Equity markets weakened in February as the accumulation of softer consumer data and
an environment of increasing uncertainty linked to a series of new tariff announcements
as well as disruption from government cutbacks sent investors to the sidelines. Markets
had evidenced significant resilience into mid-February in the face of multiple headwinds
but signs of weakness in the consumer including a soft retail sales report and declining
consumer confidence raised questions about the sustainability of growth and the
potential for stagflation. The pace of recent policy changes including DOGE inspired
government layoffs appear to be contributing to rising market volatility as seen in a
steady climb in the VIX index through the month. Although we remain encouraged by
the outlook for corporate earnings growth, we are concerned that emerging market
headwinds may be beginning to weigh on investor sentiment amidst relatively high
current equity valuations.