2025 | June Risk Odometer

Our Risk Odometer moved higher from -1 last month to +1, causing us to move our outlook back to “Cautiously Positive”, where it had been only a few months ago.  When we moved our outlook down last month we cautioned that the Odometer could be volatile going forward given the fast-changing tariff policies was having on the markets, and the fact that many of our indicators were sitting near inflection points.

The cautious tone we struck last month had a bit of caution to it given the improving tariff drama that had essentially tanked our Outlook.  Living by our rules of removing our emotions we downgraded our Outlook but now return to an outlook we believe makes more sense.  Volatility in our indicators is understandable when the tariff headlines impacting our indicators was as volatile as it has recently been. 

The good news is that this volatility has diminished, which has improved our outlook.  We envision the volatility in headlines to continue to diminish.  The markets are developing a numbing aspect to the headlines.  Market participants are developing a stronger opinion that Trump’s tactics are negotiation tools rather than policies that may be enacted for a meaningful period of time to cause a recession. 

Nevertheless, the possibility of unintended negative consequences of his negotiation tactics exist, which gives us a little bit of caution in our optimistic outlook.  Having an anything is possible but not necessarily probable mindset in something as unpredictable as Trump’s next move is a basic foundation of prudent investing.  This is exactly what our Risk Odometer does.  It keeps us disciplined in evolving our outlook based on the data and keeps our emotions in check.

We believe Trump cannot afford a self-induced recession for the sake of his tariff ideology.  We believe he will eventually stand down when it comes to high stake chances of creating a recession from his tariff policies.  The market is starting to understand this and has responded accordingly with a strong underlying bid to the markets.  As the tariff drama recedes we believe Trump’s other agendas of tax breaks and deregulation will become more of a focus.  These agendas should be a market positive and could foreshadow continuous improvements in market sentiment going forward.  Nevertheless, we will continue to follow the data in an unemotional and discipled manner and adjust our investments accordingly.

As always, we continue to believe our Risk Odometer provides guidance in making better investment decisions because it keeps us objective and disciplined.  We use this methodology and advise our clients to do the same.  Emotions are our enemies in investing. 

It is important to understand that our Risk Odometer is not designed to anticipate small to medium corrections, typically those in the 5-15% range.  Instead, it monitors for conditions which have typically preceded larger corrections.  We believe trying to anticipate small to medium corrections sounds attractive but more often results in lost opportunity than savings.

The Equity Market Risk Odometer is our guide for judging risk in the equity market.  It is used as a guide for investment decisions in our proprietary investment strategies.  It is composed of various indicators based on leading economic indicators, earnings, technical price action, breadth, and volatility.  Its score can range from +5 to -5.  Readings greater than one are positive and readings less than or equal to zero are negative.
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^{This information does not have regard to the specific investment objectives, financial situation and the needs of any specific person who may view this information.  Statements, opinions, and forecasts made represent a particular observation and assessment of the market environment at a specific point in time and are not intended to be a forecast of future events or a guarantee of future results.  Statements regarding future prospects may not be realized and may differ materially from actual events or results.  Past performance is not indicative of future performance.}

^{FC Wealth Solutions and its representatives do not provide legal or tax advice.  You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.}

^{Michael Fickell is an investment advisor representative of FC Wealth Solutions}

^{Securities and investment advisory services offered through FC Wealth Solutions, a registered investment advisor.}

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