Andrew Pyle A Comment -- General Comments From an Expert A Commentary COMMENT May 28, 2025

Yes, we had confirmation yesterday through the Fed meeting. When they released their comments, they used really aggressive language in terms of what they were expecting. We're a few months into tariffs, and we haven't seen any inflation yet, but it's in the pipeline.

Different estimates he's been reading indicate that it could take anywhere from 12-18 months for tariffs to be fully reflected in prices. It's expected to be quite severe. Along with unemployment, inflation is front and centre when it comes to the Fed moving on rates.

Hasn't really noticed any new trends from the Iran-Israeli situation. The trade issues with the US and the rest of the world have been the biggest cause of the decline that started in February down to April. We've seen a big rebound in the markets, with a lot of money going back in. Perhaps people regretted selling.

We're at the top now, pretty close to where we were at the peak earlier in the year. Where we go from here will be determined by how some of the geopolitical and trade issues are resolved. It'll be very important to watch.

In technical analysis, there's a pattern called the double top. A chart will hit a top, pull back, and then hit another top. People are deciding whether or not they're going to buy.

People are going to be looking at earnings, rather than at geopolitical and trade events. Not known yet how those events will affect the economy. Second quarter results will be coming out in the next few weeks to a month. Those will drive markets one way or the other. If you have cash to deploy into the market, he'd wait to see if we break that 6050 or so level on the S&P.

Technical analysts don't predict. They look at the patterns and trade them. He has about 15% cash in his diversified NA portfolio. If markets maintain or break above the resistance level, he'll invest. If markets decline, he'll raise more cash.

Lots of pessimism. Beyond the markets, people are pessimistic because of what's going on in the US. People are thinking about how they don't want to go south of the border for travel. Investors are surprised to learn that their portfolios are more or less where they were at the beginning of the year. They're aware of the decline, but not of the rally.

It's interesting to see how market's have recovered. He's a bit surprised to see that last month was a very strong month, driven mainly by a lot of the tech names we see at the top of the S&P 500. 

Markets have done well, but a big decision point coming. We're now at a big resistance point. If we can break above that, we should continue on for the rest of the year.

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The U.S. market is overcrowded. Going back to 1968 there have been 3 major peaks in the U.S. market of high household ownership of stocks. 1968 saw 28% household ownership, 2000 saw 25%. In both cases they were followed by a 50% drop. Now the household ownership is 30% compounded with foreign ownership of U.S. stocks being more than the previous two times, although this year there has been somewhat of an exodus to other markets. When the S&P 500 reaches this level the following historical return is close to 0%. However U.S. tech stocks have a greater portion of the market now so this pattern may not repeat. This all means investors should be more vigilant and make sure the fundamentals justify what they own.

Today is a sell the news event with oil down sharply. Oil in recent weeks rose because it was anticipating what would happen in the Middle East. Made sense. Today's events de-escalated the tension, but this isn't over by a long shot. Israel wants to delay Iran as much as possible Iran getting a nuclear weapon. Also, no nuclear reactors were hit to avoid spreading radiation. Don't adjust your portfolios, because the wild cards are vast. No idea what will happen.

Last week, the FOMC had an update of the dot plots (where the FOMC feels interest rates are going). A few Fed members believe the Fed won't cut any more rates this year, but the consensus remains of 2 cuts. For 2026: a few who predicted more cuts next year now feel there will be fewer, worried about inflation, stickier because of tariffs. Higher for longer. The average rate on US treasuries will rise from 3.36% now to 3.5%-3.7% to fund all that debt that Trump's bill will create when it is eventually signed in July.