Week of July 14, 2025

Key Points for the Week

• The economy is slowing but remains resilient and corporate earnings have been strong.
• Risk from policy, especially tariffs, hit harder than expected in the first half of 2025 and that has done some but not significant economic damage.

Current Trends & News is a weekly financial recap curated by SPC Financial®’s team of wealth management and tax-integrated advisors.* We monitor and explore the intricacies of the financial world and share insights into market developments.

Economic Update

Some pundits fear investors have become complacent recently.

"Wall Street's tolerance for shock is becoming heroic. First came the inflation angst, then the tariff crash, then the war in the Middle East. At this point, it is hard to imagine what could still rattle the investor class."

Isabelle Lee and Denitsa Tsekova, Bloomberg

Since April's tariff-induced downturn, investors have pushed U.S. stocks steadily higher, focusing on positive news - resilient U.S. economic data, solid corporate earnings growth, and the potential of artificial intelligence, reported Paul R. LaMonica of Barron's.

Despite tariff uncertainty, rising deficit and debt levels, and ongoing geopolitical conflicts, the Standard & Poor's (S&P) 500 and Nasdaq Composite Indexes closed at record highs last Thursday. In addition, the Dow Jones Industrial Average (Dow) was nearing its first new high since December 2024, reported Connor Smith of Barron's.

Then, on Friday, investor confidence hiccupped.

"Record highs and down weeks do not typically go together, but the declines themselves are relatively minuscule, especially given the tariff headlines generated during the week-the possibility of 50 [percent] levies on Brazil and 35 [percent] on Canada, among others, if negotiations do not go well-and continued attacks on Federal Reserve Chair Jerome Powell. The S&P 500, after all, is still up 26 [percent] from its April low and has gained 6.4 [percent] this year."

Jacob Sonenshine, Barron's

By the end of the week, the S&P 500 and Dow were lower, while the Nasdaq eked out a gain. Yields on longer maturities of U.S. Treasuries ended higher.

This Week in the Markets

The story of the first half of 2025 was the volatility and weakness we saw in March and April, with the S&P 500 down nearly 19% from the February 19 peak until the lows on April 8. The market's verdict on the impact of the proposed tariffs was clear. The president seems to have recently adjusted his stance, and markets responded accordingly, but we may see the president's stance get more aggressive now that markets have recovered, and then possibly looser again if markets were to decline, and that kind of instability has a cost.

When it comes to stocks, the main point is to remember the destination because the stock market may remain volatile. The bottom line is that earnings growth is the fundamental driver of stock prices over time. Even if tariffs are a drag, corporate America will look for ways to limit the impact. While policy does matter, and sometimes it matters a lot, businesses are generally skilled at navigating different policy environments. That holds for both Republican and Democratic administrations.

Higher starting yields give bonds a larger cushion than they have had in a long time. If the Fed cuts rates, that would be enough to give the Aggregate Bond Index an advantage over Treasury bills over the next year. Well, we got the modest decline in yields but not the rate cuts so far, but the Aggregate Bond Index was still able to eke out an advantage, returning 4.0% through June 30 versus 2.1% for the Bloomberg 1-3 Month US Treasury Bill Index. The early year strength, while modest, along with shifting rate cut expectations led us to lower the rate sensitivity of our bond holdings in the first half. It is not a major move, since bonds are still the best defense against a deflationary recession and Aggregate Bond yields remain higher than Treasury bills, but a deflationary recession is not our base case so the bond holding remains a hedge, complemented by other diversifiers.

With inflation uncertainty elevated, bond correlations with stocks have increased, which means they are potentially a less effective diversifier if stocks sell off.

Gold Held in an IRA

Concerns about US debt loads, inflation, political turmoil and more have led to a flurry of questions about investing their retirement account in gold or silver.

Just like land investments, the ownership of gold in an IRA is technically legal. But the taxpayer may not touch it, physically keep it or hold it in their own safe because it must be held by an approved trustee and physically maintained in an IRS approved physical depository. The physical storage requirements of gold means that the custodian will charge significant fees, and the IRA must maintain a substantial amount of cash to pay those fees for many years. Annual costs usually run between $250-$300.

The Tax Court held that a taxpayer who self-directed her individual retirement account (IRA) to invest in American Eagle coins through a limited liability company owned by the IRA and managed by the taxpayer, and who then took physical custody of the coins, received a taxable distribution equal to the cost of the coins. The court also found that a statement on the website the taxpayer used to set up her IRA, which indicated that taxpayers could purchase coins with IRA funds and obtain physical possession of the coins without tax consequences, did not constitute a reasonable cause defense to the substantial understatement of tax penalty. (McNulty v. Comm'r, 157 T.C. No. 10 (2021)).

