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March 27, 2025 – A couple of weeks ago, NCAA college basketball March Madness was just getting underway. After several surprise upsets and some chaos among millions of brackets, we now know which teams are in the Sweet Sixteen final games. Over the past 40 years, only three men’s teams have had a long streak of winning years making it into the finals. As in the stock market, last year’s darlings may not be this year’s victors, but good companies can reinvent themselves and market volatility can work both ways.

//  by Tower Bridge Advisors

More March Madness

Tariff policy has been dominating headlines and impacting market volatility this year. The Magnificent 7 technology stocks had rebounded the last few days, but fell 3% yesterday on a day in which the Nasdaq declined 2%. This volatility has been mostly due to the potential inflationary effects of new tariffs and concerns regarding retaliatory tariffs. Whether tariffs are threatened or implemented, we are now starting to see corollary impacts on business decisions. Yesterday we found out that U.S. orders for durable goods, items meant to last three years or more, (toasters, cars, aircraft), increased by 0.9% in February from the prior month. Expectations were for durable goods orders to fall by about 1%. This comes after an upwardly revised 3.3% increase in January. The rise in durable goods orders would normally be considered very favorable, but was most likely a result of front-loading purchases ahead of tariffs taking effect.

In the durable goods report, electrical equipment, appliances, and components orders jumped 2.0%.
Orders for machinery climbed 0.2% while those for transportation equipment increased 1.5%. Transportation orders were lifted by a 4.0% rebound in demand for motor vehicles and parts and a 9.3% gain in defense aircraft and parts orders. This was offset by a 5.0% decline in commercial aircraft orders. More telling, however, is that non-defense capital goods orders excluding aircraft, which is a proxy for business spending plans, dropped 0.3% after an upwardly revised 0.9% surge in January. Capital spending outside of data centers has yet to rebound steadily.

New 25% tariffs on auto imports were announced yesterday afternoon, becoming effective April 2nd. Tariffs will not apply to auto parts made in the U.S. Previously, the administration had imposed a 20% duty on all imports from China and 25% on goods from Canada and Mexico that are not compliant with a North American trade agreement. In addition, 25% tariffs on steel and aluminum from Canada, Mexico, the European Union and other countries have been fully restored. No wonder stock and bond markets have been moving in fits and starts.

Finally, the Finals

It took almost a decade, but someone finally won Warren Buffett’s $1 million NCAA Tournament bracket challenge. The winning employee took home the grand prize after picking 31 of the 32 first-round games correctly. Buffett’s bracket challenge is not available to everyone as only employees of Berkshire Hathaway# can enter. Perhaps the winner can purchase one share of Berkshire Hathaway Class A shares which go for about $800,000 per share.

Warren Buffett has been holding onto extra cash looking for better investment opportunities and valuations as the market corrects. Market corrections are a normal part of investing cycles, and the typical drawdown in any given year has averaged about 15% over the last twenty years on the way to a 10% average annual gain with dividends. The S&P 500 has already recovered from a 10% correction from its peak in mid-March, and is down about 2.9% year to date. While technology stocks dominated returns last year, so far in 2025, Technology stocks are down 8%, while the Energy sector is up 9%, Healthcare is up 6% and Financials are up about 4%.

The yield on the 10-year treasury has fallen from 4.8% early in the year to 4.2%, but has recently risen toward 4.4%. 30-year mortgage rates have remained relatively high at around 6.8%, cramping home buying activity somewhat. Looking ahead, interest-rate futures currently imply that the chances of the Fed resuming rate cuts at its May policy meeting are only 14%, so markets may not get much help from the Fed until later in the year. That will depend upon the path of inflation and unemployment.

This is a different kind of March Madness than we are used to. Markets do not like uncertainty, but have even more trouble with moving targets. April 2nd could mark an intermediate high-water mark for uncertainty as other levies are introduced that may not be as severe as previously telegraphed. Equity futures are somewhat directionless this morning awaiting a report on initial jobless claims and pending home sales. Volatility may work in both directions as the year progresses.

Talented entertainers born this day include Mariah Carey who turns 56, and Fergie who turns 50. It is not fiction that Quentin Tarantino also turns 62.

