Stock Talk - Stock Market Update, Friday July 25, 2025: Summer Stall or Squall

Episode Date: July 25, 2025

We've been seeing a powerful market rally since April—a classic V-bottom recovery that unfolded without Fed intervention and defied the doom-and-gloom predictions of many so-called experts. I explain why our team at Oak Harvest Financial Group saw this coming, why we're still bullish long term, and why now might be the perfect time to take a breath and reassess your investment plan—not chase returns. Watch to gain a clearer view of what's driving markets right now (hint: it’s not what the headlines are saying), what seasonal patterns suggest could happen next, and how to think more strategically about inflation, interest rates, and positioning your portfolio for the rest of 2025.   About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer: As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week. He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).   Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy — with a little education thrown in for good measure. Listen each week and help stay connected to your money!   Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free consultation: https://click2retire.com/Connect   Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. References to third-party analysts should not be seen as an endorsement of their views or recommendations, and you should do your own research before investing. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.

Investors, it's been an incredible three and a half months. We've had a V-bottom rally in stocks since peak market fears over economic uncertainty caused by the Liberation Day tariff spreadsheet chaos in Trump's administration. The administration has walked back some of the most draconian tariff levels touted by Peter Navarro, even seeming to play nicer a bit with China on many points. Investment team at Oak Carbis Financial Group discussed the likely V-bottom in stocks mid-to-late April, well before the historic rally took hold, while many others were talking doom and crashes. We discussed for weeks in our videos. Looking back on April 7th, what we thought was the low for the overall S&P 500 index in U.S. stocks, most likely for the rest of 2025,

except for maybe the unforecastable Black Swan event. Investors, we thought the minus 20% bare market correction was largely an event induced by president's unforeseen tariff policies. Investors, real good news is that we V-bottomed and this V-bottom happened without the Federal Reserve intervention and interest rates being cut. More Fed rate cuts are in front of us. What's their timing? I'll let the academics, economists, economists, strategists, and financial commentators and social media discuss that one ad nauseum, discussing irrelevant things in my view, such as dot plots

and Fed funds futures. Chris, irrelevant? How can that be? Because I've said, for the better part of five years, they have near zero predictive power in detecting the level of future interest rates. Study after study of data says that the Fed is a momentum investor. cuts beget cuts, and their timing is much less important than most think. Direction first.

Think investors, we're at marginal new all-time highs in stocks, and the Fed has paused. Think about that one. All those bare calls for a market collapse as the Fed reduces its balance sheet. Remember those smart calls two years ago? Those calls that the stock market was near, perfectly correlated with the Fed's balance sheet expansion? Well, we're near 6275 on cash S&P 500 as I write this, and the Fed's balance sheet has shrunk by $2.5 trillion since they started quantitative tightening. So investors, now sitting here in late July, I've been flooded with bullish pieces written largely from those who missed the near four-month

V-bottom rally, discussing the wonderfully positive seasonal tendency of July to be the second best-performing month of the year. I'm here to bring you good news and bad news. First, the good news. Investors, we're in a bull market against the peribar calls from imminent collapse like Jeremy Grantham, amongst others for nearly 15 years, against the retired hedge fund billionaire calls for a looming debt implosion or championing the beauty of the Chinese economy, Ray Dalio for the last 12 years by my count, and against the most recent calls for an inflationary spiral caused by tariffs or in a bull market, plain and simple. If you got scared or pulled the plug for emotional reasons, it might be time to enlist a professional money manager or at least a financial planner such

as Oak Harvest to help determine if you're allocated too far over your skis, first your risk tolerance, or against your needs. In simple terms, let us help you determine a plan that meets your needs first and your greed second. If you didn't get scared out, congratulations. You might be with a good planner. You might have a strong self-directed plan, or maybe you're on vacation. We're in a bull market up and to the right. Breath has been strong. Forget those naysayers who keep telling you it's only five or ten stocks in the markets, that it's only in video or Netflix or Microsoft. They've been wrong and have likely been wrong for months, if not longer. The naysayers who keep trying to scare you about this interstrate above this level or that level being the key, well, they've

likely been wrong, too. Interstrates have been in a range and been bouncing around. But Chris, interest rates have been so volatile. China is dumping the U.S. bonds, so I read, as are all other countries I hear about on TV. Possibly, but I'm sorry, the data says otherwise. Bond volatility has been declining, not rising. The best proxy I've found about bond volatility is the move index. We've talked about this one before. In fact, discussing it long before most on TV. Why, the move index measures long-term treasury bond volatility. A high-level or higher trending number equals more bond volatility, which means many market players have to de-lever. They have to sell assets. They have no choice. Their brokers tell them this.

US treasuries are the safest collateral in the world, but if their price is moving too fast, you must de-leverage. No ifs, ands or buts. Here's the chart of the move index. In this chart, like most things in the bond world, it's opposite of a stock chart. Down and to the right is good and up until the right is bad. The circles are the Fed rate cuts in 2024. Right now, the way I see it, The overall trend is lower, which is good, but we're now on support, which is not so good, particularly entering in a seasonally weaker time of the year. This, coupled with a likelihood of a small pickup of inflation, the next couple of months caused by the lag effect of the Trump tariffs, should make one slower to put new capital to work.

