August 12, 2025

Important: Tax Extension Deadline Approaching!

If you filed for an extension earlier this year, the final deadline to submit your 2024 tax return is Tuesday, October 15th. Please make sure all documents are uploaded and any open items are addressed well before then so we can ensure timely filing.

If you have questions or need to confirm if you’re on extension, please reach out—we’re here to help!

The Markets

U.S. companies have been hitting it out of the park!

Earnings season happens four times every year. It’s the period of time when publicly traded companies report how they performed during the previous quarter. So far, in aggregate, the companies in the Standard & Poor’s (S&P) 500 Index have delivered solid results for the second quarter of 2025. John Butters of FactSet reported:

“Overall, 66% of the companies in the S&P 500 have reported actual results for Q2 2025 to date. Of these companies, 82% have reported actual EPS [earnings per share] above estimates, which is above the 5-year average of 78% and above the 10-year average of 75%. If 82% is the final number for the quarter, it will mark the largest percentage of S&P 500 companies reporting a positive EPS surprise for a quarter since Q3 2021 (also 82%).”

While many U.S. companies had an excellent second quarter, economic clouds are shadowing investor optimism. Martin Baccardax of Barron’s explained:

“Investors are struggling with a contradiction at the heart of the market as stocks move into their toughest months of the year. On the one hand, earnings have been strong. On the other, economic data are showing signs of weakness. How the two variables play out could determine whether the stock market can keep rallying to new highs—or stumbles into an end-of-summer selloff.”

Recent economic data show a softening labor market and weaker consumer spending. (Consumer spending is the primary driver of U.S. economic growth.) In addition, activity in the manufacturing and service sectors slowed. Nazmul Ahasan of Bloomberg reported:

“The Institute for Supply Management’s index of services declined last month to 50.1, below all estimates in a Bloomberg survey of economists. Readings above 50 indicate expansion… The data, released Tuesday, paint a picture of a sluggish service economy wrestling with the fallout of higher tariffs, cautious consumers and [policy] uncertainty… The services sector is by far the largest in the U.S. economy, and has helped drive growth this year while the manufacturing industry contracted for five straight months.”

Last week, the major U.S. stock indexes rallied. The Nasdaq Composite Index closed at a record high, while the Standard & Poor’s 500 Index and Dow Jones Industrial Indexes finished the week close to new highs, reported Amalya Dubrovsky , Brett LoGiurato and Laura Bratton of Yahoo! Finance. U.S. Treasury yields generally moved higher. The 30-year Treasury bond yielding 4.85% at the end of last week.

Data as of 8/8/25	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	2.4%	8.6%	20.1%	15.6%	13.7%	11.8%
Dow Jones Global ex-U.S. Index	2.6	17.6	19.5	10.2	6.5	3.9
10-year Treasury Note (yield only)	4.3	N/A	4.0	2.8	0.6	2.2
Gold (per ounce)	1.4	30.0	40.8	23.9	10.7	12.0
Bloomberg Commodity Index	0.2	2.1	5.8	-4.9	7.3	0.9

Burgernomics: A Look at the Big Mac Index

During the first six months of 2025, the United States dollar delivered its worst performance since 1991. “The U.S. Dollar Index, which measures the value of the greenback against the world’s six most traded currencies, has lost almost 11% of its value…,” reported Valerio Baselli of Morningstar.

The drop in the U.S. dollar’s value hasn’t made as big a difference as some might have expected – at least when it comes to buying burgers abroad.

Since 1986, The Economist has been using the “Big Mac Index” as a lighthearted way to measure the relative value of currencies across the world. In theory, if currency exchange rates are properly aligned, a burger should cost the same no matter where it is purchased. (This is known as purchasing-power parity.) That’s rarely the case, so the index helps identify which countries’ currencies are overvalued or undervalued. They explain:

“Purchasing-power parity suggests that, with a Taiwanese Big Mac costing 78 Taiwanese dollars and an American one $6.01, the currencies’ exchange rate should be the ratio of the two prices. Hence $1 should buy NT$13 [new Taiwan dollars]. In reality, it buys NT$29. The Big Mac index therefore concludes that the Taiwanese dollar is greatly undervalued against the greenback, by some 56%.”

In July 2025, The Economist updated the Index, comparing the price of a burger in the U.S. to the price overseas. (The price of a burger in the United States rose from $5.79 in January to $6.01 in July.) After the decline in the U.S. dollar, currencies in many Asian countries remained significantly undervalued relative to the dollar. For example, a burger in the United States costs:

• 49.8% less in Hong Kong,
• 41.2% less in Japan,
• 41.1% less in Indonesia, and
• 38.5% less in India.

In contrast, that U.S. burger costs:

• 54.7% more in Switzerland,
• 39.0% more in Sweden,
• 36.1% more in the Euro area, and
• 31.1% more in Britain.

Overall, European countries have seen their currencies become more expensive when compared to the U.S. dollar, while currencies in China, Japan, Singapore, South Korea, Taiwan and Vietnam remain undervalued relative to the U.S. dollar. “Most are now even cheaper,” according to The Economist.

Weekly Focus – Think About It

“Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”

—Adam Smith, Philosopher and economist

Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

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