Quarterly Update – July 2025

Market Update

As we’ve reached the midpoint of 2025, we sit in the middle of a fundamental restructuring of the global trading system we’ve used for decades. The most recent quarter was anything but quiet, with high levels of market volatility, multiple wars taking place, uncertainty regarding trade and tariffs, lack of clarity on interest rates and we even saw the credit rating firm Moody's downgrade the United States’ credit rating. The good news is the markets recovered from their April lows, the consumer and labor markets remain strong and inflation is manageable. The S&P 500 managed a 6.2% gain through the first half of the year but still sat 1.2% below its late-2024 peak. Diversification continued to prove its worth with international equities, particularly in emerging markets, outperforming. Developed international markets were up 10.05% (MSCI ACWI Ex-US Index) and emerging markets returned 15.27% (MSCI Emerging Markets Index) through the first half of the year driven by strong performances in Asia and stabilizing European economies. Fixed income assets provided modest returns with the Bloomberg US Aggregate Bond Index up 4.02% for the year.

On Tariffs

The tariff saga has taken a repetitive turn, reminiscent of Bill Murray waking up to the same day in the movie Groundhog Day. After the April 2nd “Liberation Day” tariffs were paused for 90 days to allow negotiations, the lack of progress with key trading partners led to their reimposition on July 1, 2025, with Chinese tariffs remaining active throughout. It feels like a financial remake of Groundhog Day, with markets trapped in a repetitive loop of tariff-driven uncertainty. So far, the U.S. has only signed new trade agreements with the United Kingdom and Vietnam and a “framework” with China while talks with key partners like the EU, Japan, and South Korea failed to yield meaningful deals. This policy déjà vu weighed heavily on markets while earnings growth projections for 2025 have stabilized but remain subdued, reflecting renewed trade disruptions.

The failure to secure trade deals during the 90-day pause has fueled volatility, with the U.S. Trade Policy Uncertainty Index hovering near record highs. Looking ahead, we expect the Federal Reserve to adopt a cautious stance, with potential rate cuts in Q4 2025 if inflation moderates and economic growth slows further. For your portfolio, we continue to advocate for a diversified approach, balancing U.S. and international equities, fixed income, and selective alternative investments. We are closely monitoring trade developments and economic indicators to ensure your investments are positioned for both resilience and opportunity. As we noted last quarter, “Successful investing is a long-term endeavor, and stock market corrections are a normal part of the process.” With volatility likely to persist, we encourage you to remain focused on your long-term goals while we navigate this Groundhog Day-like economic landscape.

Capital Group portfolio manager Martin Jacobs recently put it, “Trump’s first term shows the outcome can vary significantly from the initial headlines. As someone who believes the market tends to go up far more than it goes down, I am not discouraged by this year’s volatility. I view the dislocation as an opportunity to invest in great companies and multiyear investment trends where I have conviction, setting up the portfolios I manage for years to come.” We continue to encourage our clients to take a long-term view when investing because as the chart below demonstrates, historically the stock market has remained resilient despite uncertainty:

Firm News

In the community

In May, Ryan and Luke had the opportunity to support the local Ronald McDonald House fundraiser called “Cookin’ Fort Wayne”. We joined 100 other local community leaders as “chefs” to prepare sample size portions that we dished out to the attendees. Our drink, “The Arena Elixir”, was an all-natural take on a whiskey sour cocktail and was a huge hit with event attendees. We enjoyed the time together getting out in the community in support of a great cause. If you are interested in our drink recipe or attending the event next year, let us know!

Hitting the Road

Last quarter Ryan hit the road and met with leaders from both the Purdue and Notre Dame endowment offices. It was a great opportunity to share thoughts regarding the current market environment and bounce ideas off each other on how to structure portfolios. These “scuttlebutt” discussions are always insightful and the goal is to drive better outcomes for our clients.

Welcome Bonney!

Luke recently became a dog-dad with the addition of his new Corgi puppy. She’s an energetic ball of fur who loves to spend time on the lake and is settling in well to her new home. Welcome to the family, Bonney!

As we close the second quarter of 2025, we hope you enjoy the remainder of your summer and we thank you for the trust and confidence you place in us. It is our distinct privilege to serve each of you.

In the Arena,

Ryan Kay, CFP®, AIF®

President

Email: ryan@arena-wealth.com 

Luke Friskney

Associate Advisor

Email: luke@arena-wealth.com

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

-Theodore Roosevelt’s “Man in the Arena”