The Week in Charts (5/28/25)
View the video of this post here.
I’m excited to be speaking at Creative Planning’s CONNECT25 event in Chicago on June 26.
I’ll be sharing insights on “7 Timeless Rules for Investors” alongside Peter Mallouk, followed by thought-provoking speakers on AI and the science of happiness.
If you’re in the Chicago area, we’d love for you to join us.
Hope to see you there!
The most important charts and themes in markets and investing…
1) Goodbye Triple-A
In August 2011, S&P Global downgraded U.S. Government Debt to AA+ from AAA.
In August 2023, Fitch downgraded U.S. Government Debt to AA+ from AAA.
And last week, Moody’s downgraded U.S. Government Debt to Aa1 from Aaa.
The reason for the downgrade should come as no surprise…
Large fiscal deficits and growing interest costs with successive U.S. administrations and congress failing to reverse this troubling trend.
2) Hello One, Big, Ugly Deficit
The U.S. House of Representatives narrowly passed the “One Big Beautiful Bill Act” with a vote of 215-214.
The bill extends the 2017 tax cuts, adds a slew of additional tax cuts (on tips, overtime pay, increase in standard deduction for seniors, etc.), and increases overall spending.
If passed in its current form, that would mean two things: higher annual deficits than today and more government borrowing (the bill raises the national debt limit by $4 trillion). The CBO is projecting the bill would increase the budget deficit by $3.3 trillion over the next 10 years with higher deficits in the earlier years due to the front-loading of new tax cuts.
But what about the DOGE spending cuts?
None of them were codified in the bill, meaning that any savings announced over the past few months could just be temporary.
The bill now resides with the Senate, where changes are to be expected. But will the fiscal hawks demand a bill that actually reduces the deficit? As it stands today, the odds of that happening seem quite low.
3) A Bond Market Revolt
The potential for bigger deficits, more supply and higher inflation have prompted bond market investors to revolt. The 30-year Treasury yield hit its highest level since 2007 last week, moving above 5.1%.
This is not just a U.S. phenomenon. In Japan, 30-year Government Bond yields hit a record 3.00% last week after a weak auction of newly issued bonds. Japan has one of the highest Debt-to-GDP ratios in the world (over 200%) and has seen inflation run above their central bank’s target for 34 consecutive months.
4) The Alternative to Fiat Trade
While Bonds sold off after the passage of the House bill, Bitcoin and Gold soared as investors sought an alternative to fiat.
Bitcoin hit its first all-time high since January 20, rising above $110k and $111k for the first time.
And Gold continues to shine with the largest Gold ETF ($GLD) on pace for its best year ever (+28% YTD).
5) Don’t Believe Anything You Hear
When it comes to tariffs, no one should take any statement at face value as we’ve learned time and again over the past few months.
The latest example: the “recommended” 50% tariff on the EU starting June 1.
What happened next?
You guessed it…
6) Rising Supply, Lower Prices
US home prices moved lower in April, the first monthly decline since September 2022.
What’s putting pressure on prices?
Demand remains near record lows due to a lack of affordability while supply has been steadily rising. The total number of homes for sale in the US has increased 16.7% over the last year to the highest inventory levels since March 2020.
6) A Few Interesting Stats…
$1 invested in S&P 500 in 1964 = $391 today.
$1 investing in Berkshire in 1964 = $55,023 today.
b) The best and worst performing stocks in the S&P 500 this year…
c) The US Money Supply hit an all-time high in April for the first time in three years. After a brief hiatus, money printing is back.
d) We’ve seen a HUGE reversion to the mean so far this year with Eurozone stocks UP 24% and International Stocks stocks overall UP 14% while the S&P 500 is DOWN 1%. This comes after 16+ years of US outperformance, the longest run in history.
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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosures here.
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