide averages for conforming loans, which meet federal guidelines and have lower risk due to government backing, keeping their rates lower.

Housing Affordability Index for Apr = 101.0 // Mar = 103.2 // Feb = 102.2 // Jan = 100.7 // Dec = 100.7 // Nov = 99 // Oct = 102.3. Data provided by Yardeni Research.  REF: Yardeni

5J. Velocity of M2 Money Stock (M2V) with current read at 1.386 as of (Q1-2025 updated 6/26/2025).   Previous quarter’s data was 1.383.  The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.  Current Money Stock (M2) report can be viewed in the reference link.   REF: St.LouisFed-M2V

M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1. Board of Governors of the Federal Reserve System (US), M2 [M2SL], retrieved from FRED, Federal Reserve Bank of St. Louis; Updated on June 24, 2025.  REF: St.LouisFed-M2

Money Supply M0 in the United States decreased to 5,648,600 USD Million in May from 5,732,900 USD Million in April of 2025. Money Supply M0 in the United States averaged 1,194,572.77 USD Million from 1959 until 2025, reaching an all time high of 6,413,100.00 USD Million in December of 2021 and a record low of 48,400.00 USD Million in February of 1961.   REF: TradingEconomics, M0

5K. In May, the Consumer Price Index for All Urban Consumers rose 0.1 percent, seasonally adjusted, and rose 2.4 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.1 percent in May (SA); up 2.8 percent over the year. (NSA). June 2025 CPI data are scheduled to be released on July 15, 2025, at 8:30AM-ET.  REF: BLS, BLS.GOV

 5L. Technical Analysis of the S&P500 Index.  Click onto reference links below for images.

• Short-term Chart: Trend Bullish on 7/7/2025 – REF: Short-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Medium-term Chart: Trend Bearish to Bullish on 7/7/2025 – REF: Medium-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Market Timing Indicators – S&P500 Index as of 7/7/2025 – REF: S&P500 Charts (7 of them) by Joanne Klein’s Top 7 (Click Here to Access Updated Charts)

• The S&P500 is hitting all-time-high, rebounding from a V-shaped recovery.  REF: Stockcharts

• S&P500 and CBOE Volatility Index (VIX) as of 7/7/2025.  REF: FRED, Today’s Print

5M. Most recent read on the Crypto Fear & Greed Index with data as of 7/7/2025 is 50 (Neutral).  Last week’s data was 50 (Neutral) (1-100).  Fear & Greed Index – A Contrarian Data.  The crypto market behavior is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers. With the Crypto Fear and Greed Index, the data try to help save investors from their own emotional overreactions. There are two simple assumptions:

• Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
• When Investors are getting too greedy, that means the market is due for a correction.

Therefore, the program for this index analyzes the current sentiment of the Bitcoin market and crunch the numbers into a simple meter from 0 to 100. Zero means “Extreme Fear”, while 100 means “Extreme Greed”.  REF: Coinmarketcap.com, Today’sReading

Bitcoin – 10-Year & 2-Year Charts. REF: Stockcharts10Y, Stockcharts2Y