Forty "W"ritings

Over the past several months, we’ve explored the transformative potential of artificial intelligence from multiple angles. First, we laid the groundwork by describing what AI is and how it may be poised to reshape the way we work and live. We then turned our focus to where AI is already showing up in markets and portfolios, highlighting key inputs in the buildout and the best ways for investors to gain exposure to this emerging investment theme. Most recently, we took a step back to consider AI through a macroeconomic lens, comparing it to past waves of innovation and examining its potentially transformative impact on labor markets, GDP, and productivity. Now, as AI adoption continues to rapidly accelerate, we shift our attention to the current market environment.

This October, Markets extended their gains once again, led by continued strength in the technology sector. The Federal Reserve delivered another 25 basis point rate cut, while the ongoing government shutdown delayed several key economic reports. Treasury yields moved lower across most of the curve, while cryptocurrencies struggled to maintain momentum.

Artificial intelligence represents the next great leap, and it’s unlike anything before. Why? Because intelligence has always been the engine of innovation. Now, we’re creating systems that can amplify or even outperform human intelligence in specific tasks. That means decades-long innovation cycles could compress into years or even months. Read more in Part Three of our series.

“There are decades when nothing happens, and there are days when decades happen.” That timeless adage feels especially apt in 2025. Since January, we’ve witnessed sweeping developments in tariffs, tax policy, immigration, and geopolitics - each significant on its own, but together, they’ve compressed the pace of change into mere days and weeks. For investors, it has been both exhilarating and exhausting. We’ll unpack the key themes shaping the current landscape, separate signal from noise, and discuss how to remain grounded when the world feels anything but.

US small cap stocks rode the wave of investor's desire to expand outside of the mega-cap tech stocks, the ability to continue the ride will depend on economic data that will come in the next two months. If the economy holds strong, then small caps may be able to continue their ride.

In July, US equity markets had a positive month overall, with large-cap stocks (S&P 500 - SPY) slightly outperforming small-caps (Russell 2000). On the international front developed markets (IEFA) were negative after a stellar first half of the year. Emerging markets (EEM) proved relatively resilient compared to Europe and Japan, even as global trade and growth concerns hung over markets. Core aggregate bonds (as shown by AGG) posted a modest loss of -0.17%, pressured by rising yields for most of the month before a late rally. High-yield bonds outperformed, benefiting from a supportive risk environment and less rate sensitivity.