Tariff Tantrum vs. Reality Check

Joseph: Since Trump’s “Liberation Day” tariffs on April 2, soft data (like surveys) has collapsed, while hard data (like jobs and spending) hasn’t budged. It’s a reminder that sentiment often reacts faster than the economy actually does—if it reacts at all.

Source: Citigroup as of 05.28.2025

Divergences Usually Converge

John Luke: While the split between what people feel and what they do is getting louder, they eventually converge. Job growth, income, and GDP are all holding up, with Q2 estimates now pushing higher. Right now, that story still looks solid, even if the vibes don’t match. Which will win?

Source: 3Fourteen Research as of 03.31.2025

S&P 500 Goes Full Rocket Mode

Beckham: A 20 percent move in just 28 days? That’s rare air for the S&P 500. The last three times this happened, the market was higher a year later. Short-term fireworks, long-term signal?

 Source: 3Fourteen Research as of 05.28.2025

May Meant Business

Dave: The S&P 500 just had its best month since the fall of last year (and second largest month since last May). May continues to show up when bulls need a lift.

Source: Mike Zaccardi as of 05.31.2025

May Strength “May” Mean Strength

Arch: May posted a 5%+ gain for the S&P 500. Why does that matter? Because in every previous case where May gained more than 5%, the market was up over the next 12 months.

Source: Carson as of 05.28.2025

The World Takes a Strong Lead at the (Almost) Halfway Point

Joseph: Despite the bounce in May, the U.S. market is trailing international markets by the widest margin year-to-date since 1993.

Source: Bloomberg as of 05.31.2025

Is it Yields Keeping the US Down?

Brad: There’s no magic interest rate that kills equity returns. Since 1940, S&P 500 returns have shown no consistent pattern based on nominal yields.

Source: Shiller, Goldman as of 12.31.2024

Big Tech’s Valuation Diet

Arch: A portion of the relative lag in the U.S. is due to the MAG-5 seeing their P/E ratios drop as earnings caught up to price. These names are still priced at a premium to the broader market, but the decline has been real.

Source: Strategas as of 05.31.2025

The MAG-7 Premium… It’s All Relative

Brad: Yet the MAG-7 premium in relative terms compared to the rest of the S&P 500 has dropped to 43 percent, the lowest since 2017. Still higher, but justified?

Source: Strategas as of 05.31.2025

Small Caps, Large Red Flags

Dave: Investors can own small caps at a discount, but in many areas that discount may be justified. While that’s not unusual during speculative episodes, the current level suggests that broad small-cap exposure is still littered with unprofitable firms. An allocation to higher quality small-caps may be the antidote.

Source: Strategas as of 05.31.2025

Is the Fed Looking Yet?

John Luke: PCE inflation is sitting at 2.1 percent, right where the Fed wants it. Meanwhile, real yields are at decade highs. If the Fed is really data dependent, the case for a rate cut is getting stronger.

Source: Bloomberg as of 05.31.2025

Expensive Doesn’t Always Equal Worse

Brian: Yes, homes used to be cheaper. They were also way smaller (and used to lack plumbing). In 1950, most homes were well under 1,500 square feet, while today, less than 25% are under 1500 square feet. Today, buyers want offices, islands, and three bathrooms. Adjust your nostalgia accordingly.

Source: 24/7 Wall Street, Census, Aptus as of 12.31.2024

 Takeaways

• • Market reactions and economic reality often part ways
  • Seasonality and momentum are alive and well
  • Small caps still need a quality filter
  • Big tech is still big, but not as bubbly
  • Inflation is cooling, but not investor excitement

Disclosures

Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward-looking statements cannot be guaranteed.

Projections or other forward-looking statements regarding future financial performance of markets are only predictions and actual events or results may differ materially.

This commentary offers generalized research, not personalized investment advice. It is for informational purposes only and does not constitute a complete description of our investment services or performance. Nothing in this commentary should be interpreted to state or imply that past results are an indication of future investment returns. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with an investment & tax professional before implementing any investment strategy. Investing involves risk. Principal loss is possible.

Advisory services are offered through Aptus Capital Advisors, LLC, a Registered Investment Adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about the advisor, its investment strategies and objectives, is included in the firm’s Form ADV Part 2, which can be obtained, at no charge, by calling (251) 517-7198. Aptus Capital Advisors, LLC is headquartered in Fairhope, Alabama. ACA-2506-30.

