It is not hyperbole to suggest that we are in one of the most critical periods for prudent capital management in our professional lifetimes, with new obstacles and opportunities emerging from a rapidly shifting landscape both abroad and at home.

Entering the year, the theme of our 2025 Investment Outlook was “Navigating Policy Change Amidst Fully Valued Markets.” In the six months since, there has been no shortage of seismic changes in policy from the incoming administration, particularly around trade agreements, budgetary considerations, and executive fiats. The resultant volatility in financial markets and the impact on asset prices and client portfolios was certainly anticipated in this space and has, by and large, been successfully navigated through prudent portfolio management. In this commentary, we will soberly address the central geopolitical and legislative concerns that influence markets, command our attention, and keep us up at night in the hope that our clients can rest more easily.

Interesting times, indeed. While political shockwaves across the globe are changing the trajectory of nations and shifting the outlooks for international economies, investment markets in the US are narrowly fixated on one simple question: When will we see interest rate cuts?

If ever there was a period that demonstrated how the stock market interpreted the phenomenon of an economic cycle, it was the past two calendar years. Largely driven by interest rate policy from our Federal Reserve, both stocks and bonds have retraced and advanced, gaining little ground since the end of 2021. But while investment performance may have been largely muted, the economic and geopolitical environment underpinning financial markets has been tumultuous. In this commentary, we will explore the lasting impacts of the pandemic era, where we currently sit in the economic cycle, and the implications for portfolio positioning going forward.