Trade, Taxes & GSE Release

April 10, 2025 | Premium Service | This is a special note for Annual Plan subscribers to The Institutional Risk Analyst. We’ll be sending out a placeholder for the next live subscriber conference call next week. 

We saw a lady yesterday on CNBC buying American Express (AXP). We like the idea, but she may be able to buy more cheaper before the trade storm ends. Needless to say, the movement among bank stocks over the past 60 days ensures that our index rebalance for Q2 2025 will be quite amazing. 

AXP has been in the WGA Bank Top 10 Index for many quarters, but today based upon three month total return this above average performer is in the bottom quartile of the top 100 banks.  And AXP has lots of company.

As markets correct in reaction to the Trump trade offensive, just remember that equity returns in 2024 were entirely ridiculous and clearly not enduring. The celebration of impending FOMC interest rate cuts in Q3 2024, led to a surge in new issue volumes and equity returns, but the party was over by November when financials and other sectors peaked. For example, we are back below our exit price for most of our Nvidia (NVDA) stake. H/T Jim Cramer. 

Were fifty percent returns for financials on average in 2024 reasonable, even as credit metrics were falling all year? Could those be red flags we see? A lot of the paper wealth generated last year was merely the denouement to four years of fiscal and monetary excess. But Trump II is driving up the rate of change dramatically.  Once the GOP tax bill is finalized, the Trump WH will move on to other agenda items. 

May 2025!

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