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The headlines, data, and stuff that just don’t matter bombard investors. It’s our own dang fault. The noise only exists because there’s demand for it. Investors click on the bait and even make decisions off the emotions triggered by the bait.

Our aim at Aptus is to be informed with some noise, while targeting our focus towards the things that matter. Less noise, more substance. Substance being the stuff that moves investors closer to improving financial outcomes.

C.S. Lewis had a good quote in Mere Christianity about aiming for heaven. We want to aim for our north star, too…consistent in our focus and delivery of solutions that help solve things that matter. While we cover quite a few topics, the target today is a short reminder of the core investment belief that drives our business:

Asset allocation matters most, and within that, we want to own more stocks, less bonds, and blend hedges to protect against left tails.

Bondholders = Bagholders

In investing, a bagholder describes an investor who holds onto a declining asset. Many bagholders ignore the warning signs… of which there are plenty.

Our fiat system and the accompanying debt loads are not conducive to productivity gains translating to greater purchasing power of a dollar. We will spare you the soapbox, the point is simply that our system MUST dilute the dollar’s value over time.

Speaking of distractions, remember way back when (a couple of weeks ago), cost-cutting was the initiative? DOGE, fiscal restraint, trimming excess, etc. That was all the noise. We have quickly pivoted back towards a growth-centric philosophy, one that wants to run the economy hot to stimulate demand and growth beyond the pace of our debt expansion.

Good luck with that. As investors, what matters is the recognition of all this. Let’s just play the hand we are dealt through our asset allocation. It’s no surprise to any reader of ours that our opinion in both tails is risk assets up, and bond holders as bag holders. The likely outcome of good things (growth above expectations) is risk assets higher.  The likely outcome of bad things (plunge protection team enters to supply more dollars) ultimately leads to risk assets higher.

Allocate accordingly.

Here Comes the Dollar Supply

This tweet from Charlie Bilello illustrates the increase in money supply over the last few years:

You could argue that this doesn’t matter. If that’s your stance, you probably think bonds are safe, too.

Here’s a reminder that when you hold something that can be created out of thin air, there’s a chance that thing might become worth less and less over time:

$1,000,000 today only has the purchasing power of $132,444 in 1972 dollars. Purchasing power of $1,000,000 has eroded by about 86.76% since 1972 due to inflation.

The cumulative price increase from 1972 to 2025 is 655.04%. This means that $1,000,000 in 1972 would buy the same amount of goods and services as $7,550,358.85 would buy today.

Let’s Run it Hot

We are hopeful that AI has productivity gains in store for us, to grow our way out of this debt issue. While hopeful, we will allocate dollars in a way to hedge that hope…via owning more risk assets.

We’d agree that a US default is unlikely, but the likelihood of bondholders being paid back with debased dollars is quite high. The current situation is roughly 97% public debt to GDP + 3.2% primary deficit + 3.4% effective interest rate. This means the US must grow nominal GDP at 6.6% to keep debt/GDP Stable.

The US has only grown nominal GDP at 6.6% or higher a handful of times:

• • High Secular Inflation 1965-1985

• • Dot-com Bubble (late 90s)

• • Housing Bubble (mid-2000s)

• • Everything Bubble (post-COVID)

Conclusion

Asset allocation is mission critical. If we get that right, we can get a lot of other stuff wrong and still be fine.

The backdrop is one where we are convinced that the need to own more stocks and less bonds will become increasingly apparent over time. We will continue to build solutions that help facilitate this shift and model portfolios that express this conviction.

We believe our allocations, which are a blend of risk assets with hedges, are positioned to be better in the tails. It’s the tails that carry the greatest impact towards compounding wealth through time.

If you have any questions at all, please reach out. We want to help cut through the noise. As always, thank you for your trust.

Disclosures

Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward-looking statements cannot be guaranteed.

This commentary offers generalized research, not personalized investment advice. It is for informational purposes only and does not constitute a complete description of our investment services or performance. Nothing in this commentary should be interpreted to state or imply that past results are an indication of future investment returns. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with an investment & tax professional before implementing any investment strategy. Investing involves risk. Principal loss is possible.

