June 20th, 2025: Weekly Market Review

1. Despite the shortened week due to the Juneteenth holiday, recent U.S. economic data signals growing challenges. Retail sales dropped 0.9% in May, worse than the -0.6% consensus and down from April’s 0.1% rise, reflecting weakened consumer spending amid tariff concerns and rising prices.

Initial jobless claims stayed high at 245,000, above the 200,000 mark of a robust labor market, indicating persistent softness. The unemployment rate held at 4.2%, but with likely downward revisions to job gains, it may rise. Housing starts fell to 1.256 million, below the 1.359 million consensus and April’s 1.361 million, highlighting housing market struggles under high rates and tariff-driven costs.

The Federal Reserve’s June meeting, concluding Wednesday with no rate cut, underscored a cautious approach, as Chair Jerome Powell cited elevated inflation expectations from trade policies. On Wednesday, the Fed’s monetary-policy committee also lowered its 2025 GDP growth projection to 1.4%, signaling reduced economic optimism. However, Powell’s outlook for two rate cuts in 2025 offers hope. Weak retail, high jobless claims, a vulnerable unemployment rate, and sluggish housing starts point to intensifying headwinds, with businesses cautious amid policy uncertainty, making the Fed’s careful balancing act critical to avoid stagnation while managing inflation.  REF: BARRON’S1, BARRON’S2, Briefing, CNBC, FederalReserve

2. The Boston Dynamics Spot robots that danced to Queen’s “Don’t Stop Me Now” on America’s Got Talent on June 10, 2025, performed a pre-programmed choreography, not remotely controlled. 

Using Choreographer software and animation tools, engineers and choreographers scripted the dance for five Spot robots. Onboard sensors, including 3D cameras and gyro-sensors, ensured balance and precise execution of the routine. The robots used model-predictive control for short-term adjustments, like maintaining stability, but followed pre-defined instructions without independent decision-making, similar to Boston Dynamics’ 2020 “Do You Love Me” video.

The AI in this performance is minimal, primarily limited to onboard systems for real-time balance and minor environmental adjustments. The choreography relies on pre-programmed sequences, not machine learning or autonomous decision-making. AI supports low-level control, like stabilizing movements, but the dance itself is a human-designed script executed by the robots’ control systems. This performance highlights robotic precision and human-robot collaboration, showcasing potential in entertainment. It demonstrates robots’ ability to perform complex, aesthetically pleasing tasks, possibly expanding their role in creative industries. However, it underscores the reliance on human programming over true autonomy, raising questions about the future of AI-driven creativity and robots in human-centric performance spaces. Click onto picture below to access video.  REF: AGT

3. The surging energy demands of artificial intelligence (AI), driven by the computational intensity of large models, threaten both the tech industry’s growth and global green energy targets. 

Data centers powering AI could consume up to 8% of global electricity by 2030, doubling current levels, according to Goldman Sachs and the Electric Power Research Institute. Renewable sources like solar and wind, while essential for reducing emissions, struggle to provide the consistent baseload power data centers require due to their intermittency. This has prompted exploration of alternatives like onsite power generation and nuclear energy, with over 40 venture capital firms investing in innovative energy solutions. Nuclear power, particularly small modular reactors (SMRs), offers a reliable, carbon-free option to meet AI’s energy needs while supporting net-zero goals. Tech giants, including Nvidia, are backing nuclear projects to ensure sustainable power for AI infrastructure, as renewables alone may not meet grid demands.

Nvidia’s venture-capital arm, NVentures, participated in a $650 million funding round for TerraPower, a nuclear developer founded by Bill Gates, advancing SMRs like the Natrium reactor. This 345-megawatt sodium-cooled reactor, with molten salt storage, can scale to 500 megawatts, making it ideal for data centers and renewable integration. TerraPower’s Wyoming plant, supported by $2 billion from the U.S. Department of Energy and investors like Gates and HD Hyundai, aims for operation by 2030. Despite regulatory hurdles, high costs, and public concerns over nuclear safety, TerraPower’s partnerships, including with Sabey Data Centers, highlight nuclear’s potential to sustainably power AI’s growth while easing pressure on global energy grids.  Click onto pictures below to access videos.  REF: BARRON’S, FT, TerraPower

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. ​ China’s control over rare earth minerals has emerged as a critical advantage in trade talks with the U.S., especially during 2025 tensions with the Trump administration.