Pyr charts of the longer-term 10-year inflation break-even rate and the shorter term, two-year inflation break-even rate. At between 2.42 and 2.45 percent, neither is horrible. Recall, historically speaking, 2 to 3 percent. growth, 2 to 3% inflation is Goldilocks. Ideally, 2 to 3% growth and 2% inflation would be nicer, but we sit a bit higher currently on inflation and a bit lower on growth. I would expect to see a slight uptick in the inflation figures over the next three months on the good side and many in the higher inflation camp for longer hysteria camp hit the media hard in August and September,

just as stock buyback slow, inventory has been replenished in front of Back to School and Christmas. However, everything I hear and see suggests that deflation is taking place. in the U.S. housing and rental markets. Renters I talk to are actually upset about signing leases one to three months ago and are now seeing the same apartments for 5 to 10% less. Homes in the Houston area are sitting on the market longer, and regardless of what most agents are telling you, the markets are slow and soft for sellers,

which leads me to the number one area and likely reason for a very normal summer stall or likely minus 4 to 6.5% for retracement sometime between mid-August and mid-October. A further growth slowdown looks to be approaching. tariff-induced, demand pulled forward, uncertainty upticks. Inventory is replenished in the normal time when there is almost nothing a bullish investor can do to offset a negative story and bearish swirl. Here's the real-time two-year treasury tips yield. I call it the real growth yield. It's the premium investors' demand for holding treasuries. To me, it's a measure of growth, not the measure of

treasury risks that many on TV like to spend it. Investors, look at this chart in the last 24 months. When did real growth peak? It first peaked in mid-2023, which was the confluence of the end to the COVID-induced government giveaways, and the start, the Biden administration call for IRA spending. It then peaked again in summer of 2024, which was peak Biden-IRA fiscal spending in front of the 2024 presidential election. It was relatively stable at around 1 and 3 quarters percent into year-end, 2004 post the election, until the Trump administration decided frictionary tariffs and trade were their leading issues, not investor-friendly taxes and deregulation. So investors, when did this number trough? Yes, near spot on the first week in April when the administration,

administration started to walk back its initial draconian tariff game plan. This was one of the most important real-time data series I was watching that got me confident in our V-bottom, no-one gets in call back near tax day. Investors, the problem now? It's rolling over again, just as, one, we enter a seasonally weaker time for stocks. Two, investors will have a hard time combating the demand pull-forward talk that should build over the next four weeks. And three, the administration ramps up tariff talk again. I mean, really, we neither saw nor heard from Peter Navarro on CBC from April 7th till July 10th. These are good reasons behind last week's title, Nothing But Net, because historically, if you left town after the first 10 trading days in August, didn't return until the first one or two

weeks of October, you would miss nothing net. Instead of getting FOMO, fear of missing out here, how about taking a deep breath, exhaling, and slowing down and thinking, hmm, if early August through October 10 to be stalls at the market at best, and down most years, what do I want to wait for to buy in the third quarter slowdown, whether it's caused by a minor uptick inflation from tariffs, or slowdown in the real economy due to a pause and demand after a pull forward of inventory building and pull forward to buying in front of those tariffs? What stocks and groups would I want to own on the other side of a late summer and early fall? Hence, nothing but net for last week's title. Investors, we don't expect a summer squall, but we do expect higher levels of investor frustration

over the coming three months. And yes, even during the dot-com run in 1998 through 2000, there was a period of about three months after the initial four-month V-bottom post-long-term capital markets blowing up where the overall S&P 500 churned without getting burned. Here's that update overlay then and now. Investors, the pattern remains bullish and up and to the right is good. New all-time highs are not bearish historically. However, after rallying for almost four months off the April lows, exactly four months is in between August 4th and 8th, I do not expect. the pace and percentage gains of stocks to continue at this rate. Expect the pace to slow.

Investors, we expect a normal late summer pullback in the markets. If this plays at, as we expect, our team has stuck with their 2025-year-end target of 6,600, even as stocks sold off into April, and most strategists slash their targets from over this number to the low 5,000s, and are now raising them once again. Does that mean you shouldn't add to stocks particularly if you're younger and in saving and accumulation mode? No. Rarely can you pick the absolute level on both price and time on both the buy.

side, the sell side, and the buy side once again, particularly in gross stocks, as we've covered in prior videos. Investors, regardless of the path for the economy and the financial markets over the next few months into the end of summer and early fall, the investment team at Oak Harvest will be here, growing the ship and adjusting our models where we can. Until next week, have a blessed weekend, and know that the Oak Harvest team is doing what we can to plan for you and your family's future, regardless of what stage you're at in your career or in your retirement. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed.

The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice. advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment, and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.