Thank you to all of those who joined us for our Q3 webinar. During the session, our team explored the mounting volatility heading into the third quarter and shared timely insights on key economic themes, including the impact of tariffs, evolving interest rate expectations, and how investors might consider positioning portfolios amid the current uncertainty.
Chief Investment Officer Tim Courtney opened with a review of the broader economic picture. Inflation has settled around 2.5 percent1 and unemployment remains low,2 but gross domestic product (GDP) contracted in the first quarter due to a surge in imports ahead of tariff implementation.3 The yield curve is still inverted, a signal that typically suggests recession, though the economy continues to show resilience. Tim also outlined key tax law changes, including the extension of prior income and estate tax reforms, a higher state and local tax (SALT) deduction cap, and renewed Opportunity Zone provisions.
Senior Portfolio Manager Randy Farina addressed ongoing earnings uncertainty, particularly in sectors exposed to new trade measures. He noted that valuations remain stretched in large cap-growth stocks, especially in areas tied to artificial intelligence. The team has trimmed exposure in tech and industrials and is leaning into healthcare and consumer discretionary, where valuations look more favorable. Randy also emphasized opportunities in select international stocks, where pricing appears more reasonable relative to future growth.
Finally, Senior Portfolio Manager Michael Conerly shared his perspective on the fixed income environment. The Federal Reserve remains on hold as it waits for more data on inflation and the potential effects of tariffs. Michael noted that while market expectations have swung between optimism and caution, credit spreads remain tight and the overall environment supports a balanced, quality-focused approach. The team continues to maintain exposure across the yield curve and utilizes Treasury Inflation-Protected Securities (TIPS) as a hedge against inflation.
If you have any questions about market conditions or your investment strategy, please contact your Exencial advisor. To watch the full webinar recording, click here.
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Treasury Inflation-Protected Securities (TIPS) are U.S. Treasury bonds indexed to inflation to protect investors from decline in the purchasing power of their money. The principal value of TIPS increases with inflation and decreases with deflation.