Advisory services are offered through Aptus Capital Advisors, LLC, a Registered Investment Adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level or skill or training. More information about the advisor, its investment strategies and objectives, is included in the firm’s Form ADV Part 2, which can be obtained, at no charge, by calling (251) 517-7198. Aptus Capital Advisors, LLC is headquartered in Fairhope, Alabama. ACA-2506-18.

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Wild Start to the Year – Longer Recap: A narrow rally in the first few weeks, then punishing weakness in February/March (led by Tech) as global allocators moved investments outside the U.S., then “Liberation Day” collapse of all risk assets globally, followed by a rapid recovery led by tech stocks recovering all “Liberation Day” losses, before finally some fear again getting priced into the market as the U.S. debates continue around the “One, Big, Beautiful Bill” and tariffs and de-regulation (Treasury Secretary Bessent’s three-legged stool), making the combined impact on the U.S. government budget and economy incredibly difficult to determine. Equity and bond markets assumed near recession in early April, followed by overheating risk by mid-May. Uncertainty is likely to reign until at least July/August, when 90-day tariff reprieves end and the One Big, Beautiful Bill is signed into law. Meanwhile, hard economic data continues to chug along, and earnings remain resilient.

Long-End Rates Came Back Under the Microscope: With the combination of Moody’s US sovereign downgrade and the passage of President Trump’s “One, Big, Beautiful” bill through the U.S. House of Representatives, long-end rates came back into focus. The market is worried that the bill would increase public debt over the next decade and the ever-so-important debt-to-GDP ratio. Whilst markets in the post-GFC (2009-19) period were defined by monetary policy, since 2020, fiscal policy has been the dominant policy lever. Investors should note that US fiscal spending is up 50% in the COVID era. But U.S. GDP is also about 50% larger (and the stock market has nearly doubled). In fact, the debt-to-GDP ratio today is lower than it was at the end of 2020. Nonetheless, the U.S. fiscal picture remains negative as entitlement spending continues to climb and the U.S. debt servicing cost remains elevated at 18% of tax revenues, exceeding the historical level of 14% when fiscal austerity kicks in.

An Update on the D.C. Administration: Trump is following the opposite order of operations of his first term, when he focused on deregulation and enacting tax cuts before engaging in a modest trade war targeting China. In his second term, he is imposing broad tariffs, including a 10% universal tariff on nearly every country and 25% sectoral tariffs, which raised the odds of a recession and halted business activity before Trump began to walk them back. Congress is moving forward on a tax bill that will provide tax relief for consumers in 2026 and tax cuts for businesses to encourage investment. The House passed its version in late May. Now it moves to the Senate. If the bill is enacted by July 4, before higher tariffs may take effect, that would be a positive and help to sterilize the tariff impact for consumers and businesses. Nevertheless, additional sectoral tariffs remain a risk going forward.

One, Big, Beautiful Bill: With the “One, Big, Beautiful Bill” having passed the House and on its way to the Senate, the market may start looking towards the overall ramifications. Given the interest rate market, it seems like the market is digesting this as if the tax cuts are a bit larger and a bit more front-loaded than expected, and the spending cuts a bit more back-loaded, making the bill more fiscally stimulative in the short-term than expected. Obviously, there is some bickering from both the Right and the Left. From the Right, the primary criticism is that Congress did not further the DOGE mission. This is not an austerity budget, which is what they wanted. On the Left, most of the criticism is the size of the cuts in social spending. There is also some criticism of tax cuts contributing to the deficit, but this is not gaining much traction, probably because almost all of the tax cuts are simply an extension of the current rate, and most people understand a continuation of the status quo is not really making things worse.

Earnings Season Update – Q1 2025: Overall, earnings had a party this past quarter – 78% of companies beat, which is much higher than the historical average. If you remember, heading into this earnings season, the market was pricing in ~8% year-over-year (“YoY”) growth. It came in at 14.0%, led by strong revenues. The critics would say that attention needs to be turning to the second quarter, where the impact of tariffs is expected to play a more significant role. Our thesis for this quarter and (likely) the next few would be that the AI narrative and the capital expenditures (“CapEx”) will continue to drive earnings. While the durability of this trend came under scrutiny at the start of earnings season, the largest companies have shown little indication of scaling back investment. Remember, the Magnificent Seven (“Mag 7”), which are basically tech-proxies and directly tied to the AI-movement, equate to 31.4% of the S&P 500. Said another way, a lot of the contribution to earnings for the S&P 500 seems quite stable.

