Week Ending 05_23_2025 Stock Market Recap

Markets showed their exhaustion this week. How so and why? TUNE IN TO FIND OUT!

Episode Transcript

(00:34):
Hello and welcome to
this week's edition of the Big Money Report. I'm your host,
David Boothe, President and Chief Investment Officer at BIG Investment
Services. That's B-I-G, Boothe Investment Group.
We're a full-service financial advisory based out of Dover, Delaware, serving
clients all across America. And you can read all about

(00:56):
us at abigplan.com. That's www.abigplan.com. I
put the show together once a week just to give you a recap of the week behind and
a peek at the week and weeks to come, trying to
keep you up to speed with you and your money. And we're glad you're with us today.
It is Friday, May 23rd, 2025. Want to
give a shout out to Mike and Margie, Sherry and her husband.

(01:20):
That reminds me, I have folks ask me sometimes, David, how come you only
list one spouse and not the other? Well, it's because some of
you have very unique name combinations, right? It'd be like saying, shout
out to Ricky and Lucy or Sonny and Cher or Barack and
Michelle. And if I did that, then everyone would know who you are. So
that's why I hold back sometimes. But the spouses, we love you too. So,

(01:40):
hey, let's just jump into the numbers. Let me tell you what's going on here this week. Guess what? The
market went down this week, but guess what else?
That was no surprise to you because we talked about it last week. Look, we said,
listen, the market looks stretched. All the indicators suggest that the
market is probably poised to take a breather, probably head back
down. I kind of thought it could start here towards the end of this week into

(02:01):
next week. And it has, right? So the S&P 500 this week down 2.6% on the week. So pretty
big move there. Dow
Jones Industrial Average down 2.4%, the Nasdaq Composite
down 2.4%, and the Russell Small Cap Index down 3.4%. So
all the major indices back down negative again this week. And

(02:21):
then some of you were asking, hey, David, what about that new investment you bought last week,
that managed futures investment that you were talking about? It was up
0.8% on the week, so pretty happy to see it doing its job and providing some
diversification there, which worked out pretty nicely. But with
the market taking such a big hit, as you might imagine, the volatility index took
a hit as well. It was up 29% this

(02:44):
week. The VIX up to 22 right now. So it took
a big move higher. And look, that can continue. There's a lot going on
right now. We'll talk about in a minute what's moving the markets. But with all
these headlines, we may not be finished there with the volatility index.
We may have further to go. When you take a look at the sectors, the
defensives were defensive. Staples, right? Your soaps and
shampoos, things you need, not things you want. They were down half

(03:07):
a percent this week. Everything else was down one to three. Semiconductors
down 3.6. Retail sales down 2.3. There
were some earnings reports this week from Home Depot, Lowe's, other
companies, and they just really weren't what the market was looking for. It
was hoping for more, didn't get it. Looking at other things like materials down
one and a half, real estate down 3.2, technology as a whole down 3.4. So

(03:29):
everything's just looking pretty ugly. And then gold and
silver, we mentioned last week, gold has been kind of in this corrective phase,
this consolidation phase. And I said that, look, if the market starts
to roll over, go back down again, gold will probably pick back
up once more. And doggone it, that's kind of what it did this week. It was
up 5.2% on the week and silver up

(03:51):
3.9. So what's moving markets? Well, a few things. The first thing
that the market had to contend with coming into this week was a
downgrade of U.S. debt by Moody's, the rating agency.
Of course, a lot of the folks on TV are making a big deal about this. Let's talk a little bit
about this. First of all, Moody's is a little bit late to the party. The first
one of these happened, I guess it was 2011. And before

(04:12):
all that took place, I was actually very concerned about it. I had heard
some rumblings here and there that this was a potential thing that was
about to happen. And when you start talking about downgrading the
safest investment in the world, United States Treasuries, you
gotta worry about the impacts. So we're taking the way back machine here,
going all the way back to the very first debt downgrade many years ago.

