The latest on markets, the economy and finding the courage to persevere in the face of uncertainty.
Boston was a beautiful mix of yellow and blue this week for the 129th running of the Boston Marathon. It was a gorgeous day, sunny but cool, for the more than 30,000 runners trekking from Hopkinton to Boylston Street, right downstairs from our RWA office.
John Korir of Kenya won the race in 2:04:45 and was enveloped by his older brother Wesley Korir who won the race in 2012, marking the first time relatives of any kind won this race.
Most remarkable to me was that John Korir fell flat on his face at the start of the race, got up and kept on running. And he ran to win.
Like Pope Francis, who at 88 and struggling to recover from double pneumonia, defied the advice of his doctors to go out to St. Peter’s Square on Sunday to give an Easter speech and ride in the popemobile to greet the people one last time. He was determined to serve to the end.
These are just two remarkable examples of perseverance that took my breath away this week. These stories made me consider how we must try to grasp a small part of the examples of courage and not give up on our goals or our plans.
I find it helpful to consider that this volatility in the market, as breathtaking as it has been, just brought us back to pricing on the S&P 500 Index we last had in August 2024. I remember the conversations we had back then about the risks of the Magnificent Seven and the AI halo effect, and our worries that perhaps market exuberance had gone too far, too fast. Now we know they probably had, but now we also have new risks.
As earnings season continues, the tariff overhang is real, and no concrete progress has yet been definitively revealed. While those jitters continue, investors were pleased when Trump appeared to reverse his threats to fire Fed President Jerome Powell. Speaking to reporters in the Oval Office on Tuesday, Trump said, “No, I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates.”
As other Fed speakers reiterated that it’s too soon to judge whether, when, and how much of an interest rate cut will be necessary, economic data releases this week delivered a mixed message. Manufacturing barometers ticked higher than expected, along with durable goods orders which surged 9.2% in March presumably because people were trying to get their supplies before the tariffs hit. But the service sector activity index slipped and the University of Michigan consumer sentiment index was rather sour, coming in at 52.2.
According to the Federal Reserve’s latest Beige Book release of economic activity, several districts expressed uncertainty regarding the economic outlook because of tariffs, with many firms projecting elevated input costs. The report revealed companies are “adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy.”But on the bright side, on the employment front, the Beige Book noted that hiring was “little changed” with many firms “taking a wait-and-see approach to employment, pausing or slowing hiring until there is more clarity on economic conditions.”
We are about to enter the heart of first-quarter earnings season next week, but we had to be impressed by Google’s results reported Thursday night, which showed a 12% increase in revenue to $90.2 billion, thanks to strong growth in Google Cloud, ad revenue and the growth of AI-driven features. Though legal challenges related to antitrust cases and tariff concerns continue to be an overhang, Google smartly blunted that impact with a dividend increase and $70 billion stock repurchase program.
For their part, Texas Instruments and ServiceNow topped earnings and revenue estimates, and reaffirmed guidance for the rest of the year. In contrast, companies who are beating but issuing weaker guidance due to government policy uncertainty are getting hammered, including the likes of IBM and Southwest Airlines.
Notably, after Tesla announced first-quarter earnings plunged 40% and auto revenue fell 20%, one would have expected the stock to be in a freefall, but that was not the case. Instead, the stock was buoyed by the reassurances from Elon Musk that he would spend more of his time there and less on DOGE.
With stocks in better shape than where we started the week, we push forward in the hopes that we can all get back to normal soon enough. In the meantime, there is valuable work to be done in portfolio management, so please note our efforts to rebalance stocks and bonds, pair losses and gains to reset portfolio weightings to high conviction positions, and ensure cash and safety assets are locking in higher yields in the event rates do fall as we move through 2025.
Like Korir, the only way to stay in the race is to get back up and keep running.
Thank you for your interest in our weekly investment commentary. If you would like to speak personally with a member of your advisory team, please call 833.RWA.PLAN (833.792.7526).