The Markets
Optimism headed south on Friday.
After rising for most of the week, stock markets lost momentum last Friday as economic data raised doubts about further Federal Reserve rate cuts, reported Rita Nazareth of Bloomberg. Late in the day, President Trump announced new tariffs would be imposed this week, and stocks dropped into negative territory.
Consumer Sentiment Fell Sharply
Last week, the University of Michigan Consumer Sentiment Index reported that consumer confidence, which tumbled four percent in January, fell another five percent in February.
“Consumer sentiment fell for the second straight month, dropping about 5 [percent] to reach its lowest reading since July 2024. The decrease was pervasive, with Republicans, Independents, and Democrats all posting sentiment declines from January, along with consumers across age and wealth groups. Furthermore, all five index components deteriorated this month, led by a 12 [percent] slide in buying conditions for durables, in part due to a perception that it may be too late to avoid the negative impact of tariff policy. Expectations for personal finances sank about 6 [percent] from last month, again seen across all political affiliations, reaching its lowest value since October 2023. Many consumers appear worried that high inflation will return within the next year,” wrote Surveys of Consumers Director Joanne Hsu.
Rising inflation could keep the Federal Reserve from lowering rates further. Survey participants expected prices to rise 4.3 percent over the next 12 months. That is a full point higher than in the previous month, when they anticipated prices would rise by 3.3 percent. Over the longer term, inflation expectations were steadier, rising from 3.2 percent to 3.3 percent.
Tariff Talk Took A Toll
In a Friday afternoon press conference, President Trump indicated he will implement reciprocal tariffs next week, although he did not specify which countries will be affected. “The tariffs would be the next volley in a trade war pitting the U.S. against some of its largest trading partners. Trump announced levies of 25 [percent] against Canadian and Mexican imports last weekend, though suspended them for a month after the countries agreed to increased border security and measures to reduce the flow of illegal drugs into the [United States]. A separate 10 percent tariff against Chinese imports went into effect, and China responded with tariffs of its own,” reported Joe Light of Barron’s.
Employment Remained Relatively Stable In January
The U.S. employment report showed hiring was solid in January, but less robust than expected, reported Lucia Mutikani of Reuters. The data showed “strong wage growth last month, with average hourly earnings surging by the most in five months, which should keep consumer spending supported.”
While a steady labor market was encouraging, investors have some concerns about the future, reported Megan Leonhardt of Barron’s. “Looking ahead, employment conditions could face more headwinds as federal policy changes take hold, and many economists expect to see further weakening within the U.S. labor market this year. The shifts in trade and immigration policies, in particular, could upend the relative stability currently on view in the labor market, as well as impede the downward progress inflation has made.”
On Friday, major United States stock indices gave back gains from earlier in the week and ended the week lower. The yield on the benchmark 10-year U.S. Treasury moved lower over the full week before rising on Friday.
| Data as of 2/7/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -0.1% | 2.6% | 22.3% | 12.0% | 14.4% | 13.4% |
| Vanguard Total Intl Index (Foreign Stocks) | 0.7 | 4.1 | 10.4 | 2.9 | 5.3 | 5.2 |
| Total Bond Market (U.S. Dollar Bonds) | 0.3 | 0.9 | 3.3 | -1.1 | -0.5 | 1.3 |
| Gold (per ounce) | 2.2 | 10.1 | 40.8 | 16.6 | 12.8 | 8.8 |
| Bloomberg Commodity Index | 1.9 | 5.5 | 7.8 | -1.6 | 6.9 | 0.1 |
S&P 500, Vanguard Total International Stock Index, Vanguard Total Bond Market Index, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized. Sources: Yahoo! Finance; MarketWatch; morningstar.com; djindexes.com; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
CONSIDERING PLACES TO RETIRE. A recent survey found that about one-third of Americans plan to retire in their current city, 42 percent want to move to a different city or state, and 16 percent intend to retire outside the United States, according to The Currency. A key factor in decisions about where to retire is financial security. More than 85 percent of participants wanted to retire in a place where they can maintain their current standard of living without financial stress.
Where Are the Top Places To Retire In 2025?
According to Adam McCann of WalletHub, the top three states for retirement (based on 46 factors that include tax rates, cost of living, quality of medical care, and entertainment) are:
- Florida ranks first overall, and second for affordability. The cost of living in the state has risen over the past few years driven by housing and insurance costs, though. The average homeowners’ insurance premium rose by almost 60 percent from 2019 to 2023, reported Michelle Conlin and Matt Tracy of Reuters.
- Minnesota ranks second overall, and first for healthcare. The state has some of the best healthcare in the country. The state boasts “the most health care facilities, the second-most nursing homes, and the third-most home health care aids per capita. Its geriatrics hospitals also rank as the fifth best in the nation. Due to the great health care conditions within the state, Minnesota has the third-lowest percentage of seniors with a disability, the fourth-lowest percentage with poor mental health, and the fifth-highest percentage who are in good physical health.”
- Colorado ranks third overall. It is a tax-friendly state with no estate or inheritance taxes. “In addition, it has the seventh-lowest poverty rate for residents ages 65+… plenty to keep seniors active and engaged. For example, it has the sixth-most volunteer opportunities, the ninth-most scenic byways and the 11th-most theaters per capita.”
About two-thirds of Americans say that saving for retirement is a financial priority, and that their happiness in retirement depends on achieving their retirement savings goals. If you would like to learn more about saving for retirement, get in touch. We can help.
Weekly Focus—Think About It
“It is never too late to be what you might have been.”
—George Eliot, novelist
Best regards,
Waterford Advisors
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* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
https://www.bloomberg.com/news/articles/2025-02-06/stock-market-today-dow-s-p-live-updates (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/02-10-25_Bloomberg_Stocks%20Slide%20as%20Tariff%20Angst%20Adds%20to%20Price%20Worries_1.pdf)
https://www.barrons.com/articles/trump-japan-reciprocal-tariffs-d70ebe70?mod=Searchresults (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/02-10-25_Barrons_Trump%20to%20Announce%20Reciprocal%20Tariffs_2.pdf)
http://www.sca.isr.umich.edu (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/02-10-25_UM%20Survey%20of%20Consumers_3.pdf)
https://www.barrons.com/livecoverage/january-jobs-report-data-today (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/02-10-25_Barrons_Why%20Januarys%20Weak%20Jobs%20Report%20Makes%20Rate%20Cut%20Less%20Likely_5.pdf)
https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/02-10-25_Barrons_Data_6.pdf)
https://www.empower.com/the-currency/play/retire-well-live-little-research
https://wallethub.com/edu/best-and-worst-states-to-retire/18592
https://www.gobankingrates.com/money/economy/cost-of-living-by-state/