July 2025

The Slice

A Monthly Market Update & Investment News Roundup

Cutting through the noise...so you don't have to.

Good morning,

I'm an LSU fan. And I spent an inordinate amount of time watching college baseball last month. By my estimate, the Tigers played roughly 30 hours of postseason baseball on their way to capturing their 8^th national championship, and I think I watched a solid 24 of those. It was glorious, but I also realize that I need to figure out DVR for streaming.

Above: LSU won its 8th NCAA baseball championship last month in Omaha.

LSU has played some great games in Omaha over the last 35 years, but one stands out. In 1996, after an early lead, the Tigers found themselves down four runs to Miami in the sixth inning of the championship game. All-American closer Robbie Morrison was on the mound for Miami. In the infield were future MLB champions Pat "The Bat" Burrell and Alex Cora. Things were looking good for "The U."

But in the sixth inning, Miami's Burrell, the tournament MVP, hit a fly ball to deep center that on any other day would have been a grand slam. But on this day, a strong wind kept the ball from going over the wall. LSU caught it and kept themselves in the game.

Then, in the ninth inning, LSU's leadoff batter, who was 0-for-15 heading up to the plate, hit a double to put himself in scoring position.

Still, Miami clung to a one-run lead with two outs in the bottom of the ninth. Morrison had just struck out his eighth batter of the game, and all the Hurricanes had to do was get the final out. Coming up to the plate was a guy who had missed 42 games with a wrist injury and hadn’t hit a home run all year. Easy enough.

Morrison used the same breaking ball that had struck out the previous batter, but LSU second baseman Warren Morris pounced on it early and hit a line drive over right field. It went from Morris's bat to the bleachers in less than three seconds. Morris didn't even know it was a homer until he looked left and saw the entire Miami infield collapsing to the dirt in disbelief. To this day, no other championship game, collegiate or pro, has ended in a walk-off homerun.

Above: LSU's Warren Morris saved his only homerun of the '96 season for the bottom of the 9th inning in the College World Series.

Midway through the year, the market now finds itself in a similar position to Miami in those middle innings. Despite a big drop in April, the market is on pace for double-digit returns in 2025. And right now, things are looking good:

• Despite tariffs, inflation has remained below 3%, keeping the consumer-driven economy on firm footing.
• President Trump looks set to nominate a Fed Chair to succeed Jerome Powell as early as this fall. And that job interview is going to go something like this: "How much are you going to cut rates?" Whoever comes up with the best answer to that question is going to play a major role in enabling multiples on earnings to expand, or at the very least, stay elevated, as bonds and cash become less attractive.
• And the market now has momentum on its side. Not only are the next twelve months' forecasted profits at an all time high, but 3Fourteen Research's Warren Pies points out that the second half of the year is usually positive after a decline like the one we got in the first half of this year.

To be sure, the second half of the year is not without risks. If you ask Steve Eisman, hero of the Big Short, the only risk worth worrying about is still a trade war:

Read books on World War I. Nobody wanted World War I. There was not a single country in Europe that said "Y'all we gotta go to war!" But because of all the reciprocal treaties they had, they eventually sort of fell into it. And then it was a disaster...

So, can we close out the year with three straight double digit gains? I can't tell you that. What I can tell you from watching a lot of sports (and markets), is that Warren Morris hitting that walk-off, is a reminder that the things we don't expect to happen, that we don't want to happen, can and do happen...at the worst possible time. At least for Miami fans.

Batter up.

Here's what you need to know.

