IN-DEPTH ANALYSIS AND INSIGHTS DELIVERED MONTHLY

October has, so far, lived up to its spooky season moniker as markets fret over a barrage of bad news on multiple fronts. Yet equities continue to be resilient in the face of an unending stream of bad news. To summarize the macro environment: it’s ugly.
• First Brands & Tricolor bankruptcies shaking the banking and private credit markets. Are we looking at a looming banking crisis and deluge of bad loans?
• JP Morgan CEO Jamie Dimon warning on risks in private credit, stating glibly “when you see one cockroach there are probably more.”
• Government has been shut down for 20+ days with no end in sight. Most government employees have already missed one paycheck 10/15, and 10/31 looking awfully suspect. It’s estimated between 50-65% of the USA lives paycheck to paycheck, which could have a large impact on consumer spending.
• Trade war with China moved from a simmer back to a boil. Tariff threats abound.
• Argentina needed a $20B+ lifeline from the USA to stay afloat with its currency down -30% this year sparking concerns on possible debt defaults and contagion across Latin America.

Learn More from October 2025 Brief – The Return of Volatility

With Labor Day officially wrapping up summer, and our attention turning to fall activities such as football and cooler weather, so too the market may be looking to turn. Many US markets are trading at, or near, record highs leaving little wiggle room for bad news or disruption of any sort. Historically, September is the weakest seasonal month of the year. But before you start pulling the eject lever on the bull market, take a step back and realize any sell-off we have is likely to be short lived. However, I would be prepared for a -5% to -7% pullback. Seasonality tells us to be ready for a drop. The last 5 years, the S&P 500 has averaged a -4.17% return in September – by far the weakest month on record with it being negative 4 of the last 5 years. Over 10 years, September has returned -1.96% with 6 out of 10 years negative, and over 20 years it’s -0.65%. But if you look ahead at what the winter may bring, November is the strongest month of the year and historically we have rallied out the year. Over the last 20 years, October, November, and December all average positive returns, and November-April is the strongest 6-month period in the year.

Learn More from September 2025 Brief – A Fall Fall?

When travelling the choice of where to eat lunch is often driven by convenience and availability. The sandwich chain Subway is often a satisfactory stop – typically clean, quick, and you know what you will get. The food is not inspiring but it’s acceptable. But does anyone really feel excited about stopping at Subway for lunch? Not particularly. It’s an easy and fast choice, one that everyone is ok with but, honestly, nobody is writing home about. That is the way we feel about this economy. The data is fine, overall health is acceptable and palatable, but nothing really pops out as exciting or strong about it. Broad based, the economy feels ok but uninspired, weathering tariffs but not taking off either. The quintessential Subway sandwich economy – unremarkable.

Learn More from August 2025 Brief – The Subway Sandwich Economy

Tariff war 2.0 is right around the corner; on August 1st, blanket tariffs on imports from at least 14 countries are set to take place absent new trade deals. Markets are starting to get a bit worried that this will play out like April’s Liberation Day announcements on 4/2. Back in April, the S&P 500 fell over -11% in 3 days before a 90-day reprieve for negotiation was announced. We are back into a similar situation with August 1st now the deadline to watch and many proposed tariff rates actually higher than the 4/2 initial rates.

Learn More from July 2025 Brief – USA vs. Everybody Else

Artificial Intelligence is proving it will change the world, but one area AI cannot address is our emotions and behaviors as humans. “Robo-advisors” first popped up following the 2008 financial crisis and sought to leverage AI to offer low-cost financial advice and investment management. However, many people are uncomfortable with the idea of a robot advising them about something as important to their livelihood as their money. And like it or not, money is emotional.

Learn More from June 2025 Brief – Managing Your Money and Your Emotions

Tariffs have become the primary talking point when it comes to the economy and investment strategy in 2025. With news constantly shifting over which deals are on, or off, the table, one thing seems certain; foreign goods have been getting more expensive. As the hot summer weather approaches, it’s worth considering how these tariffs may impact something that helps you keep cool and entertained: your beverage of choice. Whether you’re lounging on a beach or hiding indoors with the AC on full blast, you might find your favorite CH₃CH₂OH-infused drink costing more this summer. One way to avoid many of these rising costs? Reach for good ol’ American-made products on the shelf.

Learn More from May 2025 Brief – Red, White, & Brew

The tariff shock continues to reverberate throughout the market with the Trump administration continuing to defend its actions, focusing on, “sometimes you have to take medicine” as they seek to rebalance trade deficits and re-shore manufacturing and production back to the USA. This is a rapidly developing situation that is likely to see further downside until we get some negotiations. Tariffs are likely here to stay, even if they are rolled back less onerous.

Learn More from April 2025 Market Brief – Anatomy of a Bear

With the tariff war heating up from a simmer to a boil, it’s a good time to take a step back and look at how the world has shifted in the last few decades. The trend of de-globalization and onshoring (or near-shoring) has been accelerating since the global financial crisis and moving even faster in a post-COVID world. The pandemic showed just how vulnerable far-flung supply chains can be to disruption, which caused many companies to begin building in redundancies and bringing manufacturing closer to home. We would argue that peak global trade happened in the early 2000’s and since then, the world has been shifting away from free global trade.

Learn More from March 2025 Market Brief – Divergent Deglobalization

As we kick off February, markets are weathering multiple assaults on their bull run. We should be rejoicing a pickup in profit growth across multiple sectors with the S&P 500 on pace for a 10% growth in profits vs. 7% anticipated. But earnings are taking a backseat to politics as the Tariff War 2.0 began in full 2/1/25. The opening salvos of Tariff War 2.0 began against Canada and Mexico with a 25% tariff on all imports from Mexico and Canada, exempting energy resources from Canada at 10%. China will also see a 10% tariff on all imports. Importantly, the US government is also suspending the “de-minimis” exemption for packages and shipments under $800 addressed to individuals. The de-minimis exemption has been a huge driver of global e-commerce – think Temu, Shein, or baubles from Esty international sellers. The point of the de-minimis exemption was to allow insignificant and small items to be disregarded for regulations, duties, or taxes in the context of international trade. Suspending this exemption makes international e-commerce exponentially more difficult and expensive.

Learn More from February 2025 Market Brief – The Uncertainty Premium

Markets are reacting sharply to a new potential threat: what if the USA is not the leader in AI technology and others have figured out how to do it better and more efficiently? That potential game-changing question was brought up by DeepSeek, a Chinese AI app that was recently launched in the US. DeepSeek is majority owned by Lian Wenfeng’s quant AI focused Hedge Fund, High-Flyer. They announced the development of DeepSeek in March 2023 and by all measures have exceeded expectations. This app was developed as a response to OpenAI’s ChatGPT, which launched in late 2022 and caused a large scramble to keep up by Chinese tech firms. DeepSeek is like ChatGPT but with a few noticeable differentiators. DeepSeek develops open-sourced free AI models, which means multiple developers can inspect and improve on the software. Their first opensource AI model R1 competes with ChatGPT in areas such as reasoning and code generation and has become the #1 download in the iPhone app store as an AI assistant App. In a very short time (days!) they have overtaken ChatGPT as the top-rated free app. China is flexing its AI muscles this week, and US tech companies seem to be on the back foot.

Learn More from January 2025 Market Brief – Game Changer?