US dollar dips, corporate earnings rise, and the Fed pauses.
Taking a closer look…
- Former Fed governor, Kevin Warsh, has been nominated as the next Fed chair. Warsh is known for his focus on inflation. However, recent commentary suggests he may argue for lower interest rates to support economic growth. For now, the Fed has held rates steady, citing solid growth and low unemployment, and may gradually cut rates in 2026 if inflation eases or the economy weakens.1
- Ongoing trade and geopolitical developments continue to weigh on the US dollar.2 Dollar fluctuations are normal. A cheaper dollar can help make US exporters more competitive and provide a boost to multinational companies with significant international sales. At the same time, precious metals like gold and silver continue to draw strong investor interest, despite recent volatility.
- A weaker dollar can boost international stocks, as it did last year. This is because returns become more favorable when translated back into US dollars. That said, currency isn’t the only driver of international stock returns. Many economies are expanding, with corporate earnings projected to grow.3 Additionally, recent trade deals, like last week’s European Union (EU) and India agreement, may provide further economic and market support in years to come.
- Despite generally positive economic and market news, many Americans remain pessimistic.4 Firm inflation and soft job hiring remain key concerns. Still, layoffs remain historically low, with initial jobless claims down from last year, signaling a resilient jobs market that can continue to support consumer spending.5
- Fourth-quarter US corporate earnings season is well underway. More than 75% of companies have beaten estimates by over 9%.6 Despite these results some large-cap tech stocks saw increased volatility as investors assessed significant artificial intelligence spending. US stock markets may continue to grow if most companies meet or beat earnings expectations.
- Tax filing season kicked off last week. This year could look different for many Americans. New tax legislation increased standard deductions and introduced new credits. Refunds are projected to be more than $150 billion higher than last year.7 Most Americans typically spend their refunds, which may help businesses and the economy in the months ahead.
Institutional Portfolio Manager, Strategic Advisers
"Digesting the daily news flow has long been a challenge for investors. It obscures focus on long-term goals and can drive emotional investment decisions. That’s why it’s important to follow a patient investment process and analyze the facts. Over time portfolio returns are driven by fundamentals, not news headlines."
Who we are
For over 30 years, Strategic Advisers and its dedicated group of seasoned investment professionals have helped clients reach their financial goals. Our team of portfolio managers, with specialized areas of focus in asset allocation and specific asset classes, along with our deep quantitative and fundamental research, drive our investment selection and risk management decisions on behalf of our clients.