June 12th, 2025: Weekly Market Review

1. The U.S. labor market in May 2025, as reported by the Bureau of Labor Statistics (BLS), shows signs of a deeper slowdown than headline figures suggest, with the establishment survey reporting a modest 139,000 nonfarm payroll increase (near the 12-month average of 149,000) led by gains in health care (+62,000), leisure and hospitality (+48,000), and social assistance (+16,000).  

In addition, the data is offset by significant downward revisions of 95,000 jobs for March and April, a sharp 696,000 employment drop in the household survey (the largest since December 2023), a 0.2-point decline in the labor force participation rate to 62.4%, and a 0.3-point drop in the employment-population ratio to 59.7%. These factors, alongside rising short-term unemployment (+264,000), declining federal government jobs (-22,000), and a widening gap between payroll and household survey data, indicate a labor market under strain, with workers exiting the job market, potentially masking the true extent of unemployment in the stable 4.2% rate and signaling risks to consumer confidence and economic growth. REF: BLS-Emp, LizSonders, BLS-LP

2. The CPI for Shelter, comprising about one-third of the CPI, tracks urban housing costs via Owners’ Equivalent Rent (OER) and Rent of Primary Residence, using data from 50,000 housing units collected semiannually by the BLS. In April 2025, the Shelter index rose 3.9% annually (index: 429.989, Dec 1982=100), with Rent of Primary Residence up 2.6% and OER at 3.35%. 

I believe this data is flawed and lags because it relies on a fixed sample and imputed rents, missing real-time market trends. Apartments.com reported a 1.2% annual rent increase in May 2025 (median rent: $1,534), far below the BLS’s figure, showing CPI overstates housing inflation.

The CPI Shelter’s methodology drives its lag and inaccuracy. Its six-month price relatives and quality adjustments delay capturing market shifts, unlike Apartments.com’s focus on new lease asking prices. OER, based on hypothetical rents for owner-occupied homes, often uses untransacted asking prices, inflating the index. The 3.9% CPI Shelter rise versus Apartments.com’s 1.2% highlights this disconnect, as the BLS’s reliance on outdated data and imputed rents misrepresents actual rent trends, making CPI Shelter a poor reflection of true housing cost pressures.  REF: Apartments.com, BLS

3. In the June 2025 episode of The Diary of a CEO podcast, hosted by Steven Bartlett, Cathie Wood, the founder and CEO of ARK Invest, discussed the transformative impact of innovation on the global economy during her visit to Europe. 

Managing nearly $30 billion in assets, Wood highlighted disruptive technologies such as artificial intelligence, robotics, blockchain, and life sciences, emphasizing their potential to reshape industries like transportation, healthcare, and finance. She predicted significant economic growth driven by these advancements, spotlighting investment opportunities in companies like Tesla, Coinbase, and CRISPR Therapeutics, and forecasted Bitcoin reaching $1.5 million by 2030. Wood advocated for a mindset of continuous learning to capitalize on these changes, noting that the next five years could fundamentally alter economic landscapes, with innovations like Tesla’s autonomous taxis and AI-driven diagnostics leading the charge. Cathie explains the following in the video. Click onto pictures further below to access videos. I urge you to spend some time and watch either version of the interview listed below. REF: StevenBartlett-DiaryOfACEO

• How there’s only 5 years until everything changes, and what you must do to prepare.
• Why she’s betting on Bitcoin hitting $1.5 million by 2030.
• The simple strategy that will skyrocket your passive income.
• How Tesla’s autonomous taxis and humanoid robots will reshape entire industries.
• The number one company that could make you financially free in 5 years.

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 investor relations section of 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)
• Biotechnology (Market-Risk)
• Financials (Market-Risk)
• Digital Asset – Bitcoin (Market-Risk/Hedge)
• Cloud Computing (Market-Risk)

4. World Watch

4A. ​ The UK economy shrank by 0.3% in April 2025, the sharpest drop since October 2023, driven by U.S. tariffs and domestic tax hikes according to Bloomberg. 

A 10% U.S. import tax on UK goods led to a £2 billion ($2.7 billion) export decline, hitting cars and steel hardest, according to the Office for National Statistics. The end of a property tax break cut real estate and legal activity, contributing 0.2 percentage points to the decline, while higher employer National Insurance contributions strained services and manufacturing, deepening the slowdown.

Despite the contraction, recovery prospects remain. UK-U.S. trade talks, with potential tariff cuts on cars and steel by July 9, 2025, could revive exports. The UK’s three-month GDP growth of 0.7% to April signals resilience. Stable global oil supplies, with U.S. crude inventories up 2.7 million barrels for the week ending June 6, 2025, per the Energy Information Administration, ease cost pressures. While tariffs and taxes caused a short-term shock, trade agreements and steady supply chains should limit long-term damage, supporting a rebound.  REF: Bloomberg

4B. Oil prices spiked in June 2025 as fears of an Israeli strike on Iran’s nuclear facilities intensified, per CNN’s June 11, 2025, report citing U.S. intelligence.

