Looking Back at 2025
This was a strong year for investors, even though it didn’t always feel that way. After a shaky start with concerns about inflation, tariffs, and hiring, markets rebounded quickly from an April low.
- The S&P 500 finished the year up nearly 18%.
- Company earnings stayed strong, especially in technology, health care, and communication services.
- AI spending continued to boost productivity.
- The Federal Reserve cut interest rates three times.
- Consumer spending stayed solid, and economic growth picked up in the second half of the year.
New Headlines as We Start 2026
Tariffs and Geopolitics
The U.S. announced new tariffs on several NATO allies tied to the Greenland situation - 10% starting February 1 and rising to 25% on June 1 if no agreement is reached. These mainly affect European exporters, but the uncertainty has added short‑term volatility. The issue has been a major topic at the World Economic Forum, where Europe is considering an “anti‑coercion” response.
A Supreme Court Ruling Could Change Things
The Supreme Court is preparing to rule on whether the 2025 tariffs were constitutional. A ruling against the administration could remove existing tariffs, trigger refunds, and ease market tension - though it may also pressure bond markets if tariff revenue declines.
Venezuela and Oil Markets
The U.S. capture of Venezuela’s president briefly pushed oil prices higher, but most analysts expect a limited long‑term impact given Venezuela’s aging infrastructure and limited ability to increase production.
What’s Changing as We Enter 2026
As we look ahead, several trends matter most:
- Moderate economic growth as inflation cools and interest rates potentially drift lower.
- Earnings growth remains the main driver of returns.
- AI productivity gains begin to show up more broadly across industries.
- A more balanced market, with sectors participating beyond mega-cap tech.
- Crowding themes like AI, semiconductors, and reshoring still require selectivity.
How We’re Positioning Portfolios
Our research points to another constructive year, but with volatility along the way.
With that in mind, we are:
- Staying focused on high-quality companies with strong balance sheets.
- Keeping exposure to AI and productivity-driven themes but avoiding overcrowded areas.
- Leaning into industrials and infrastructure, where spending is expected to rise.
- Staying selective in consumer-focused sectors, where pressure may continue.
- Making sure portfolios remain diversified and aligned with long-term goals.
Our Message to You
There’s plenty of noise – tariffs, global headlines, and rapid changes in technology. But underneath the headlines, the fundamentals remain solid. We’re monitoring markets closely, proactively analyzing strategies regularly, and making sure your plan stays on track. If you’d like to talk through your plan or the outlook for 2026, we are here to help.