There is an old saying that “there are decades when nothing happens and days when decades happen”. The past month seems to fall into that second category and provides a useful reminder that the economy and markets don’t always move in straight lines. While news headlines generally focus on the more negative factors, the broader picture remains more balanced.
Overall economic growth has continued at a pace in line with long‑term trends and, barring a prolonged spike in energy prices, the risk of recession seems quite low. Moreover, the economy should receive a boost, starting in 2026, from the generous fiscal stimulus contained in the One Big Beautiful Bill Act, and that’s not even to mention the massive investment in infrastructure being made by America’s giant technology companies, as they build out the infrastructure necessary to support the revolution in artificial intelligence.
These substantial positive factors are being at least partially offset by a remarkable array of uncertainties, ranging from the slow growth in job creation, sticky inflation, policy uncertainty, the disruptive impact of artificial intelligence, increasing concerns with both liquidity and solvency in the private credit markets and, of course, the War on Iran, which has probably had the greatest impact on investor sentiment.
Importantly, domestic markets have shown more resilience than many expected, largely because the U.S. is a net exporter of energy. However, most foreign markets, whose economies are much more reliant on commodities coming out of the Strait of Hormuz, have not been as fortunate.
These geopolitical events are important, and we will continue to monitor them closely. That said, once the conflict ends and oil prices retreat back towards pre-war levels, we expect for most of the sectors and asset classes that outperformed early in the year to return to dominance.
For investors, periods like this highlight the importance of staying disciplined. Markets are processing many moving pieces at once, from global events to technological change, which can create short‑term uncertainty. However, market history shows that long‑term progress often continues even when headlines feel unsettled. Maintaining a diversified strategy and focusing on long‑term goals—rather than reacting to short‑term noise—remains a sound approach.
As always, we are here to help you navigate these conditions and answer any questions about how current events fit into your overall financial plan.
Additional Disclosures:
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice to meet the particular investment needs of any investor. Past performance does not guarantee future results. Investing involves risks, including the loss of principal. Investing internationally carries additional risks such as differences in financial reporting, currency exchange risk, as well as economic and political risk unique to the specific country. This may result in greater share price volatility. Shares, when sold, may be worth more or less than their original cost. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.