Politics and Markets: The market is not political. It doesn’t care about draining swamps, political retribution, woke or anti-woke campaigns or DEI initiatives. The market only cares about policies that:

• • Increase (or decrease) earnings, and
  • Support growth (or hinder it).

Any political movement or agenda that is viewed by the market as getting in the way of better earnings and growth will be viewed as negative and be a headwind on risk assets, regardless of whether those policies are from Republicans or Democrats. This is the way we must view political coverage over the next year (and likely four years), and this will help us cut through the noise and stay focused on the policies that will impact markets.

S&P 500 EPS: ’25 (Exp.) EPS = $264.00 (+7.7%). ‘24 EPS = $245.16 (+11.5%). 2023 = $220 (+8.6%). 2022 = $219 (+0.5%). 2021 = $204.*

Valuations: S&P 500 Fwd. P/E (NTM): 21.6x, EAFE: 15.2x, EM: 12. 2x, R1V: 17.1x, and R1G: 27.4x. *

*Source: Bloomberg and FactSet, Data as of 5/31/25

Disclosures

Aptus Capital Advisors, LLC is a Registered Investment Advisor (RIA) registered with the Securities and Exchange Commission and is headquartered in Fairhope, Alabama. Registration does not imply a certain level of skill or training. For more information about our firm, or to receive a copy of our disclosure Form ADV and Privacy Policy call (251) 517-7198 or contact us here. Information presented on this site is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities.

This commentary offers generalized research, not personalized investment advice. It is for informational purposes only and does not constitute a complete description of our investment services or performance. Nothing in this commentary should be interpreted to state or imply that past results are an indication of future investment returns. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with an investment & tax professional before implementing any investment strategy.

Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward-looking statements cannot be guaranteed.

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. There is over USD 11.2 trillion indexed or benchmarked to the index, with indexed assets comprising approximately USD 4.6 trillion of this total. The index includes 500 leading companies and covers approximately 80% of available market capitalization.

The Nasdaq Composite Index measures all Nasdaq domestic and international-based common type stocks listed on The Nasdaq Stock Market. To be eligible for inclusion in the Index, the security’s U.S. listing must be exclusively on The Nasdaq Stock Market (unless the security was dually listed on another U.S. market prior to January 1, 2004 and has continuously maintained such listing). The security types eligible for the Index include common stocks, ordinary shares, ADRs, shares of beneficial interest or limited partnership interests and tracking stocks. Security types not included in the Index are closed-end funds, convertible debentures, exchange traded funds, preferred stocks, rights, warrants, units and other derivative securities.

The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.

The MSCI EAFE Index is an equity index which captures large and mid-cap representation across 21 Developed Markets countries*around the world, excluding the US and Canada. With 902 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

The MSCI Emerging Markets Index captures large and mid-cap representation across 26 Emerging Markets (EM) countries*. With 1,387 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

Investment-grade Bond (or High-grade Bond) are believed to have a lower risk of default and receive higher ratings by the credit rating agencies. These bonds tend to be issued at lower yields than less creditworthy bonds.

Non-investment-grade debt securities (high-yield/junk bonds) may be subject to greater market fluctuations, risk of default or loss of income and principal than higher-rated securities.

Nasdaq-100® includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.

The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. This includes Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities, and collateralized mortgage-backed securities. ACA-2406-10.

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John Luke: The S&P 500 has developed into a much more quality-focused index than in its past

Source: @warrenpies as of 05.28.2025

Dave: with Mag 7 tech names continuing to build on their fundamental leadership

Source: Raymond James as of 05.28.2025

Brett: While the chatter was that Q1 earnings calls would be void of future guidance, companies spoke confidently of their outlooks

Data as of 05.27.2025

Dave: which supported the overall positive tone coming out of Q1 earnings season

Arch: “Soft data” diverging (and ultimately converging) with hard data is not a new phenomenon

Data as of 05.23.2025

Joseph: and we’re starting to see the (weaker) soft data move in the direction of the hard data as the tariff tantrum subsides

Data as of 05.23.2025

Dave: On the subject of hard data, consumer spending of late has been both consistent and in line with income

