HOW IS ALL THIS GOING TO TURN OUT? | Crouch Connection | May 2025

MAY 2025

  HOW IS ALL THIS GOING TO TURN OUT?

It’s been another month of wild headlines, shifting markets, and enough tariff talk to last us a lifetime. But underneath the noise, there is still a lot of strength in this economy, and we continue to stay focused on fundamentals. I wanted to share a few things I have been keeping an eye on.

Strong Companies Still Getting the Job Done

  Despite ongoing noise from tariff-related headlines, 78% of S&P 500 companies have beaten earnings expectations this quarter according to an article by Linda Duessel of Federated Hermes – a sign that corporate fundamentals remain resilient. That is no small feat with all this uncertainty, and it fits right into our approach – investing in solid businesses with real staying power, not chasing the latest hype.  

The Labor Market Defies Gravity

April hiring numbers again beat expectations, with 177,000 new jobs reported – demonstrating that the feared slowdown in employment has not arrived. While some revisions slightly softened in earlier months, the labor market remains healthy.

The Consumer Keeps Carrying the Torch

Consumer resilience is the backbone of the U.S. economy – and it has not buckled. Retail data shows consumers are still spending. As Ed Yardini once put it: “Americans shop when they are happy and, if anything, they shop even more when they are sad. As long as they are employed, consumers will shop.”

Capital Spending in AI: Still Full Speed Ahead

Worried about a slowdown in innovation? Capital expenditures in artificial intelligence remain strong, reinforcing our investment thesis in secular growth trends and best-in-class companies with strong balance sheets.

Policy Tailwinds on the Horizon

Linda Duessel, senior equity strategist of Federated Hermes, in my opinion one of the best all-around market strategists out there, this week offered encouraging signs of progress on multiple fronts:

·      Deregulation efforts are accelerating across more the 400 agencies.

·      A new federal budget is likely to pass by July.

·      Oil prices are declining, which should help consumers and businesses alike.

·      And, promisingly, China trade negotiations appear to be thawing.

Our Strategy: Strength in Uncertainty

We have always emphasized owning the best-in-class companies with durable growth drivers. The recent market environment – a news driven, high-uncertainty climate – only strengthens that approach. As volatility picks up, the strongest firms tend to consolidate their lead. Tom Taylor, CEO of flooring retailer Floor & Décor, commented on the impact of tariffs in his latest earnings report:

“We have made really good progress in diversifying outside of China. And as we said, by the end of the fourth quarter, we anticipate our receipts (from China) to be down to the mid-single digit range…from, if you go back to 2017…50% of our sales were coming out of China.”

That shows how well-run companies can adapt to changing conditions, even conditions as volatile as our recent experience.

As always, we appreciate your trust and remain committed to navigating these markets with discipline and diligence. Please do not hesitate to reach out if you would like to review your plan or discuss new opportunities.

Best Regards,

Dave Crouch

CEO & Chief Investment Officer

Aspen Grove Asset Management

Buffett Quote:

“The big money is not in the buying or the selling, but in the waiting.”

― Charles T. Munger (Buffett’s Partner) 

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