Dominating roughly 61% of global mining and 92% of processing for these 17 elements vital for electric vehicles, smartphones, and F-35 jets, China restricted exports of seven key rare earths—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—in April 2025, countering U.S. tariffs up to 145%. These curbs disrupted U.S. supply chains, halting production at firms like Ford, and led to a Geneva trade truce, lowering U.S. tariffs to 30% and China’s to 10% while resuming some exports, showing China’s power to leverage its near-monopoly to force U.S. concessions.

Despite the truce, China’s rare earth dominance continues to challenge the U.S., with Beijing maintaining supply chain control. The June 2025 London talks secured faster export licenses for non-military U.S. firms for six months, but military magnet restrictions remain, highlighting China’s strategic edge. The U.S. is responding with Executive Order 14241 and over $439 million to boost domestic processing, like MP Materials’ California plants. Yet, independence could take a decade, leaving the U.S. exposed in security and manufacturing, pushing Trump’s administration to negotiate for access to these critical minerals.  Click onto picture below to access video.  REF: WSJ, CBS

4B. The Swiss National Bank’s (SNB) decision to cut its interest rate to zero, as stated by Chairman Martin Schlegel, is a response to the strong Swiss franc’s impact on Switzerland’s export-driven economy. 

A strong currency raises the cost of Swiss goods like pharmaceuticals and watches abroad, reducing their competitiveness. By lowering rates, the SNB aims to weaken the franc, making exports more affordable and boosting demand to support Switzerland’s trade surplus. Schlegel’s mention of potential FX market interventions highlights the SNB’s readiness to manage the franc’s value, ensuring inflation stays within the 0-2% target while enhancing trade amid global uncertainties like U.S. tariffs.

However, this strategy involves risks and complexities. A weaker franc can improve exports but risks U.S. scrutiny, as Switzerland’s 2025 watchlist status suggests concerns over currency manipulation. FX interventions, involving selling francs for foreign currencies, may strain relations with trade partners. Additionally, zero interest rates can burden domestic banks and savers, as seen during Switzerland’s 2014-2022 negative rate period. Despite these challenges, the SNB prioritizes medium-term price stability, using currency depreciation to counter deflationary pressures from cheaper imports and sustain Switzerland’s export growth in a volatile global market.  Click onto picture below to access video. REF: Bloomberg

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

According to TradingEconomics as of 6/16/2025 (REF: TradingEconomics):

• The annual inflation rate in the US rose for the first time in four months to 2.4% in May 2025 from April’s 2.3%, the lowest since 2021, but came in below expectations of 2.5%. 
• China’s surveyed unemployment rate inched down to 5% in May 2025, slightly below both market forecasts and April’s figure of 5.1%.
• The gross domestic product in India expanded 2% quarter-on-quarter in the three months to March 2025, following a 1.9% growth in the previous period, according to data from OECD.
• India’s consumer price inflation eased to 2.82% in May 2025, down from 3.16% in April and below market expectations of 3%.

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 6/16/2025 – 8:00PM-ET is 62 (Greed).  Last week’s data was 63 (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 –0.8111 as of June 19, 2025.  Previous week’s data was -0.5433.  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 6/16/2025 is showing Normal.  Spread on the 10-yr Treasury Yield (4.44%) minus yield on the 2-yr Treasury Yield (3.95%) is currently at 49bps.  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 6/16/2025, rates shown below are as of 6/16/2025, 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 5/13/25.  Last month’s data was 1.66756%.  REF: REAINTRATREARAT10Y

ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2) currently at 3.18 as of June 16, 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. (6/16/2025) Today’s National Average 30-Year Fixed Mortgage Rate is 6.91% (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 6.91%, compared to Freddie Mac’s rate at 6.84% and the Mortgage Bankers Association (MBA) rate at 6.93%, 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 6/16/2025 – REF: Short-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Medium-term Chart: Trend Bearish to Rising on 6/16/2025 – REF: Medium-term S&P500 Chart by Marc Slavin (Click Here to Access Chart)

• Market Timing Indicators – S&P500 Index as of 6/16/2025 – 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 6/16/2025.  REF: FRED, Today’s Print

5M. Most recent read on the Crypto Fear & Greed Index with data as of 6/16/2025 is 53 (Neutral).  Last week’s data was 64 (Greed) (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