January 2025 Newsletter

Eric Boyce • December 24, 2024

Dear Clients and Friends,


As we approach the end of 2024, we wanted to take a moment to reflect on the year and discuss a few thoughts heading into 2025.



The past year has been a year of significant newsworthy moments, historic elections, and market movements highlighting both challenges and opportunities.  The US showed economic resilience, buoyed by a stable labor market, growth in retail sales and consumer spending, as well as a recovery of sorts in manufacturing.  Inflation has gradually cooled from its peak, but incremental gains are proving to be a bit challenging due to sticky rents and wages.  Real wage growth remains positive, though, helping to fuel consumption.  Goods inflation remains subdued, whereas service-sector inflation continues to run higher than pre-pandemic levels.

The mostly favorable economic backdrop has put the Federal Reserve in an interesting spot.  The desire to lower short term interest rates is confounded by recent economic strength potentially driving a resurgence of inflation, not to mention the short-term potential impact of tariff increases under Trump 2.0.   


Investors list inflation, geopolitical tensions, and trade protectionism as the three main economic risks heading into 2025; meanwhile, a trade war, Fed rate hikes due to unexpected inflation, and a persistently strong dollar are viewed as potentially the most bearish developments next year if they materialize (see thoughts below on interest rates).  Longer-term interest rates have gone back up as of late, and the yield curve has finally un-inverted following a prolonged stretch.  Although mortgage rates have moved up in tandem with 10-year treasuries, we saw an increase in existing homes sales last month for the first time since 2021.

US equities have generally performed well, driven by strong corporate earnings and optimism around AI.  This, in turn, has added to the wealth effect contributing to consumer spending. Stock markets have also responded positively this year to increased liquidity and corporate profits, although earnings estimates for 2025 have been coming down over the past few months.  That has resulted in a richly valued market, but not for all stocks. While I’d expect a bit more volatility in the overall index heading into 2025, I see value and small cap stocks as having particular value as the dust settles. 


As I’ve noted many times, Mr. Market does not like uncertainty, and we should continue to stay “eyes wide open” regarding potential shifts in fiscal policy and the economic outlook. On balance, there appears to be a good case to be made for markets to reasonably perform in 2025, although I would not bet on a repeat of the past couple years.  I think the easy gains have been made, meaning that a consistent, diligent approach to diversification and asset selection will likely be key going forward.   


While it’s a bit odd to think the Federal Reserve would continue to cut rates while investment markets remain relatively exuberant, I do think the Fed will cut interest rates modestly next year.  With some economic tailwinds heading into 2025, I think monetary policy expectations will need to be tempered, however, and eventually a new consensus will develop.  I’m optimistic by nature, and I respect the value and comfort of having a long-term investment horizon.  New year prognostications are often wrong, and I tend to place greater value in economic and valuation trends versus time-specific year-end targets.  At this point, there is every reason to believe that, through long-term planning and strategy, we will be able to navigate the near-term uncertainties which lie ahead.     


I hope you and yours have a wonderful and prosperous new year. We appreciate the trust you have placed in us and look forward to continuing to serve you in the coming year and beyond. 


