Weekly Newsletter 07/11/25
Good afternoon and wishing you the best.
The stock markets are in a bit of a retreat this afternoon, though off worst levels, after US equities finished higher on Thursday with the S&P 500 and Nasdaq hitting new all-time highs. An interesting bit to me was the most shorted names fared well as momentum unwinding continues…which translates to “smart money” (not really) had placed a “position” (a glorified Vegas style bet) that certain companies and industries would go down, hence the term “short”. Well, Delta airlines exceeded expectations in a pre-market earnings update, and the entire airline sector went up 10% with a handful exceeding 12% right out of the shoot. From information I read, 18% of all the airline stocks were held short. With such concentration of “smart” ideas this is also brings another risk factor to the table called a “crowded trade”. Keep in mind “smart money” (SM) doesn’t invest with balance in mind…no no, to be SM you need to use leverage (like a credit card to normal people) to make even more smart bets. So, we get what we had here yesterday. Down 10-12% in one sector matters little to us, however, a leveraged position is not down 10-12%...depending on how smart you are, it could be down 35-50%. To close a “short position” one must buy the stock…can you see the circular catch-22 going on? A stock market cannot sustain positive momentum on short covering for long. Even SM has its limits. “Markets can remain irrational longer than you can remain solvent.”—John Maynard Keynes
For the week big tech was mixed with YTD laggards TSLA-US and AAPL-US outperforming. Airlines, travel and leisure, as previously mentioned, along with other SM short favorites, miners, metals and apparel experienced the short squeeze bounce. Machinery, builders and banks also fared well. Treasuries were weaker with the yields up 4-5bp further out of the curve. The Dollar index was up 0.1%. Gold up 1.0%. WTI crude up 1.3% after Thursday's 2.7% drop.
Tariff talk remains an overhang as President Trump said he would hit Canada with a 35% tariff rate on August 1st. In addition, a higher baseline tariff of 15-20% on most trading partners and reports the EU will get a tariff letter today to go with rumors the trade deal with Vietnam may not be done. However, there is also the usual chatter about how these threats may not come to fruition. The recent market reaction has been very muted to the tariff bluster unlike several months ago. Pretty quiet elsewhere ahead of next week's unofficial start of Q2 earnings season. Political scrutiny surrounding the Fed still a big story with reports about how the White House is shifting its Powell criticism toward the renovation of the central bank's headquarters. Some focus on what has been going on below the surface as of late in terms of the momentum factor unwind. Nothing was on the US economic calendar this morning. Looking ahead to next week, the focus will be on June CPI out on Tuesday. Street looking for headline CPI up 0.3% m/m in June, pushing the y/y rate up 0.1 bp to 2.7%. Core CPI also seen up 0.3%, pushing the y/y rate up 0.1 bp to 3.0%. Retail sales another high-profile data point on Thursday, while preliminary University of Michigan consumer sentiment for July caps off the week on Friday. Fed speakers include Bowman, Barr, Collins and Logan on Tuesday, Hammack and Williams on Wednesday and Daly on Thursday…I’m sure you will all be tuned in for those riveting conversations.
I was recently introduced to a market I never knew existed. 19th century blue jeans, Levi’s to be exact. Depending on age and condition, auction prices typically reach $50,000 with a pair sold in 2022 for $100,000. I was completely skeptical when my dad mentioned this, however, like he has done sooo many times in my life, he proved me wrong…when will I learn? They are normally found in abandoned mines of all places. A short back story: in my youth, as a family we would “explore” (get lost looking for) ghost towns of the west. Specifically in the states of Wyoming, Montana, Colorado, South Dakota and Arizona with gold, silver and copper mining boom towns being my Dad’s favorites. We have been a 1,000ft underground, the only people for miles on dusty roads in the middle of nowhere and enough “are we there yet?” to drive anyone crazy. Many times, even when we were at the location, I wondered “are we there yet”? Anyway, this is another example of how sometimes really good investment ideas don’t work out and some wild ideas can completely exceed expectations and, in the case of 19th century Levi’s, create a whole new market.
The link below contains additional financial and personal finance articles.
https://www.raymondjames.com/evangelista/resources
“Success is getting what you want; happiness is wanting what you get.”– Ingrid Bergman
Thank you,
Kyle
KYLE CHRISTIANSON, CFP®
Financial Advisor
Raymond James & Associates, Inc.
1421 Pine Ridge Rd, Ste 300
Naples, FL 34109
Toll Free (800) 843-2025 | Direct (239) 513-6525 | Main (239) 513-6500 | Fax (239) 596-5474
Kyle.Christianson@RaymondJames.com
Any opinions are those of Kyle Christianson and not necessarily those of RJA or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. This is not a recommendation to purchase or sell the stocks of the companies mentioned. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Leading Economic Indicators are selected economic statistics that have proven valuable as a group in estimating the direction and magnitude of economic change. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