Markets

2025 Year-to-Date Asset Class Returns

Data thru 6/27/2025. Source: © Exhibit A, FactSet Research Systems Inc., Standard & Poor's  This slide is for informational and illustrative purposes only. The data provided is believed to be accurate, but there is no guarantee of its accuracy, completeness, or timeliness. This is not a recommendation or offer of any financial product. Past performance is not indicative of future results, and investors should consider their own objectives and risk tolerance. Indices, if presented, do not include fees, are unmanaged, and not available for direct investment. Definitions & Methodology: The returns shown represent year-to-date return performance of sector ETFs provided by iShares (EEM, EFA, TIP, AGG, DJP), SPDR (MDY, SPSM, SPY, BIL), and Vanguard (VNQ). These ETFs track the following sectors: Commodities, International, Emerging Markets, U.S. Large Cap, REITs, U.S. Mid Cap, TIPS, U.S. Small Cap, Cash, and Bonds. Data is sorted by return from highest to lowest.

News & Notes

• The Great Convergence: How to invest when stocks, cash, treasuries and corporate bonds all yield about the same. (WSJ)
   
• The Army's New Nerd Brigade: The Army's new innovation corps has landed some prized recruits: executives from Meta, Palantir, and Open AI. (WSJ)
   
• Stablecoin for Boomers: Stablecoin pegs the value of a cryptocurrency to another asset, like the dollar, yen, etc. A recent IPO of stablecoin firm Circle generated significant interest from investors because the company reported $1.7B of interest income prior to going public. But it's not quite what it seems. (JPM)
   
• Bobby Bonilla and the Time Value of Money: Every July 1st, the New York Mets pay Bobby Bonilla $1.2MM, but he hasn't played for the team since 1999. A quick lesson on the time value of money. (Barron's)
   
• I'm Frugal. My Spouse Is Not: How one couple makes it work. (WSJ)
   
• Tough Job Market for New Grads: How to help your kid without running out of money. (Barron's)
   
• What are Trump Accounts?: Families with children born between Jan 1, 2025-December 31, 2028 would be eligible for a one-time contribution of $1000 from the government under the Big Beautiful Bill. (TIME)
   
• Travel & Spend:
  36 Hours: Istanbul (NYT)
  36 Hours: Outer Banks (NYT)
  36 Hours: Detroit (NYT)

(Pie)Chart of the Month

Returns of a Diversified Portfolio in 2025

Source: © Exhibit A, FactSet Research Systems Inc. | June 27, 2025.

2025 is on pace for double digit gains-- if you're diversified. Unlike previous years, the seven largest stocks, sometimes referred to as the Magnificent 7, aren't the ones doing the heavy lifting. In fact, Apple, Amazon, Google, and Tesla are all negative for the year. Instead, gold, international stocks, and even bonds are working to drive returns -and with less risk than an all-equity portfolio. 

This slide is for informational and illustrative purposes only. The data provided is believed to be accurate, but there is no guarantee of its accuracy, completeness, or timeliness. This is not a recommendation or offer of any financial product. Past performance is not indicative of future results, and investors should consider their own objectives and risk tolerance. Indices, if presented, do not include fees, are unmanaged, and not available for direct investment. Definitions & Methodology: This hypothetical portfolio does not represent actual performance, was not achieved by any investor, and is for illustrative purposes only. Actual results may vary substantially. The chart illustrates the year-to-date total return attribution of a hypothetical diversified portfolio across multiple asset classes. The portfolio was calculated using the assumed weights shown and multiplying each weight by the gross total return (including dividends, with no fees) of the corresponding ETF. The hypothetical "diversified" portfolio is composed of the following ETFs and weights: SPY (30%), SPSM (10%), EFA (15%), EEM (5%), AGG (25%), VNQ (5%), DJP (5%), and BIL (5%). This demonstration includes material assumptions and limitations and should not be relied upon for investment decisions. Diversification does not ensure a profit or protect against loss.

Firm News

Pile O' Bricks

Ben got his birthday wish: We made a surprise trip to LEGOLAND after school let out. Are there worse things to step on in the middle of the night? I'm not sure that there are.

NOLA

We stopped in New Orleans on our way to visit grandparents. We went to the Aquarium and some of my favorite food spots. Jack had too much bread pudding :(

Happy Fourth of July!

Markets close starting Thursday July 3rd at 1pm EST, and reopen on Monday July 7th at 9:30.

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