May 20, 2025
4
min read
💬 Daily Observation
“Volatility is the fee, not the fine, for long-term returns.” — Morgan Housel
Yesterday, a friend confided, “I’m afraid to check my portfolio” after Moody’s credit-rating news. I reminded her that fear feels loudest at the top of the roller-coaster—yet the track remains the same length. Staying buckled in (and diversified) beats jumping off mid-loop*.
🗞️ Today's stories that matter (and why)
1. 🧾 Trump's ‘Big Beautiful’ Tax Bill Sparks Debt Concerns
President Trump’s new tax proposal seeks to extend the 2017 tax cuts and introduce fresh tax breaks—but at a steep cost. The legislation could add $3.3 trillion to the national debt by 2034, pushing thedebt-to-GDP ratio to a record 125%. Moody’s reacted by downgrading the U.S. credit rating, driving long-term Treasury yields higher.
Why it matters: Rising debt and borrowing costs may crowd out essential public spending, elevate inflation risk, and increase strain on government bond markets—key dynamics for fixed income investors and macro-sensitive equities.
Assets in focus: Fixed Income
2. 🛢️ US Shale Oil Production May Plateau Amid Current Price Levels
At the Qatar Economic Forum, ConocoPhillips CEO Ryan Lance warned that US shale production could plateau bydecade's end if oil prices remain in the$65–$75 range. A drop into the $50s could trigger declines, as breakeven costs remain high and innovation stagnates. Qatar’s Energy Minister backed this view, stressing the need forprices above $60 to sustain global energy investment.
Why it matters: If shale output stagnates, global oil supply could tighten, potentially driving up prices. That affects inflation, consumer spending, and energy-sensitive sectors—adding macro pressure.
Assets in focus: Commodities
3. 🏠 Mortgage Rates Surge Past 7% After Credit Downgrade
In the wake of the US downgrade,30-year mortgage rates rose to 7.04% before stabilizing just below. The elevated rates are deepening the housing affordability crisis: 2024 marked a30-year low in home sales, and spring 2025 isn’t faring better. Builders are cutting prices amid economic and supply-chain pressures.
Why it matters: Elevated mortgage rates can deter potential homebuyers, slow down the housing market, and impact related sectors, influencing overall economic growth.
Assets in focus: Real Estate
4. 🛠️ Home Depot Posts Strong Earnings Despite Tariffs
Home Depot reported $39.86 billion in Q1 sales, a 9% year-over-year gain, and exceeded revenue expectations. The company reaffirmed pricing stability despite U.S. tariffs, showing adaptability in a volatile trade environment.
Why it matters: Strong corporate results—even in the face of macro headwinds—can bolster investor confidence and support valuations in the broader retail sector.
Assets in focus: Equities
5. 🌍 G7 Meeting Underscores Global Economic Tensions
The G7 summit in Canada highlighted diverging views on trade, currency policy, and fiscal responsibility. The U.S. pushed for more flexible currency regimes in Asia, while others raised alarm over debt sustainability and protectionism.
Why it matters: Global economic tensions can lead to market volatility and impact international trade relations, affecting global economic growth.
Assets in focus: Currencies
🌀 Diversification Score – How Diversified Is Your Portfolio?
Analyze your portfolio's diversification and get recommendations to improve your risk-adjusted returns.
📊 Market Movements Snapshot
Asset Classes:
- 🟢 Commodities (Gold): YTD +22.08%. Gold has surged to record highs, driven by investor concerns over U.S. fiscal policies and global economic uncertainties.
- 🟢 Alternatives (Bitcoin): YTD +11.43%. Bitcoin is trading around $105,941, nearing its all-time high, fueled by institutional demand and macroeconomic factors.
- 🔴 Equities (US Small Caps): YTD -5.6%. US small-cap stocks have underperformed due to heightened sensitivity to rising interest rates and economic headwinds.
For the full list, click here
Sectors:
- 🟢 Utilities: YTD +7.47% The utilities sector benefits from steady demand and increased investment in infrastructure, appealing to investors seeking defensive assets amid market fluctuations.
- 🔴 Energy: YTD -0.6%. Energy stocks face headwinds due to fluctuating oil prices and concerns over global demand, leading to cautious investor sentiment.
For the full list, click here
🤯 Alternative Investment Highlight: 🔥 Charizard Card Fetches $213,500 at Auction
A pristine 1999 Pokémon 1st Edition Holographic Charizard card, graded PSA 10, recently sold for a staggering $213,500 at Goldin's "Pop Culture Elite Auction." This card, illustrated by Mitsuhiro Arita, is considered one of the most iconic and sought-after in the Pokémon trading card game.
With fewer than 3% of the over 4,830 PSA-graded copies achieving a perfect 10, its rarity and condition contributed to the high auction price.
🧠 From the Education Center: Diversification, a Practical Guide
Diversification is powerful—but only when it’s done right. Learn how to spread risk smartly across assets, geographies, and time.
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Editor, Diversification.com
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*For compliance reasons, these stories are complete fiction with made up characters and portfolios. Possibly influenced by real interactions, and definitely not financial advice."