Ben’s quarterly review highlights big wins for gold and small-cap stocks, record highs in the markets, and a mix of reasons to stay cautious — and optimistic. With strong earnings, low sentiment, and Fed support, we see plenty of opportunity ahead for long-term investors.

August market recap: Stocks, bonds, and international markets rise as investors anticipate Fed rate cuts. Learn how liquidity, government debt, and market shifts impact portfolios and why diversification and active management matter.

July was generally positive for the stock market, with tech and energy leading the way, but a weaker jobs report late in the month raised new questions about the economy. The outlook is still cautiously optimistic, though inflation, hiring slowdowns, and global events mean it’s wise to stay diversified.

As we pass the halfway mark of 2025, we want to share a few key takeaways from our latest investment market update. We’ve seen strong performance in many areas, but also signs that call for thoughtful rebalancing as we look ahead.

Markets Warm with the Weather – May brought a more constructive tone as trade tensions eased, lifting sentiment and encouraging a rebound in risk assets.

Fixed Income Buyers Remain Cold – While equities priced in potential fiscal stimulus, bond markets focused on long-term deficit risks, pushing yields higher across most of the curve.

Fed Independence Under the Spotlight – The Fed has held rates steady this year while calls from the Executive Branch grow louder to ease policy. Investors wonder yet again how independent the Fed truly remains.

Fed Structure Limits Political Control – Fed governors serve staggered 14-year terms and require Senate confirmation, but average tenure is only about seven years. While this structure gives presidents some influence, it falls short of control. This is especially true given that the full voting Federal Open Market Committee (FOMC) includes five regional presidents unaffiliated with the Executive Branch.

Imperfect Independence – Despite renewed debate around Fed leadership and independence, there is no current evidence to suggest investors should shift positioning. The Fed remains an imperfect yet vital anchor for monetary stability.

Tariffs have commanded much of our mental bandwidth recently, but several other forces remain equally, if not more, critical to market outcomes:

1. Market Conditions

2. Monetary Policy

3. Fiscal Policy

We believe our positioning coming into the year remains as relevant today as it did then. Fragility, Durability and the Age of Alpha help frame our positioning to weather both uncertainty and elevated volatility.

• Sweeping Import Tariffs Implemented – Beginning April 5, a 10% universal tariff will apply to all imported goods, with an additional tariff for countries running a trade deficit with the U.S. starting April 7. This move signals a broad protectionist shift in U.S. trade policy 

• Existing Tariffs Remain Intact – The new tariffs do not replace prior trade restrictions, such as the 2018 China tariffs, compounding the overall cost of imports for businesses and consumers. 

• Key Exemptions for North America & Select Sectors – Canada, Mexico, and certain industries (e.g., pharmaceuticals, autos) are exempt. 

• Historic Economic Impact – If fully implemented, these tariffs would increase the U.S. effective tariff rate from 2% to 20%, generating ~$640 billion in revenue, comparable to doubling corporate tax revenue. If we called a tariff a tax, this would represent the largest tax increase in modern U.S. history.