WEEK AHEAD

<span data-preserver-spaces="true">Well, my friends, if last week's market action were a basketball game, it would be the kind where elite players are in the zone, blocking out all the noise and distractions. A curious blend of focus and lost in translation, all wrapped up in the comforting hum of fresh all-time highs. One might imagine the market, like a seasoned politician, simply shrugging off the noise and marching steadily onward, albeit with a slight swagger in its step.</span>

<span data-preserver-spaces="true">The S&amp;P 500 continued its relentless ascent, tacking on +0.61% to close at a robust 6,296. The second-quarter earnings season, much like a well-timed cavalry charge, arrived just in time to provide fresh impetus. And leading the charge? None other than the venerable titans of finance.</span>

<span data-preserver-spaces="true">Yes, the big banks, those stalwarts of the American economy, delivered a performance that would make a Broadway producer weep with joy. Financial stocks, emboldened by the audacity of their own profitability, posted a 0.86% weekly gain, pushing their year-to-date return to a rather impressive 10.54%. JPMorgan (JPM), in particular, played the role of the confident elder statesman, not only topping analyst estimates but also, with a flourish, boosting dividends and share repurchases. CEO Jamie Dimon, ever the pragmatist, offered a nod to the "risks of tariffs and trade uncertainty" – a polite cough in the face of prosperity, if you will – but then quickly pivoted to the more palatable news of boosted net interest income guidance. One can almost see the collective sigh of relief from shareholders, comforted by the sweet whispers of Trump's tax reform and potential deregulation. It's a bit like finding out your eccentric uncle, despite his peculiar habits, is quite good with money.</span>

<span data-preserver-spaces="true">Then there's Nvidia (NVDA), the AI chipmaker, a company that seems to exist in a perpetual state of defying gravity. News of its plans to resume sales of the H20 AI chip to China sent its stock soaring to a new all-time high. In a move that feels almost poetic in its symbolism, Nvidia has now firmly eclipsed Apple (AAPL) as the largest company by a cool trillion in market capitalization. The tech sector, naturally, basked in this reflected glory, with Nasdaq and the broader technology sector gaining 1.51% and 2.12%, respectively. Yet, in a twist that would delight any connoisseur of market paradoxes, the humble utility stocks remain the true quiet champions, boasting a 15.25% year-to-date gain. It's a reminder that while we chase shiny new objects, sometimes the most reliable returns come from the folks who keep the lights on and can also benefit from the AI and crypto frenzy.</span>

<span data-preserver-spaces="true">Meanwhile, in the less glamorous, but equally vital, world of bonds, things got a bit… dramatic. Yields experienced a certain level of volatility, partly due to President Trump's public and persistent pressure on Federal Reserve Chair Jerome Powell to cut rates. One imagines Mr. Powell, like a stoic chess grandmaster, trying to ignore the shouts from the gallery while simultaneously navigating the subtle moves on the board. But it wasn't just political theater; core inflation, that stubborn beast, showed its head, and the specter of tariffs loomed. The 30-year yield, in a moment of pure theatrical flair, broke through the 5% ceiling for the first time this year. It was a stark reminder that even in a bull market, the bond market retains its capacity for a good old-fashioned scare.</span>

<span data-preserver-spaces="true">On the economic front, the week was a veritable inflation-palooza:</span>
<ul>
<li><span data-preserver-spaces="true">Consumer Price Index (CPI) came in slightly hotter than expected, with headline MoM increasing 0.3% (above the expected 0.2%) and YoY at 2.7%. </span></li>
<li><span data-preserver-spaces="true">Core CPI followed suit, up 0.2% MoM and 2.9% YoY. Yet, in a delightful counterpoint, the Producer Price Index (PPI) delivered a surprising dose of calm, with headline wholesale inflation at 0.0% MoM and 2.3% YoY (below the expected 2.5%). </span></li>
<li><span data-preserver-spaces="true">Core PPI, too, was unchanged MoM and up 2.6% YoY. It's a symphony where the brass section is playing too loudly, but the strings are maintaining a serene calm.</span></li>
<li><span data-preserver-spaces="true">Industrial Production increased 0.3% in June, an annual rate of 1.1%, with manufacturing and utilities ticking up better than expected. </span></li>
<li><span data-preserver-spaces="true">Housing Starts, defying the skeptics, also rose 4.6% to 1.321 million units. </span></li>
<li><span data-preserver-spaces="true">Retail Sales, after a dip in May, rebounded strongly, increasing 0.6% in June, well above expectations, putting the YoY gain at a healthy 3.9%. </span></li>
<li><span data-preserver-spaces="true">Even consumer sentiment, that notoriously fickle creature, rose to 61.8, and, perhaps most importantly, one-year inflation expectations eased.</span></li>
</ul>
&nbsp;