(04:32):
I called a meeting with a guy named Tom Metzold. Tom Metzold
was a portfolio manager, a bond manager at Eaton Vance,
one of the top bond managers in the country at the time. I scheduled dinner with
him in Philadelphia, and I went and met him, and I said, look, Tom, here's
what's on my mind, here's what I need to know. If they downgrade U.S.
debt, what is going to happen with the bond market and

(04:54):
everything else? First thing he did was he dismissed me, which
I found pretty irritating. Oh, that's never going to happen. Just forget about
it. Not going to happen. I said, well, you know what? Humor me. Just
humor me. And let's say it does happen. My question is, what are you going to
do about it? What is the industry going to do about it? And what
he said next was I found pretty profound. He said, there's nothing we can do, David. He

(05:15):
said, where are we supposed to go? There's a demand for debt. People want
to buy bonds. They want to collect interest. They want safety when
they do so. Who else has the paper to
replace the United States? He says, nobody. We said, where am I going to go? Germany? Yeah,
they're AAA rated, but how much debt can I get? I can't get that much. No
one's got it. Where are we going to go? China? We're not going to go to China. We're not going to

(05:36):
go to Southeast Asia. We want to deal with safety. And even
if they downgrade U.S. debt, it's still going to be the safest game in town. Nothing's
going to change, even if it happens. Well, I took those
words to heart. And guess what? When they got to downgrade, that's exactly what
happened. Actually, bonds went up in value, not down. Everything
was fine. There's a little bit of a knee-jerk reaction, but everything settled out. So

(05:58):
all this stuff this week about Moody's downgrading our debt, Look,
if you don't know that we're in a bad spot right now financially as a country, then
you're living under a rock. We've got far more debt than we can handle. We've
got to get the ship corrected course. It's no surprise to
anybody, but I think the media is making a bigger deal out of it than what it really is
at the moment. So then the second thing that moves markets this week, and

(06:19):
this kind of goes hand in hand, is President Trump's big, beautiful
bill. It looks more like a big, expensive bill, and the
market doesn't like that right now either. It looks like the bill at this
point in time is not going far enough to fix our financial situation,
to make an impact on the debt, to make the
market feel a little bit more comfortable about where we sit right now financially as

(06:40):
a nation. And therefore, we saw interest rates spike tremendously
on this news. You would think they would have gone up on the debt downgrade, not so much.
It was the bill passing the House caused a bond market
to really lose its mind earlier this week. And we saw interest rates spike
up significantly. Look, the TLT, long-term bonds,

(07:01):
down 2% on the week. And we saw 30-year
bonds hit over 5% this week. This
is concerning, and this is something that we're watching very, very
closely. People have asked me throughout my whole career about the country,
the solvency of America, about the country going bankrupt, all these different types of
things. I said, look, at the end of the day, you look at

(07:22):
debt to GDP, not the total dollar amount, whether it's
$5 trillion, $7 trillion, or where we're at now at $30-some trillion. You
look at the percentage of debt to GDP, and we've always been
in a pretty good spot until these last few years. Right
now, we're the worst position we've ever been in. We're pushing close to 125% debt
to GDP. The last time we did this was World War II.

(07:43):
We were at 120%. but there's some big differences. World
War II, Social Security covered one widow who was expected to
be dead before they could collect. There was no Medicare, there was
no CIA, there was no NASA, there weren't goose poop studies
in Montana being funded by taxpayer dollars, right? We blow so
much money now, we have so many obligations on top of that, that

(08:04):
125% debt to GDP today looks
far, far, far different than it did back at World War II. So
it's a problem. But as I tell people, the
United States, yes, is probably living in a big straw house, but
it's the biggest, strongest, baddest straw house on the block. Everybody
else is in worse shape than we are. China, Europe, you name it. Nobody

(08:25):
else holds a candle to us at the moment. So even though
there's issues, the market's reacting to it, I don't see
us careening over a cliff at the moment. The signs just aren't
there. The bond market is something to watch, and we're watching it
very closely. And then finally, the last thing that moved markets this
week was President Trump himself here on Friday, out

(08:46):
of the blue, picks on Apple, says he wants to
put a 25% tariff on Apple's iPhones because
they're not being made in America. He doesn't want them made, not just in
China, he doesn't want them made in India either. He says he wants them made in
America, and if they're not made in America, he's gonna put a 25% tariff
on Apple iPhones. Now, first of all, I