Iran, a key OPEC producer with 3.3 million barrels daily, risks supply disruptions, with potential retaliation threatening the Strait of Hormuz, a vital route for a third of global crude. The U.S. decision to withdraw some embassy staff from the Middle East due to the strike threat, reported by various sources on June 11, 2025, heightened market concerns, pushing Brent crude to $68.12 and West Texas Intermediate to $64.29 per barrel. However, I see this as a short-term shock, with steady global supplies from non-OPEC sources likely to cap long-term price rises.

Diplomacy and robust supply counter sustained price surges. U.S.-Iran nuclear talks, mediated by Oman and reported on June 10, 2025, aim to ease tensions, potentially stabilizing Iran’s oil exports. U.S. crude inventories rose by 2.7 million barrels for the week ending June 6, 2025, per the Energy Information Administration, signaling ample supply. Kazakhstan’s 2% production increase in May, despite OPEC+ quotas, further supports supply resilience. While the strike threat fuels volatility, I expect non-OPEC production and diplomatic progress to limit long-term price escalation, stabilizing markets. Click onto picture below to access video.  REF: EIA, Morningstar, WSJ

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

According to TradingEconomics as of 6/9/2025,  REF: TradingEconomics

• The ECB cut key interest rates by 25 bps at its June meeting, based on updated inflation and economic forecasts. 
• Japan’s GDP was flat in Q1 of 2025, beating a flash estimate of a 0.2% contraction but marking a sharp slowdown from the 0.6% growth in Q4.
• The Reserve Bank of India (RBI) unexpectedly lowered its key repo rate by 50 bps to 5.50% at its May meeting—larger than market expectations of a 25 bps reduction—while shifting its policy stance from accommodative to neutral.
• The Bank of Russia cut its key interest rate by 100 basis points to 20.00% on June 6, citing continued easing in inflationary pressures, including core inflation.

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 6/9/2025 – 8:00PM-ET is 62 (Greed).  Last week’s data was 56 (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 –0.5433 as of June 12, 2025.  Previous week’s data was -0.5089.  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, May 30, 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) decreased to –0.25 in April from +0.03 in March. Three of the four broad categories of indicators used to construct the index decreased from March, and three categories made negative contributions in April. The index’s three-month moving average, CFNAI-MA3, was unchanged at +0.05 in April. REF: ChicagoFed, April’s Report

5E. (5/19/2025) The Conference Board Leading Economic Index (LEI) for the US fell sharply by 1.0% in April 2025 to 99.4 (2016=100), after declining by 0.8% in March (revised downward from the –0.7% originally reported). The LEI declined by 2.0% in the six-month period ending April 2025, the same rate of decline as over the previous six months (April–October 2024). 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 April  (Released on 5/31/2025)

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 81.13% (with data as of 05/31/2025 – Next Report 06/12/2025) according to RecessionAlert Research.  Last release’s data was at 74.4%.  This report is updated every two weeks. REF: RecessionAlertResearch

5G. Yield Curve as of 6/9/2025 is showing Normal.  Spread on the 10-yr Treasury Yield (4.46%) minus yield on the 2-yr Treasury Yield (3.99%) is currently at 47bps.  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 6/9/2025, rates shown below are as of 6/9/2025, 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 1.66756% as of 5/13/25.  Last month’s data was 1.66841%.  REF: REAINTRATREARAT10Y

ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) currently at 3.09 as of June 9, 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. (6/9/2025) Today’s National Average 30-Year Fixed Mortgage Rate is 6.95% (All Time High was 8.03% on 10/19/23).   Last week’s data was 6.96%.  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 6.95%, compared to Freddie Mac’s rate at 6.85% and the Mortgage Bankers Association (MBA) rate at 6.92%, 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.

(5/13/25) Housing Affordability Index for 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 1.387 as of (Q1-2025 updated 5/29/2025).   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 May 27, 2025.  REF: St.LouisFed-M2

Money Supply M0 in the United States decreased to 5,732,900 USD Million in April from 5,775,200 USD Million in March of 2025. Money Supply M0 in the United States averaged 1,188,977.26 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 Bearish to Bullish on 6/9/2025 – REF: Short-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Medium-term Chart: Trend Bearish to Rising on 6/9/2025 – REF: Medium-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Market Timing Indicators – S&P500 Index as of 6/9/2025 – REF: S&P500 Charts (7 of them) by Joanne Klein’s Top 7 (Click Here to Access Updated Charts)

• A well-defined uptrend channel shown in green with S&P500 broke away from the uptrend.  REF: Stockcharts

• S&P500 and CBOE Volatility Index (VIX) as of 6/9/2025.  REF: FRED, Today’s Print

5M. Most recent read on the Crypto Fear & Greed Index with data as of 6/10/2025 is 64 (Greed).  Last week’s data was 58 (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