One of the most frequent questions we get from clients is if they should make any changes to their portfolio due to a current situation or event. Most of the time we recommend staying the course because we have already put them into a well-diversified portfolio based on their unique risk tolerance, time horizon and financial plan. We create investment strategies that will endure market fluctuations. More importantly, you don’t want to make emotional decisions based on market fluctuations.
The implementation of tariffs by the current administration is one of those events that has caused a lot of conversation and concern recently. The evolving tariff policies have caused some whipsaw reactions in the stock market over the past month or so. With the recent delay and renegotiated rates on the Chinese and U.S. tariffs the stock market rallied with the S&P 500 now positive again for the year.
The risk of recession for this year has also been increasing due to the uncertainty created by policy changes. Although some analysts have slightly decreased the odds due to the recent progress in the trade negotiations with China, which also gives time for other cushions to be implemented such as tax cuts and deregulation.
On the topic of tax cuts, at the end of 2025 nearly every provision in the individual income tax code expires. Congress is currently discussing extending these tax cuts as well as making some additional tax cuts. Over the next several weeks they will be hammering out the details. Once the tax cuts are passed and signed into law, we will email the updated tax laws along with some insights so that you will know how they will impact you. Below is a link to some of the proposed tax law changes.
The Fed and interest rates are also key factors we are watching this year. Recent policy changes could put the Fed in a difficult balancing act. Fed Chair Jerome Powell recently said at a policy conference that “We may be entering a period of more frequent, and potentially more persistent supply shocks – a difficult challenge for the economy and for central banks.” The forecasted rate cutting schedule continues to change as the data changes but the Fed will continue to remain focused on their dual mandate of inflation and the labor market as they determine interest rates.
We will keep you updated and talk to you individually if there is anything that needs to be addressed in your portfolio. As always, feel free to reach out to us to discuss any concerns or ask any questions.
Enjoy the warmer weather!
Kurt, Jean, Anders, Maggie and Molly