I hope this message finds you well. With our September market update, I’d like to share a brief video highlighting the latest economic developments and what they mean for your portfolio.
Click on the video below to watch.
Key Highlights from the September 2025 Market Update:
- Labor Market Weakness
- August jobs data showed just 22,000 new positions created, one of the weakest readings in years.
- This slowdown prompted the Federal Reserve to cut short-term interest rates by 0.25%, the first rate cut of 2025.
- Political Pressure on the Fed
- President Trump’s ongoing attempts to dismiss Fed officials and influence monetary policy have raised concerns about Fed independence.
- If successful, this could weaken the U.S. dollar and elevate long-term inflation expectations.
- Tariff Uncertainty
- Courts have ruled many of the administration’s global tariffs illegal, with appeals now headed to the Supreme Court.
- Tariffs are increasingly being used as foreign policy tools, targeting Brazil, India, and even Norway, resulting in raised global tensions and trade risks.
- Stock Market Dynamics
- U.S. equities rallied on expectations of further Fed rate cuts, while international stocks outperformed due to a weakening dollar.
- Dollar depreciation is amplifying foreign market returns, with countries like Spain (+49% in dollar terms) and Germany (+34%) benefiting the most.
- Artificial Intelligence Mania
- AI continues to drive both market enthusiasm and corporate spending.
- Major tech firms are projected to spend over $350 billion on AI in 2025, with expectations to exceed $500 billion in coming years.
- The adoption curve is unprecedented. ChatGPT reached 100 million users in just two months, fueling expectations of long-term disruption.
- Gold at All-Time High
- Gold prices surged past $3,700/oz, supported by falling interest rates and continued central bank buying.
- Relative to U.S. equities, gold remains historically inexpensive, leaving room for further upside.
Our Perspective
In the near term, risk assets, such as stocks and cryptocurrencies, are supported by falling short-term interest rates and enthusiasm around opportunities in artificial intelligence. But risks remain: the dollar is weakening, which is supporting international investments, the U.S. is isolating itself through the aggressive use of tariffs, and the weakening jobs picture indicates a recession may be a possibility in 2026.
I encourage you to watch the full video for a deeper dive into these topics. As always, please reach out if you’d like to review your portfolio positioning in light of these developments.
Omar Bassal, CFA
Chief Investment Officer
