Forty "W"ritings

As we navigate through the economic landscape of 2025, investors face a complex array of challenges that suggest the possibility of continued volatility ahead. The disconnect between sentiment indicators and economic data, ongoing trade policy uncertainty, potential shifts in global investment flows, and unresolved fiscal policy questions all represent significant headwinds that may lead to market disruptions in the short term. It's important to emphasize that these are possibilities rather than certainties, but prudent investors should consider these factors in their strategic planning.

Concerns about a potential economic slowdown are rising, fiscal policy shifts and government spending cuts introduce some contractionary pressures however the near-term economic picture remains broadly positive. Tariff policies alone are unlikely to push the economy into recession. So far in 2025, diversification has re-emerged as a key with both bonds and international stocks outperforming US equities.

In the world of what matters for investor returns who is in the White House has little impact. Historically, US stocks have risen regardless of who is in office and that is why it's important to not let your political emotions impact your investment strategy.

In August, equity returns started with a thud but clawed back losses by the end of the month. Softness in the labor market increased concerns about a broader slow-down in the economy causing some to speculate that the Fed may reduce rates at a quicker pace. As a result, treasury yields declined which was a positive for bond investors.