Data as of April 2025

John Luke: with baby boomers the most reliable constituents, spending from both lifetime savings and fresh Social Security checks

Brad: China is no friend to the US as a whole, but the access has been a boon to US companies, especially those in technology and communications

Beckham: and while both US and Chinese corporations have benefited from access to cheaper input costs, China has started to look to other markets to reduce its reliance on the US

Data as of April 2025

John Luke: 2025 performance of US stocks vs. the rest of the world has been pretty weak

John Luke: but the 2025 catchup is tiny in comparison to the US dominance from 2020 through 2024

John Luke: The primary driver of US dominance has been superior fundamentals, as European companies in particular have continually failed to grow

Source: Alpine Macro as of 05.27.2025

Jake: and the US dominates the world in developing financially successful companies

Data as of March 2025

JD: We’re on to the “lower taxes and regulation” part of the DC agenda, with the proposed tax bill another source of juice for the economy

Data as of 05.23.2025

John Luke: and with the debt and deficit already in the danger zone, the policy approach would seem to favor running the economy fast enough to outgrow the expanding debt burden

Data as of 05.27.2025

Ten: The US government has no appetite to reduce the growth of spending

Data as of 05.25.2025

Brian: but US consumers have dramatically reduced their debt relative to assets

Data as of 05.28.2025

Brad: Market reactions to tariffs have become more tame, but there’s still a wide dispersion of possible paths

Data as of 05.29.2025

Disclosures

Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward-looking statements cannot be guaranteed.

Projections or other forward-looking statements regarding future financial performance of markets are only predictions and actual events or results may differ materially.

This commentary offers generalized research, not personalized investment advice. It is for informational purposes only and does not constitute a complete description of our investment services or performance. Nothing in this commentary should be interpreted to state or imply that past results are an indication of future investment returns. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with an investment & tax professional before implementing any investment strategy. Investing involves risk. Principal loss is possible.

Advisory services are offered through Aptus Capital Advisors, LLC, a Registered Investment Adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about the advisor, its investment strategies and objectives, is included in the firm’s Form ADV Part 2, which can be obtained, at no charge, by calling (251) 517-7198. Aptus Capital Advisors, LLC is headquartered in Fairhope, Alabama. ACA-2505-24.

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1. Now that the “One, Big Beautiful Bill” has passed the House and is on its way to the Senate, I’ll start shifting some Musing focus over the next few weeks to the overall bill and the potential market & spending ramifications. As the bill goes through reconciliation, I’ll be pretty quiet until there is some tangible output, as the overall physique of the bill will ultimately change (especially with this week’s tariff news).

For now, I would say that the tax cuts are a bit larger and a bit more front loaded than expected, and the spending cuts a bit more back loaded, making the bill more fiscally stimulative in the short-term than expected. Obviously, there is some bickering from both the Right and the Left. From the Right, the primary criticism is that Congress did not further the DOGE mission. This is not an austerity budget, which is what they wanted. On the Left, most of the criticism is the size of the cuts in social spending. There is also some criticism of tax cuts contributing to the deficit, but this is not gaining much traction, probably because almost all the tax cuts are simply an extension of the current rate, and, in my opinion, most people understand a continuation of the status quo is not really making things worse.

2. While the tariff news is positive from a stock standpoint, the tariff drama is far from over for several reasons. The administration has already appealed the decision, and a path to the Supreme Court seems likely. Additionally, the ruling didn’t say the President can’t implement these tariffs; it just said that using IEEPA to justify them is invalid. Point being, look for the administration to try other avenues to justify the tariffs or to increase non-tariff trade pressure. All-in-all, trade negotiations are likely to become more difficult in the short run, given that trade partners have less pressure to cut a deal.

What Happens from Here? There is a slew of other methods where Trump can reimpose tariffs. Those means would be: 1) along the lines of Section 338 of the 1930 Tariff Act, which would allow for up to a 50% tariff rate (this is the likely route), and/or 2) the Balance of Payments authority allows for Trump to impose tariffs on countries with large trade deficits but limits the rate to 15%, the authority is temporary as well and gives just 150 days before Congress votes on the measure. They’d likely not pass this, but it buys Trump and his team time to find another workaround.

