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June 12, 2025 – Despite a resilient stock market grinding near all-time highs, a fresh wave of geopolitical risk and fiscal policy uncertainty is creating headwinds. A chorus of Wall Street’s most respected investors is sounding the alarm, warning of dangerously high valuations, an unsustainable U.S. debt burden, and the rising probability of an economic slowdown.

//  by Tower Bridge Advisors

A Market That Refuses to Quit
Despite a drumbeat of anxieties, the stock market has been on a remarkable run, continuing its relentless grind higher and hovering just shy of all-time highs. It’s a classic bull-market climb, but this week, the ascent was checked by a fresh wave of geopolitical jitters. Renewed tensions in the Middle East, sparked by reports of the U.S. preparing for potential embassy evacuations in Iran, sent a ripple of caution through the markets.

This predictable flight to safety saw investors pile into Treasuries, holding the 10-year yield near 4.4%, while the U.S. dollar softened. In a tell-tale sign of market anxiety, WTI crude oil surged nearly 5% to $68 a barrel, a clear signal that traders are pricing in a higher risk premium. This geopolitical flare-up momentarily overshadowed a tentative trade truce between the U.S. and China, and a cooler-than-expected inflation report—two pieces of news that would typically fuel a rally. It’s a market caught in a tug-of-war between positive economic signals and ever-present global risks.

A Roundtable of Titans: The Case for Caution
While the market’s resilience is impressive, some of the sharpest minds on Wall Street are sounding the alarm. I believe it’s crucial to hear their perspective.

J.P. Morgan CEO Jamie Dimon, a bellwether for the health of the economy, is skeptical of the “soft landing” narrative. He warns that the real numbers could soon deteriorate, with unemployment ticking up and inflation proving stubborn. It’s a reminder to look past the headlines and focus on the underlying economic currents.

Legendary bond guru Jeffrey Gundlach is ringing an even louder bell, calling America’s staggering $37 trillion debt burden “untenable.” He makes a powerful point: for the first time in recent memory, both stocks and long-term Treasury bonds sold off together this spring. This is a seismic shift, suggesting that foreign investors, who have funded our deficits for decades, may be losing their appetite for U.S. debt. This isn’t just a market call—it’s a warning about the structural integrity of the U.S. economy.

Veteran investor Leon Cooperman is focused on valuations, which he sees as dangerously high. With the S&P 500 trading at a P/E ratio of 22, he argues the market is priced for a perfect future that is far from certain. He sees a day of reckoning ahead, especially if interest rates move higher as he predicts. I would add this observation to Mr. Cooperman’s comments, the market is more expensive today than it was before the spring selloff because corporate earnings forecasts for 2025 have continued to fall, yet stock prices have bounced back to pre-selloff highs.

Steve Cohen, an investor renowned for his ability to navigate market cycles, puts the odds of a recession at 45%. He describes the market as “toppy” and believes the “best gains have been had.” He’s preparing for a period of sideways, choppy action and wouldn’t be surprised by a significant correction.

Finally, Ray Dalio, the famed founder of the world’s largest hedge fund, offers a blunt warning: “I think we should be afraid of the bond market.” He fears a “death spiral” where rising interest rates and massive deficits feed on each other, creating a shock potentially more severe than the 2008 financial crisis.

Balancing Caution and Optimism is the Prudent Approach
Markets have a habit of taking the escalator up and the elevator down. The long, steady climbs can lull us into complacency, but they often mask the growth of systemic risks that are suddenly exposed by an unexpected event. Today, we are witnessing incredible technological advancements and economic progress, but we cannot ignore the fault lines forming beneath the surface.

Our job is to navigate this complex landscape with discipline. While we acknowledge the positive developments in inflation and trade, the chorus of caution from these seasoned market observers cannot be ignored. The combination of geopolitical flashpoints, stretched valuations, and an unsustainable debt trajectory creates a challenging environment. Now, more than ever, a disciplined, diversified, and risk-aware approach to managing your portfolio is not just a best practice—it is an absolute necessity.

Actor Dave Franco turns 40 today, sportscaster Marv Albert turns 84, former baseball star Hideki Matsui turns 51, and actor Timothy Busfield is 68.

Christopher Gildea 610-260-2235

Tower Bridge Advisors manages over $1.3 Billion for individuals, families and select institutions with $1 Million or more of investable assets. We build portfolios of individual securities customized for each client's specific goals and objectives. Contact Nick Filippo (610-260-2222, nfilippo@towerbridgeadvisors.com) to learn more or to set up a complimentary portfolio review.

# – This security is owned by the author of this report or accounts under his management at Tower Bridge Advisors.

Additional information on companies in this report is available on request. This report is not a complete analysis of every material fact representing company, industry or security mentioned herein. This firm or its officers, stockholders, employees and clients, in the normal course of business, may have or acquire a position including options, if any, in the securities mentioned. This communication shall not be deemed to constitute an offer, or solicitation on our part with respect to the sale or purchase of any securities. The information above has been obtained from sources believed reliable, but is not necessarily complete and is not guaranteed. This report is prepared for general information only. It does not have regard to the specific investment objectives, financial situation or the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed in this report and should understand that statements regarding future prospects may not be realized. Opinions are subject to change without notice.

