Market Insight

As we enter the second quarter, investor sentiment and consumer confidence have clearly been impacted by new policies pursued by the Trump administration. Since the President was sworn into office in January, nearly every department of the federal government is being reshaped. A dramatic transition is underway, bringing uncertainty to both the public and private sectors. The speed and scale of these changes are unprecedented, leaving investors with limited historical guideposts.

Change foments uncertainty, which is often the enemy of the markets that thrive on stability. Lack of certainty may prompt a reduction in risk by investors. The scale of the change, at least for the short term, is creating a cautious and defensive investment environment. The sheer magnitude of ongoing policy shifts has created a more cautious, defensive investment environment. Threats of new or increased tariffs have impeded corporate growth. While foreign trading partners have quickly responded to counter U.S. policy changes. DOGE-induced job losses have fueled broader concerns about employment conditions. Recession fears have increased, and corporate earnings forecasts for 2025 have weakened. The post-election optimism that once lifted markets now feels like a distant memory. Investors, like the government, are in transition, forced to assess variables that were nonexistent just three months ago. However, people, businesses, politicians, and governments adapt—so do investors. While the current environment is full of heightened uncertainty, we do not think it is permanent.