Sincerely,


Eric C. Boyce, CFA

President & CEO










By Jonathan McQuade April 1, 2025
Trading goods has been around for millennia - with early written documentation beginning with the silk road to the industrial and now digital revolution - the exchange of goods has led to an interconnected world where products and services change hands between cultures and countries. Globalization (the exchange of goods) started to play a central role in global Gross Domestic Product (GDP): a measure of the total value added from the production of goods and services in a country or region each year with exports accounting for approximately 13% of world GDP in 1970 and near 30% in 2023, according to the World Bank.  Tariffs have been one of the major headlines as Donald Trump entered the Oval Office for his second term as President. To prime the discussion and apply it to current events, it seems judicious to take a moment and look back at the role tariffs have played in policy for the United States. Tariffs are essentially a tax on goods and/or services imported to the United States paid for by the business importing the goods and typically passed onto the consumer in the form of an increase in price of that good. An increase in tariff rates is meant to discourage trade as it makes goods more expensive to buy from other countries compared to buying domestic goods to which the tariff does not apply. Major economies, 23 countries in total, entered the General Agreement on Tariffs and Trade (GATT) in 1947 to lower tariff rates and other trade barriers to encourage trade. This is perhaps what makes President Trump’s stance to raise tariffs more controversial. A look back in U.S. history will show that tariffs were the government’s primary revenue source prior to 1913, when the 16th Amendment introduced the federal income tax. Today, tariff revenues make up less than 2% of the $4.9 trillion in total tax revenue for 2024, with the majority coming from individual and corporate income tax. Given that tariffs are no longer a major element of domestic tax policy, what role do tariffs play in broader economic and policy goals? The implementation of tariffs are now primarily used as a tool to protect and regulate trade practices that could injure domestic industry, advance foreign policy goals or as negotiating leverage in trade negotiations, according to a paper titled: “U.S. Tariff Policy: Overview” by the Congressional Research Service. For policy, the potential benefits are clear. Economically, the benefits are less clear. Retaliatory tariffs, rising costs, and supply chain disruptions all bring into question whether tariffs will result in the desired outcome of benefitting the U.S. consumer.
By Eric Boyce April 1, 2025
Dear Clients and Friends,
By Eric Boyce March 30, 2025
This week, CEO Eric Boyce, CFA discusses: 1. earnings estimates have come down, but are still growing for the S&P 500, but not for the Russell 2000 2. valuations have come down appreciably for the S&P 500, and the good news is that it's coming from price/earnigns multipl contraxtion and not earnings 3. gold catches a bid, and there's a strong bet that interest rates will come down based on interest in 3-month SOFR futures 4. both individual and institutional investors more cautious amidst the change in leadership within the market (Mag 7 goes on sale) 5. foreign ownership of US investments has picked up, providing both a benefit and potential risk 6. FOMC more concerned with unemployment and inflation, but do not expect recession despite some estimates for negative growth during 1Q 2025 7. Regional Fed surveys highlight caution; trade figures highlight front running of imports ahead of tariffs 8. corporate profits remain high; pending home sales plunge
By Eric Boyce March 23, 2025
This week, CEO Eric Boyce, CFA discusses: 1. volatility increases within the market, market sector shifts, market concentration dynamics 2. with higher volatility from trade, etc. policy, markets can actually exhibit better risk-adjusted returns; consumer inflation from tariffs may promote higher profit margins 3. power of long term compounding - EVEN IF price/earnings multiples contract from here 4. international valuations improving relative to S&P500 5. stabilization perhaps in office RE market 6. individual investors very apprehensive about market, think business conditions, employment & income trends worsening. 7. small business outlooks more guarded, higher prices paid showing up in the data 8. housing supply improving, but prices are rising faster than inflation
Boyce & Associates Wealth Consulting March 9 Market Minutes featured image
By Eric Boyce March 9, 2025
By Eric Boyce March 9, 2025
This week, CEO Eric Boyce, CFA discusses: 1. data has been mixed as of late, reflecting some anxiety, uncertainty and conservatism on the part of both business and consumers 2. economic growth softening, although recession calls remain mild. Eyes wide open, however... 3. other data, including the ISM Services PMI, remain solidly in expansion territory 4. Fed may bein a tough spot on near term rate cuts, given the sustainability of announced tariffs. Desire to cut in anticipation of slower growth may be pre-empted by near term effect of tariffs, to the extent they are sustained... 5. generational look at income, economic power, retirement assets 6. equity market trends, including recent test of 200 day moving average and moderation in earnings estimates 7. volatility up, international return expectations higher than US large growth
By Eric Boyce March 3, 2025
This week, CEO Eric Boyce, CFA discusses: 1. expectations for growth and inflation both increasing for 2025 2. earnings transcripts show increase mention of inflation, tariffs - but also productivity gains from AI 3. labor market really appears stable at this point - firms are downplaying both hiring and layoffs (except in DC) 4. consumer sentiment remains ok, but may change. 50% of consumer spending comes from top 10% earners who have $1.3T in excess savings 5. peak impact of tariffs and DOGE likely 4Q - -0.5% to growth and +0.2% to inflation 6. regional Fed surveys reflect somewhat muted conditions with new exports expected to decline and uncertainty on the rise 7. S&P 500 and 10 year treasury yield positively correlated for the first time in a few months; 3m-10y yield curve back to inverted 8. growth v. value; international equity has weaker growth vs US, but much better valuations 9. bearish sentiment spikes at the individual investor level 10. graph on expected military spending by Europe next few years in the wake of the failed Trump/Zelenskyy meeting this past week
blog post cover: secure, smart, and successful: the financial empowerment blueprint for women
By Kelly Griggs March 1, 2025
Financial empowerment starts with knowledge and action. Celebrate International Women’s Day by taking control of your financial future with smart strategies, mindset shifts, and powerful money tools.
Boyce and Associates Wealth Consulting Charts and Chats March 2025 newsletter featured image
By Eric Boyce March 1, 2025
Dear Clients and Friends,
Boyce and Associates Wealth Consulting Charts and Chats featured image
By Eric Boyce February 23, 2025
February 23 2025 Charts & Chats with CEO Eric Boyce, CFA. Trade-war risks, inflation concerns, strong retail sales, and shifting capital spending—plus insights on tariffs, government shutdown predictions, and private equity trends. Stay informed!
Show More