<span data-preserver-spaces="true">The American consumer, despite the headlines, is still willing to open their wallets, albeit with a slightly more discerning eye.</span>

<span data-preserver-spaces="true">Looking ahead, the market's gaze turns back to earnings, with a parade of mega-companies, including Alphabet, Tesla, Coca-Cola, IBM, Texas Instruments, and Intel, set to report. But the bond market, ever the unpredictable sibling, will likely continue its volatile dance as we approach the next FOMC meeting </span><strong><span data-preserver-spaces="true">on July 29</span></strong><span data-preserver-spaces="true">. Will the pressure on Fed Chair Powell to cut rates finally reach a tipping point? Or will he, like a seasoned conductor, maintain his tempo despite the clamor? Only time, and perhaps the next batch of economic data, will tell.</span>

<h2><strong><span data-preserver-spaces="true">The Big Beautiful Bill Part Deux: When Tax Cuts Get Botox</span></strong></h2>
<span data-preserver-spaces="true">They called it the "One Big Beautiful Bill" (OBB). </span><span data-preserver-spaces="true">Washington called it "fiscal policy." </span><span data-preserver-spaces="true">Wall Street called it "a green light."</span>

<span data-preserver-spaces="true">In reality, it's the 2017 Tax Cuts and Jobs Act with a fresh coat of makeup and an even larger price tag. Passed in July 2025, just in time for campaign season, the new legislation extends—and in some cases expands—the Trump-era tax cuts that were set to expire at year-end.</span>

<span data-preserver-spaces="true">Markets barely blinked. Why would they? The S&amp;P was already hovering at all-time highs, tech earnings were surging, and any risk of a tax hike just got erased. But under the hood, there's more to unpack.</span>

<span data-preserver-spaces="true">Let's separate the rhetoric from the returns.</span>
<h3><strong><span data-preserver-spaces="true">Part I: What the Bill Actually Does</span></strong></h3>
<h4><strong><span data-preserver-spaces="true">1. Corporate Tax Cuts Made Permanent</span></strong></h4>
<span data-preserver-spaces="true">The 21% rate is here to stay. No cliff. No phase-out. Just permanent low taxation for businesses large and small. The math is simple:</span>

<strong><span data-preserver-spaces="true">Lower taxes → higher net income → higher EPS → higher multiples.</span></strong>

