The second quarter of 2025 unfolded in a world of heightened volatility and unpredictability. Geopolitical tensions, abrupt policy shifts, and weakness in leading economic indicators tested the resilience of investors and the market. From escalating trade disputes to growing unease over democratic norms, the global environment became more difficult to navigate with ripple effects felt across economies and our daily lives.

The second quarter opened with President Trump’s announcement of “Liberation Day”. These reciprocal tariffs targeted key U.S. trade partners and immediately unsettled global markets. The fear of a broader trade war quickly spread, consumers were fearful of rising prices, and consumer confidence quickly tanked. As the quarter went on, we faced harsh deportation policies, DOGE actions, political violence, and geopolitical risks in the Middle East, capping a period defined by volatility and a threat to American values.  In this environment of uncertain times, the resilience of investors and markets was tested like never before.

We may be entering one of the most volatile times our economy has seen in the last twenty years. And that’s saying a lot, considering we’ve already endured two not-so-insignificant crises in the Great Financial Crisis of 08/09 and the COVID-19 pandemic. We already know that the challenges will not be limited to the economy or the stock market this time. Tariffs loom large in this cycle, certainly in the mind share of the current administration in Washington, and there are the added uncertainties of haphazard and potentially illegal staff cuts, deportations without due process, the dismantling of federal agencies, emerging autocratic tendencies in the White House—spurred on by a pliant Congress—and the upending of longstanding, loyal, global alliances. Alarmingly, with the majority of Americans receiving their news from social media, often in 15-second soundbites curated for their political leanings, the response from large swaths of voters has been tepid, if not mildly supportive. The headline “eliminating waste, fraud and abuse” does not appear controversial. Yet, too few people are asking how randomly eliminating every fifth employee achieves this goal. Details are boring; headlines rule.

For global equity investors, 2024 presented stark contrasts. Key economic themes such as inflation and artificial intelligence endured while the trend of populism led to further political disruptions. Global equity markets continued a steady rise, notching a second consecutive year of double-digit gains, amid a tumultuous sea of political upheaval in democracies around the world. U.S. equities, particularly megacap technology stocks, outperformed other developed market equities as the U.S. continued to outpace others in economic growth since the COVID-19 pandemic, driven by a strong labor market and resilient overall consumption.

Meanwhile, over 70 nations held elections, a banner year for democracy even while the threat of encroaching autocracy loomed ominously in several corners of the globe. A key theme of 2024’s global electoral extravaganza was a rejection of incumbent leaders and parties as voting publics, aggravated by the high cost of living, sought change and new—often unorthodox—approaches to realizing broader prosperity. Yet, while voters rebuked incumbent political leadership in many democracies worldwide, investors continued to stick with leading industries and companies in global equity markets. The emerging commercialization of artificial intelligence continued to drive equity valuations and returns as industries levered to this phenomenon benefited from investor enthusiasm, such as software applications.