MARKET RECAP

• US stocks +1.27%, international +0.53%, bonds -0.25%.
• The small-cap index broke out to new highs, joining the other indexes.
• Forward EPS multiples recently reached their highest levels since 2021 (~22.6x). Earnings yields are now below long-term Treasury yields, indicating an expensive market.
• Last week’s spike in jobless claims reversed; continuing claims remain stable, suggesting no broad labor deterioration.
• The FOMC cut rates for the first time after months of holding steady, citing “risk management” despite stronger growth and inflation forecasts. Median projections suggest one to two more cuts by year-end.
• The U.S. dollar index is down over 10%, its most significant drop since 2011, boosting foreign equities and commodities.
• No matter what you think about tariffs, one benefit to the government is significant revenue. Torsten Slok of Apollo reports that the government is bringing in about $350 billion annually, which would equal about 19% of the annual household income tax.

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