Christopher Crooks, CFA®, CFP® 610-260-2219

 

Tower Bridge Advisors manages over $1.5 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: « December 19, 2024 – The Federal Reserve lowered its key interest rate by a quarter percentage point yesterday, but signaled that only two more rate cuts may be coming in 2025 instead of the four cuts widely expected. Fed Chairman Powell said it is like “driving on a foggy night or walking into a dark room full of furniture: you slow down, you go less quickly.” That hawkish and more uncertain tone was not well received by markets. While the stock market is typically volatile on Fed decision days, the 10-year yield backed up to 4.5% and stocks dropped about 3% following the Fed’s remarks. Markets have been strongly positive this year, but a pause on this news provides a chance to focus on better valuations. Stock market futures are indicated positively this morning.
Next Post: May 30, 2025 – Amidst a volatile market, significant economic risks such as high interest rates and trade policy are creating a tense environment where stock market gains may be capped. Key sectors, like housing, are already showing signs of strain from elevated rates, while the bond market remains turbulent. Therefore, a diversified and defensive investment strategy is recommended, emphasizing fundamental analysis and valuation discipline for stocks while holding high-quality bonds to navigate the expected volatility. »

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  • September 23, 2026 – With safe bonds paying 5%, ordinary companies are struggling to look attractive—leaving only the booming AI giants able to keep up with the math, even as soaring expectations and heavy spending create new risks of their own.
  • September 16, 2026 – Today is decision day for the Federal Reserve. A small interest rate hike is mostly discounted in expectations, but it may be more of a surprise if we do not get one. Energy prices and global bond yields have been marching higher over the last few weeks. Coupled with concerns surrounding an AI spending slowdown, it is no wonder that stocks have taken it on the chin recently.
  • September 9, 2026 – Back-to-school season finds investors studying a shifting market, a resilient economy, and the next chapter of AI. What does the market’s report card reveal—and why might patience earn the highest marks?
  • September 2, 2026 – New Federal Reserve Chairman Kevin Warsh noted recently that he wants to avoid a “Hall of Mirrors” problem. That is, if markets rely on the Fed’s guidance, and the Fed relies on market prices to adjust policies, then the Fed is more likely to be blinded to new developments. Energy prices and global bond yields are mirroring each other as they move higher, and may force a policy response from the Fed as the year progresses.
  • August 26, 2026 – Washington’s attempt to artificially hold down interest rates can’t hide a $40 trillion debt, and if market reality eventually pushes rates higher, high-risk and speculative investments will suffer the most painful losses.
  • August 19, 2026 – This week we received data on the housing market as well as earnings reports from major home improvement retailers. Higher mortgage rates and higher input costs are impacting buyers, builders, and the construction materials providers along the supply chain, leaving the housing market in a sideways holding pattern. Like Homer’s Odyssey, housing and equity markets have been battling a series of obstacles all year on the path to new highs.
  • August 12, 2026 – Big Tech’s $730 billion annual AI infrastructure sprint faces potential headwinds from severe power grid bottlenecks and lagging software monetization, making disciplined, risk-budgeted portfolio exposure a prudent strategy to capture long-term secular growth while buffering against a possible sharp correction.
  • August 5, 2026 – Stock markets rebounded this week on lower oil prices coming on the heels of a temporary cessation of Middle East tensions. Oil prices dropped about 10% this week, and corporate profits have been coming through stronger than expected. SpaceX reported its first quarter as a public company, and equity markets are once again rocketing to new all-time highs.
  • July 29, 2026 – As overstretched AI valuations fracture against a hawkish Federal Reserve and mounting consumer credit strain, the rotation out of tech into value equities proves that single-sector concentration is risky.
  • July 22, 2026 – The stock market is behaving like a duck swimming feverishly underwater, but on the surface seems to be gliding along. We have seen rapid rotation between sectors as investors try to decipher moves in oil prices, inflation, interest rates and earnings. Major bank earnings came in ahead of expectations this quarter, and the consumer appears to be maintaining strong spending levels. However, technology stocks have risen and fallen like the tides. We will gain more clarity from some of the large AI spenders this week.

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