Then there are these questions:

1. Where do you find a qualified trustee and a qualified custodian?
2. How do you make RMD's when reaching age 72?
3. What are the fees paid to the custodian?
4. What are the fees paid to the trustee?
5. Where does the cash come from to pay the fees of the custodian and the trustee?
6. Is your investment limited to American Gold Eagles or equivalent 99.9% purity standard bars? (It does or it does not qualify-Krugerrands do not qualify because of the purity requirement)
7. Are you younger than the age of 55? The volatility of gold prices makes the risk unacceptable for an older investor according to every standard of investment advising.
8. You must buy the gold investment from an unrelated seller-you cannot deposit gold that you already own in an IRA.
9. Are you willing to buy an investment that you are paying 20% more than it is going for in the spot market? The spot price needs to go up 25% just to make a net 5% on the investment. Can you imagine paying a 20% commission to buy stock?
10. Are you willing to buy an investment for which you pay a 25% premium over purchase price, then pay another 5-10% premium over spot price to sell it?
11. Does a gold investment really protect you against an economic collapse when you don't physically have it in your possession? How will you access it if the transportation system is down, or the economy collapses?
12. Have you considered that you may be a victim of an investment scam of a self-directed IRA setting up an LLC that keeps the gold in your home or a local safe deposit box? Run from anyone promoting this concept-even the IRS says to watch out for this scam. The "Home Storage Gold IRA" is not legal read the tiny, tiny fine print of the seller! The home storage IRA does not meet the IRS' definition of a trustee because it has not submitted documentation to the IRS meeting the stringent list of regulations including requirements relating to fiduciary ability, fiduciary experience, capacity to account, fitness to handle retirement assets, bonding, audits and net worth. Moreover, the applicant cannot act as a trustee until the IRS provides notice that the application has been approved. Adding an LLC to the mix is ridiculous and transparent to the IRS.
13. Have you considered just owning gold through an investment account investing in a gold ETF trust that avoids all these risks and hassles?
14. Have you considered that if we had a complete collapse of our economic system or electric grid your gold would have already been taken by the entities in charge of the vault? And, if we cannot drive or fly, you would have to walk to New York to get it?

If you have any questions about investing in gold or silver, please contact us.

Big Beautiful Tax Law Summary

On July 4th, President Trump signed into law the "Big Beautiful Bill." This legislation enacts sweeping and permanent changes to numerous tax provisions, extending, enhancing, or terminating various credits, deductions, and rules. It is important to note that if nothing was done, tax breaks that millions of Americans have benefitted from would have expired. Key highlights include:

• Permanent Extensions and Enhancements:

  • Lower individual tax rates are made permanent beyond 2025.
  • Larger standard deductions for single and heads of household taxpayers.
  • Child tax credit increased and made permanent with stricter ID requirements.
  • The Estate and gift tax exemption is raised permanently to $15 million.
  • Alternative Minimum Tax (AMT) exemptions increased and permanently extended.
  • Enhanced childcare and adoption credits.
  • Permanent renewals of Opportunity Zones, New Markets Tax Credit, and Low-Income Housing Credits.
  • Expansion of 529 plan qualified expenses to include postsecondary credentialing.

• New Tax Benefits and Programs:

  • Temporary deductions for tips, overtime pay, and car loan interest (2025-2028).
  • Creation of tax favored savings accounts for children with government contributions for some.
  • New tax credit for contributions to K-12 scholarship organizations.
  • Expanded exclusions for employer-provided student loan payments.

• Limitations and Changes to Deductions:

  • Permanent limitation and adjustment of mortgage interest, casualty loss, and miscellaneous itemized deductions.
  • New limitations introduced on itemized deductions based on income thresholds.
  • State and Local Tax (SALT) deduction cap raised temporarily but phases down as income exceeds certain thresholds.
  • New floor on charitable deductions for individuals (0.5% AGI) and corporations (1% taxable income).

• Termination of Energy and Clean Vehicle Credits:

  • Credits for new and used clean vehicles, commercial clean vehicles, clean energy property, and various energy efficiency incentives end between 2024 and 2028.
  • Introduces restrictions on foreign ownership and materials for clean energy production credits.