(09:07):
really don't want to pay $3,500 for my next phone. Secondly, I'm
not really sure you're going to get to do the work. We got a little bit of a situation in America. We've
got a lot of folks that just don't want to work and they're getting paid not to work. So if
you're going to move the jobs here, we better make sure we've got somebody to do them. And
then thirdly, just the logistics, you know, you just don't move a supply chain in
the blink of an eye. So there's a major issue with all of that. The

(09:28):
market didn't like it. Apple, of course, took a big hit on that news. And
then in addition to that, our negotiations with Europe on
tariffs have not been going quite the way that the Trump administration would
like. And he threatened a 50 percent tariff on
European imports today as well. So the market was really down
and out this morning. I mean, it was getting crushed. down about 2% this

(09:49):
morning. It did finish off the lows down about half a
percent on the day, 0.6%. So it recovered a
little bit. I think the market's trying to parse out what's real, what's
bloviating, what's posturing and what's actually on the
table. I think the market's thinking that a lot of what was said today was just
posturing. So all of that said, this
rally that we've been in since early April finally cracked,

(10:13):
finally cracked. We're finally starting to pull back from it. So now the next
question is, where does it stop? Well, the first level
of support that we're watching is 5,500 on the S&P and
it closed this week at 5,802. So there's a little bit of a
move down from there. And then if it doesn't hold that level, the
next level in line would be 5,200. And I think, look, 5,200 to

(10:35):
5,500 I think is a very reasonable place for this market to
find some footing if we're going to go a bit lower. And I think we should go
a little bit lower. It's a huge move very quickly. And what's changed? Not
a whole heck of a lot except the big delay on tariffs, right? It
doesn't mean that there's not going to be a higher tariff level. There clearly
is. So there's still a lot of stuff this market's got to work

(10:56):
its way through. And I think that you're also going to see an
impact on next quarter's earnings as these tariffs
start to trickle through and really make an impact on businesses
and the overall economy. And some of that's not priced in yet. So the
technical accomplishments. And I was talking to a young man earlier
today about this, Landon, sharp guy. Technical accomplishments of this

(11:17):
market since early April have
been such that I'm really hard pressed to
believe it's going to go all the way back down to the lows earlier
in April, down at 4,800 range. It's kind of hard to see
it doing that after accomplishing as much as it has. But
it doesn't mean it can't be sloppy here for a while. And that's our expectation. So

(11:39):
look, we're in a great spot. I've got everything positioned right where
I want it. I'm hoping that this downturn will
give us an opportunity to add a little more to all
the things we bought back in early April when things were really down
and out, because there's a few stocks I'd like to buy more of. So
we're going to sit back, let things unfold, try to pick up some
bargains if the opportunities arise. But other than that, I think we're sitting in a

(12:01):
great spot right now. It goes up, goes down, goes sideways. I
think we're in a really good position. So I'm going to wrap up. Between now and
next few days, you're thinking about your future, your long-term goals, all the things you
want to do with you and your money. Maybe it's sell that house
and move to another state and buy another one on the water and hang out
closer to your friends. Maybe it is start a new business or

(12:22):
retire a little early. Hey, you know what your goals are. Don't just think about
it. Think big. Think BIG. And
Thank you for listening to this week's edition of the Big Money Report with
your host, David Boothe, President and Financial Advisor at
BIG Investment Services. For more information on BIG and
how you can access their planning and investment management services, visit

(12:46):
them at abigplan.com. That's abigplan.com. Or
call them toll free at 866-946-PLAN. That's 866-946-7526. The
foregoing content reflects the opinions of David Boothe and Boothe Investment Group,
Inc., and is subject to change at any time without notice. There's no

(13:06):
guarantee that the statements, opinions, or forecasts provided herein will
prove to be correct. Content provided herein is for informational purposes only
and should not be used or construed as investment advice or a recommendation regarding
the purchase or sale of any security. All investing involves risk, including the
potential for loss of principal. There is no guarantee that any investment plan or