The alternative rock band R.E.M. went from Athens, Georgia, to the top of the world in 1991 with the hit song “Losing My Religion.” The provocative video won a Grammy and several MTV music video awards. The song and sentiment are still relevant today as demonstrated by the over 1 billion views on YouTube.
The song is not about religion. R.E.M.’s frontman Michael Stipe explained that “losing my religion” was a southern phrase describing the feeling of being at the end of one’s rope or losing faith. The message is perfect for discussing markets in 2025. (Honorable mentions in the R.E.M. catalog include “It’s the End of the World as We Know It” and “Everybody Hurts.”)
Market Uncertainty
Investors often point to uncertainty as a reason for market declines. We think that’s lazy because uncertainty is always a part of investing. We admit the level of fog today is thicker than the normal haze. According to the Global Economic Uncertainty Index, the uncertainty is higher today than during COVID-19. The March 2020 uncertainty peak was the bottom of the stock market decline and the start of a +50% rally. Uncertainty can be a good time to buy. We are not suggesting this is peak uncertainty or that a 50% rally is in store. We are simply looking deeper at our faith in the research.
“Try, cry, fly, try”
The initial tariffs imposed by the executive branch were so severe that many Wall Street analysts panicked. Extreme assumptions are being made about the possible impacts, such as:
There have already been signs of slowdown in certain industries, but it is possible tariffs will be eased before the real damage is done. It is also possible tariff pain will be offset by tax cuts, deregulation, and technological advances.
Here are two reasons we are not as bearish as the rest of the crowd:
Riding on the optimism above while also considering the 1Q25 earnings reports from mega-cap technology companies, there are some highlights worth noting from the first quarter of 2025:
The impressive net income growth leads to increased spending to further build the AI infrastructure. Below we explore the capital expenditures of the largest companies in the U.S. as a symbol that the economy still has momentum.
These companies are making significant capital expenditures to build out infrastructure:
The $450 billion of capital being spent by just five US companies in 2025 is more money than the total value of the largest company in Europe. (SAP’s total market capitalization is $360 billion.)
The current situation is challenging, but we believe this country and human spirit are resilient. U.S. citizens and companies will adapt and persevere. So far, the data supports this notion, but it may be too early for the effects of tariffs to raise their ugly head.
It is crucial to remain faith-based in the data and not let political or personal biases cloud your judgment.
“Oh life is bigger, it's bigger than you.”
Perhaps the digital revolution and U.S. consumers are bigger than one man.
Lear Investment Management (“LIM”) is a Registered Investment Advisor based in Dallas, Texas and registered with the Securities and Exchange Commission. Registration does not imply a certain level of skills or training. This content is for informational purposes only, contains the observations and opinions of LIM, is not intended to provide investment advice, and should not be relied upon for investment decisions. Past performance is no guarantee of future results and information pertaining to LIM’s processes is subject to change at any time without notice.
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