Filed Under: Market Commentary

Previous Post: « June 9, 2025 – This week the focus will be on trade negotiations with China and the progress getting the Big Beautiful Bill on the President’s desk. The former is likely to be complicated and slow moving, but any movement in the right direction should keep investors happy. As for the legislation, it will be inflationary and worrisome long-term if one focuses on future debt service requirements. But this market has heard wolf cried too often to care until either interest rates spike higher or the dollar comes under renewed attack.
Next Post: June 16, 2025 – While many in Congress fret that the reconciliation bill now before the Senate raises deficits and ultimately leads to economic disaster if left unchecked in the future, the focus will be on now. That means lower taxes, faster growth and higher earnings in the short-run as long as the bond market doesn’t rebel. Only a true crisis is likely to elicit fiscal austerity. That won’t happen before the current bill, slightly modified, will pass. Wall Street will embrace it because it always embraces stimulative policy, at least until the side effects kick in. Markets are starting to replace complacency with euphoria. That can last many months. But as we learned from the SPAC debacle in 2021, it won’t last forever. »

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  • August 25, 2025 – The Fed’s shift in policy, as stated by Jerome Powell last Friday, moves away from a focus on inflation and more toward insuring full employment. Such a shift suggests more short-term rate cuts and a willingness to tolerate some inflation as long as it stays below 3%. A willingness to tolerate a bit more inflation may sound innocuous but it could lead to unanchored long-term inflation expectations and keep 10-year Treasury yields elevated. If so, the euphoria expressed in Friday’s market rally may have been a bit too exuberant.
  • August 21, 2025 – This Friday we will receive commentary from the Federal Reserve after its annual gathering in Jackson Hole, Wyoming. The central-bank gathering has sometimes been a venue for marking shifts in Fed policy. Last year Fed Chairman Powell used it to signal that rate cuts were coming, and followed through the next month. The Snake River, which runs through Jackson Hole, provides an apt backdrop for the Fed’s meeting where the waters can be turbulent and winding. In the meantime, technology stocks have retreated this week and a number of consumer-focused companies have provided both encouraging and uncertain signals.
  • August 18, 2025 – The noise of front-page news doesn’t seem to coincide with record stock prices. War, ICE raids, violent storms and tariffs may be the topics of the Sunday talk shows, but the stock market cares more about earnings and interest rates. Earnings are rising and interest rates are stable. Will that continue? Earnings growth should slow a bit as the full impact of tariffs hits. While the Fed Funds rates should start to decline this fall, markets will focus on changes in the 10-year Treasury yield more than the Fed Funds rate.
  • August 14, 2025 – The market is increasingly divided, with a strong AI-driven rally on one side and a weakening consumer economy on the other. This contradiction creates a significant risk of a sudden economic downturn or stagflation, as soaring tech valuations may be unsustainable without broader economic support.
  • August 11, 2025 – There is an expression that rationality requires separating the wheat from the chaff. In Wall Street, to be a successful investor, it is necessary to separate hype from reality. That is particularly important as speculative fever rises. Some of the hype is real; some is nonsense. Don’t simply follow consensus. As investors you invest in companies, not hype, not single products, hot today but cold as ice tomorrow. Think rationally and you will be a successful investor.
  • August 7, 2025 – Football is considered a game of inches. Consider the “Brotherly Shove,” popularized by the Philadelphia Eagles, which is a play used to gain very short yardage and advance down the field. In order to counter this offense, defensive opponents have employed various tactics, but without much success. Two consumer-focused companies, McDonalds and Disney, recently reported quarterly earnings, and are slugging it out on the field as consumer preferences change and these companies try to adapt.
  • August 4, 2025 – Confusing economic reports on GDP and the labor market can be decoded to show that growth in the first half of 2025 was muted while inflation was well contained before the full impact of tariffs. If those data trends continue, look for one to three 25-basis point rate cuts before the end of 2025. That outlook may change with subsequent data but it is increasingly clear that an economy that has proven so resilient may need a bit more help to offset the impact of tariffs and significantly lower population growth.
  • July 31, 2025 – The U.S. economy demonstrated a strong rebound in Q2 2025 with 3.0% GDP growth. Tech giants Microsoft and Meta significantly exceeded earnings expectations, fueled by the ongoing AI boom and robust cloud and digital advertising performance. While the current AI-driven market rally shows parallels to the dot-com era’s speculative growth, today’s tech giants exhibit stronger financial fundamentals than many during the earlier boom. Investors should balance the allure of high growth with valuation discipline and diversification to mitigate risks in this dynamic market.
  • July 28, 2025 – The world looks pretty healthy but rising speculation elevates our concern. When the amount of corporate money flowing into bitcoin is twice the amount raised in initial public offerings to date, that gets our attention. With that said the focus this week will be on earnings and a slew of economic data on inflation, interest rates, and employment, all of which can be market moving.
  • July 24, 2025 – Like the game of Go in China, or Igo in Japan, the evolving tariff negotiations between the U.S. and our trading partners are creating a constantly changing gameboard and continue to dominate the news cycle. Markets reacted positively yesterday to indications that Japan’s tariffs would be capped at 15%, less than the 25% expected, and a potential deal with the European Union. Tariffs are already having an impact on corporate earnings and outlooks, although equity markets continue to gain ground.

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