• Other Provisions:

  • Increased limits and indexing on 1099 reporting thresholds.
  • Adjustments to charitable deduction carryforwards.

If you have any questions about the bill and how it may impact your financial plan, please contact us.

FBI Warns of Suspicious Text Message Scams

The FBI has issued a warning to 150 million Apple and Android users to be aware of malicious text messages being sent to their phones. The text message scam warns individuals of significant consequences if outstanding bills or fines are not paid immediately. The messages currently include unpaid tolls and newer DMV traffic offenses, but will eventually mimic texts from bank and credit card companies, per the FBI. The FBI reported that there was an 800% increase in fraudulent DMV-themed texts in the first week of June alone.

Not only are the cybercriminals impersonating a DMV, but they are also impersonating law enforcement officials, demanding payment for fines or missed court appearances to avoid arrest.

"Scammers always prey on people's fears. They are always opportunistic. They try to ratchet up that sense of urgency so that you do not think about what you are doing and then send the money."

Spokesperson from the FBI

If you receive a suspicious text message, the FBI and other agencies suggest that you do not click any link the message contains and to delete the message immediately.

A Reminder About Scams

Scams usually start with a phone call, email, text, or another form of communication. The person typically claims to be from an agency or organization you know – or one that sounds like it might benefit you, such as the National Sweepstakes Bureau or a lottery.

The person may know your name and address. They may give you their official title or an identification number. No matter how official they seem, you can be confident it is a scam if the person contacting you:

• Indicates there is a problem with your benefits.
• Asks you to pay to receive a prize.
• Suggests that paying will increase the chance of winning.
• Requests financial information, such as a bank account or credit card number.
• Pressures you to act immediately.
• Tells you to pay using a specific method, such as a gift card or cryptocurrency.

If this happens, remember that the Social Security Administration, the Internal Revenue Service, Medicare, and your bank do not call, email, or text to ask for money or personal information. They do not demand that you pay immediately, and they do not accept payment by gift card, prepaid debit card, cryptocurrency, or another untraceable form of money transfer.

When you suspect a scam:

• Hang up or close the message. Do not respond in any way.
• Remain calm.
• Think back over the call. Write down any personal information you may have inadvertently shared.
• Report the scam. Contact the Federal Trade Commission at ReportFraud.ftc.gov. You may also want to report the incident to your state's attorney general or your local consumer protection agency.
• Share your knowledge. Talk with family, friends, and neighbors about your experience so they know what to look out for.

When you receive a digital message, no matter how official it seems, do not click on any links. Do not give or confirm any personal information, including your name, birth date, phone number, address, email address, place of birth, driver's license, passport, or Social Security numbers, bank or other account numbers, and PIN numbers.

Being skeptical can keep you safe. Remove yourself from the situation. Do not share information. If you feel anxious and need to confirm that it was a scam, contact the organization using a method provided on their official website.

Did you Know? This Week in History

July 16, 1935: World's First Parking Meter Installed

The world's first parking meter, known as Park-O-Meter No. 1, was installed on the southeast corner of what was then First Street and Robinson Avenue in Oklahoma City, Oklahoma on July 16, 1935. The parking meter was the brainchild of a man named Carl C. Magee, who moved to Oklahoma City from New Mexico in 1927. By the time Magee came to Oklahoma City to start a newspaper, the Oklahoma News, his new hometown shared a common problem with many of America's urban areas-a lack of sufficient parking space for the rapidly increasingly number of automobiles crowding into the downtown business district each day. Asked to find a solution to the problem, Magee came up with the Park-o-Meter. The first working model went on public display in early May 1935, inspiring immediate debate over the pros and cons of coin-regulated parking. Indignant opponents of the meters considered paying for parking un-American, as it forced drivers to pay what amounted to a tax on their cars, depriving them of their money without due process of law.

Despite such opposition, the first meters were installed by the Dual Parking Meter Company beginning in July 1935; they cost a nickel an hour and were placed at 20-foot intervals along the curb that corresponded to spaces painted on the pavement. Magee's invention caught on quickly: Retailers loved the meters, as they encouraged a quick turnover of cars-and potential customers-and drivers were forced to accept them as a practical necessity for regulating parking. By the early 1940s, there were more than 140,000 parking meters operating in the United States.

Weekly Focus

"Trust is like the air we breathe. When it is present, nobody really notices. When it is absent, everybody notices."

Warren Buffett, American Investor and Philanthropist

"Everyone thinks of changing the world, but no one thinks of changing himself."

Leo Tolstoy, Russian Writer