From the desks of Stanley Katz & Lauren Madera
TO OUR ILLINOIS RESIDENTS, HAPPY PULASKI DAY!
The three major U.S. stock market indices told dramatically different stories this week (i.e., DJIA: +0.95%, S&P 500: -0.98%, Nasdaq: -3.47%). The notable divergence between the blue-chip Dow’s modest gain and the tech-heavy Nasdaq’s sharp decline points to a significant market rotation in progress. A fundamental reassessment is underway as investors digest the Trump administration’s tariff policies. The Argus report below warns that, unlike the 2017-2018 tariff rounds, today’s consumers are already burdened by persistent inflation, with the CPI having grown at a 3.6% compound annual rate since 2018. As Argus’s Jim Kelleher notes, “Lower-tier consumers are severely strained by this burden and have less and less available for discretionary spending.” In other words, new tariffs may not just reignite inflation but could actually trigger a consumer spending slowdown.
Meanwhile, the tech sector is experiencing its own recalibration following recent developments in artificial intelligence. Columbia Threadneedle’s analysis of China’s DeepSeek AI model suggests that the market may have overreacted to perceived threats to American AI dominance. While DeepSeek’s approach may simply represent evolution rather than revolution, it has sparked important discussions about the economics of AI development. The analysis highlights that “the real innovation lies in DeepSeek’s reasoning model,” which could actually increase demand for computing power rather than reduce it. It’s similar to how fuel-efficient cars have not reduced gasoline consumption – people just drive more. For investors, this volatility serves as a reminder that, even in innovative sectors, market fundamentals eventually reassert themselves, often creating opportunities for those with a long-term perspective.
Below are links to a number of third-party research reports that we have read and analyzed over the past week. We hope you will find the information interesting, useful, and worthwhile.
Argus:
Columbia Threadneedle:
Nuveen:
Northern Trust:
Capital Group:
Stanley Katz & Lauren Madera, Financial Advisors
ClientFirst Financial Strategies, Inc.
937-293-5500
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