LPWMG

We wanted to provide you with a quick update on the investment committee’s outlook regarding the stock market and some of the key developments making headlines recently.

As we’ve previously mentioned, with the change in administration at the White House, this was always set to be “a year of change.” Several factors are currently influencing the market, the most pressing being the recently imposed tariffs on Canada, Mexico, and China, along with their retaliatory measures. Markets tend to react negatively to uncertainty, and concerns over a potential trade war have led to fears of an economic slowdown or even a recession. However, we believe that currency adjustments in Canada, Mexico, and China could serve as a partial offset to potential inflationary pressures.

In response to these developments, the stock market has been sliding, the U.S. dollar is surging, cryptocurrency values are plummeting, and oil and natural gas prices are climbing—largely in reaction to President Trump implementing his long-promised tariffs. Given the market’s sensitivity to policy shifts, especially under the International Emergency Economic Powers Act, volatility is likely to persist. While there are both pros and cons to tariffs, we will save a deeper discussion for another time, as the landscape remains fluid.

Another factor influencing sentiment is the emergence of DeepSeek, China’s artificial intelligence initiative that is reportedly both more affordable and more advanced than current U.S. solutions. While details remain scarce, history reminds us that progress is rarely linear, and major technological advancements often bring market disruptions. If DeepSeek’s claims hold true, the potential economic impact could be significant—lower capital costs, broader AI adoption, and greater efficiency across industries. Naturally, we are monitoring these developments closely to identify opportunities arising from pricing inefficiencies and market dislocations.

As we have previously noted, we anticipate a rotation into sectors that have underperformed over the past several years. We are already seeing this trend play out. The correction in the technology sector, which we have discussed on multiple occasions, was expected. Regarding tariffs, the bond market’s reaction to potential inflation will be telling, though we believe currency markets may absorb some of the impact, preventing a major inflationary event.

Despite the volatility, we remain cautiously bullish. A market pullback—should it occur—could present attractive opportunities to deploy capital strategically within this market rotation.

As always, we appreciate your trust in our investment approach. Market cycles evolve, and uncertainty can create opportunities for disciplined investors. We will continue to analyze developments closely and adjust our strategy accordingly. Please don’t hesitate to reach out with any questions.

Our Best Always,

Bob

Robert O'Braitis
CEO
Chief Investment Strategist