<span data-preserver-spaces="true">And with full expensing for capital investments and restored R&amp;D deductions, it's Christmas in July for CapEx-heavy industries.</span>
<h4><strong><span data-preserver-spaces="true">2. Individual Cuts Extended—But Not for Everyone</span></strong></h4>
<span data-preserver-spaces="true">The lower brackets, expanded standard deduction, and $2,000 child tax credit remain in effect. However, SALT caps were only partially lifted, phasing out above $ 500,000 in income. High earners in blue states still face penalties—just not as severe. And candidly, a small price to pay.</span>
<h4><strong><span data-preserver-spaces="true">3. Pass-Throughs Still Winning</span></strong></h4>
<span data-preserver-spaces="true">The 20% deduction for pass-through income sticks, now with looser thresholds and fewer phaseouts. Real estate investors and LLC owners can exhale—nothing to see here…</span>
<h4><strong><span data-preserver-spaces="true">4. Estate Tax &amp; QSBS Perks</span></strong></h4>
<span data-preserver-spaces="true">The estate tax exemption north of $13M is preserved—and likely indexed higher for inflation. Qualified Small Business Stock (QSBS) rules got sweeter too: faster vesting, higher exclusions, and more companies eligible. Silicon Valley is happy.</span>
<h4><strong><span data-preserver-spaces="true">5. Green Energy Left Out in the Cold</span></strong></h4>
<span data-preserver-spaces="true">EV and solar credits are expiring. New projects will face longer permitting delays. If you were banking on renewables leading the next leg of growth, the policy winds just shifted. Not to mention, those high-powered magnets are now a target for tariffs.</span>
<h3><strong><span data-preserver-spaces="true">Part II: What This Means for Investors</span></strong></h3>
<h4><strong><span data-preserver-spaces="true">Earnings Remain Juiced</span></strong></h4>
<span data-preserver-spaces="true">This is an EPS tailwind masquerading as policy reform. The bill supports profit margins across various sectors, but benefits tech, manufacturing, and capital-intensive businesses in particular.</span>
<h4><strong><span data-preserver-spaces="true">The Trump Trade Reloads</span></strong></h4>
<span data-preserver-spaces="true">Energy, defense, and industrials get a boost. Clean tech hits a policy wall. And anything China-related faces rising tariffs and stricter scrutiny. If 2017 was the tax cut rally, 2025 is the sequel—with more selective winners.</span>
<h4><strong><span data-preserver-spaces="true">The Debt Doesn't Matter—Until It Does</span></strong></h4>
<span data-preserver-spaces="true">This bill adds $3–4 trillion to the national debt over the next decade. That hasn't spooked markets yet. But with Treasury issuance rising and the Fed pinned between growth and inflation, rates could eventually respond.</span>
<h4><strong><span data-preserver-spaces="true">Policy Risk Is a Sector Now</span></strong></h4>
<span data-preserver-spaces="true">As we approach 2026, the real risk isn't the current bill—it's what comes next. A new Congress could tinker, tighten, or reverse course entirely. Tax-loss harvesting, estate planning, and muni exposure may matter more in the next 18 months than they have in the last five years.</span>
<h3><strong><span data-preserver-spaces="true">Part III: The Real Bottom Line</span></strong></h3>
<span data-preserver-spaces="true">This wasn't reform. It was an extension—with benefits.</span>
<h4><strong><span data-preserver-spaces="true">Friends of Washington with benefits!</span></strong></h4>
<span data-preserver-spaces="true">For investors, it means more of the same:</span>

<span data-preserver-spaces="true">• Friendly tax policy
</span><span data-preserver-spaces="true">• Favorable treatment for capital
</span><span data-preserver-spaces="true">• A federal balance sheet that's quietly ballooning</span>

<span data-preserver-spaces="true">But that doesn't mean risk is gone. It's just moved—from legislation to leverage. From tax code to Treasury auctions. </span><span data-preserver-spaces="true">Markets love certainty. And this bill, for all its excesses, gave them exactly that.</span>

<strong><span data-preserver-spaces="true">Next for investors:</span></strong><span data-preserver-spaces="true"> spotting the Amazons hiding in value clothing—especially as AI begins reshaping non-tech sectors. What looks cheap today might be tomorrow's growth engine.</span>

<span data-preserver-spaces="true">Because, like all things in politics and portfolio management: </span><span data-preserver-spaces="true">What's "beautiful</span><span data-preserver-spaces="true">"</span><span data-preserver-spaces="true"> in the moment can get ugly when the bill comes due.</span>

<strong><span data-preserver-spaces="true">Source: </span><a class="editor-rtfLink" href="https://www.npr.org/2025/07/03/nx-s1-5454841/house-republicans-trump-tax-bill-medicaid" target="_blank" rel="noopener"><span data-preserver-spaces="true">https://www.npr.org/2025/07/03/nx-s1-5454841/house-republicans-trump-tax-bill-medicaid</span></a></strong>

<span data-preserver-spaces="true">Disclosure:</span><span data-preserver-spaces="true"> This material is for informational purposes only and should not be considered investment advice. The opinions contained herein are subject to change without notice.</span>