Market Insights Recap — Week of February 17, 2025
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Hello. I'm Steve Orr, Chief Investment Officer for Texas Capital's Private Bank.
Big picture? Most regions of the globe appear to be bottoming. Services and production metrics are looking better than last summer. Now, our political meter is reading higher than normal. Tariffs are back on the front burner. Kind of a return to 2018. And there's five wars involving the largest number of countries since World War II.
Here at home, the U.S. remains the bright spot. We're cruising along in second gear. The government does run out of money on March 14, but a budget bill looks to be on track, moving surprisingly fast. Spending cuts, debt ceiling, passed budget. Let's do it in that order.
Stocks are in a consolidation phase. They're near all-time highs. Earnings are strong. Fourth quarter coming in 16.9% year over year. 2025 earnings. Our growth forecast is more in the 10% area. Wednesday the 19th of February marks the shutdown bull market peak. That run from 2009's low was one of the longest bull cycles in history. The effects of the shutdown far and wide, the economy fell 16% that spring by GDP measures, and the S&P 500 fell by a third in February and March. Today, we're working our way higher in another bull cycle that started with the October 2022 low. Through Friday, the S&P was up 76% from that 2022 low, an average rise for this stage of the bull.
2025 for stocks is shaping up to be a solid high single-digit return year. Bonds remain trapped in a trading range, waiting on tariffs, the debt ceiling and inflation. Barring some big event, rates should stay right about these levels until Congress decides to raise the debt ceiling. That could be May or June. Not holding my breath. The fed is on hold. Do not expect another change in rates until the end of summer. Chairman Powell was very direct in his congressional testimony recently that "We do not need to be in a hurry to adjust our policy stance." That's D.C. speak for not cutting rates anytime soon.
In summary, the economy is doing fine. We expect tariff and tax uncertainty to slow growth slightly later in the year. Stocks and interest rates are treading water. Waiting on D.C. drama. Federal reserve is on hold for most of the year, and our indicator dashboard is various shades of green, keeping us fully invested. Thanks for tuning in. Until next time, stay long.