This is What I’m Focusing On Tariff revenue is growing at a pace of $190B annually from Trump’s new tariffs. Including tariffs over a 10-year window is roughly equal to the 10-year cost of the tax bill. If these tariffs are removed and not replaced through other means, the US deficit will be larger than would otherwise be the case. I believe the tariffs will be reimposed through other methods, but the bias is another headwind for long-term bond yields in the short run.

Onward and upward.

Q1 2025 Earnings Recap

Overall, earnings had a party this past quarter – 78% of companies beat, which is much higher than the historical average. If you remember, heading into this earnings season, the market was pricing in ~8% year-over-year (“YoY”) growth. It came in at 14.0%, led by strong revenues. The critics would say that attention needs to turn to the second quarter, where the impact of tariffs is expected to play a more significant role.

Our thesis for this quarter and (likely) the next few would be that the AI narrative and the capital expenditures (“CapEx”) will continue to drive earnings. While the durability of this trend came under scrutiny at the start of earnings season, the largest companies have shown little indication of scaling back investment. Remember, the Magnificent Seven (“Mag 7”), which are basically tech-proxies and directly tied to the AI-movement, equate to 31.4% of the S&P 500. Said another way, a lot of the contribution to earnings for the S&P 500 seems quite stable.

For Brad Rapking, me, and the rest of the equity team, this was one of the more mentally draining earnings seasons as there was a ton of dispersion (cue UNH – if you need commentary here or on any stock, let me know). But I’d state, anecdotally, that there was an overall positive slant. The largest amount of dispersion was in the consumer areas of the market – no surprise there.

But things are not so challenging that we are seeing a coordinated slowdown, nor are we in an environment where the soft consumer sentiment numbers are hindering market share winners from continuing to win. I’d argue on the net, consumer earnings season has been better than expected, with some really good prints in a choppy macro. While there are certainly some challenging areas, trends have seemingly improved at least somewhat into April/May. And there’s no better verbiage than from the Visa earnings call – the CEO basically said that the strong spending environment has continued into April and May.

The chart below shows Year over Year (YoY) S&P 500 forecasted earnings growth by quarter. These series use Wall Street analysts’ median estimates before a company reports, replacing them with actual results once available. The series starts with 500 estimates and ends when all 500 companies have reported. The chart shows that Q1 2025 earnings (blue) are expected to grow by 12.98%. Note Q2 forecasts, in orange, are being revised sharply lower as companies provide their assessments of what tariffs mean for their bottom lines.

Data as of 05.12.2025

And, solely because of Q2 expectations, the overall 2025 earnings estimates have come down from their peak of $277 to $263 (-5.05%). Though I must state that it is still an increase of +9.6% from 2024 earnings, which is right in line with historical averages.

However, to keep things in perspective, as of today (this may not hold true in the future), it feels like the 20% correction that the market witnessed from 2/19/2025 – 4/8/2025 was overdone, given the de minimis decline in EPS estimates. I am knocking on wood as I type this, but we’ll see where the hard data goes from here.

If the consumer remains strong and spends like they have been, it’s tough for the market to get completely into trouble.

At the end of the day, I can’t say this enough: ignore soft data! This morning’s PCE data continues to show strength in consumer spending –> consumer spending is sustaining at 5%+ YoY despite soft data and this is no change in any trend. Although soft data is apocalyptic, you could build just as good of a case of consumer “overheating” as you could “slowing” right now. As long as consumers have jobs, which they do, it’s difficult for this trend to materially slow down.

Source: Raymond James as of 05.30.2025

Stay nimble.

Disclosures

Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward-looking statements cannot be guaranteed.

Projections or other forward-looking statements regarding future financial performance of markets are only predictions and actual events or results may differ materially.

This commentary offers generalized research, not personalized investment advice. It is for informational purposes only and does not constitute a complete description of our investment services or performance. Nothing in this commentary should be interpreted to state or imply that past results are an indication of future investment returns. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with an investment & tax professional before implementing any investment strategy. Investing involves risk. Principal loss is possible.

Advisory services are offered through Aptus Capital Advisors, LLC, a Registered Investment Adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about the advisor, its investment strategies and objectives, is included in the firm’s Form ADV Part 2, which can be obtained, at no charge, by calling (251) 517-7198. Aptus Capital Advisors, LLC is headquartered in Fairhope, Alabama. ACA-2505-24.

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