Good morning,

The Supreme Court issued a significant ruling regarding the administration's tariff authority, determining that certain tariffs implemented through executive action were not legal. While this decision may have been anticipated by many market observers, the timing and specifics create important implications for markets and the economy.

What Does This Mean?

The ruling essentially limits the executive branch's unilateral ability to impose broad tariffs without legislative approval. However, this does not mean tariffs are completely off the table. The administration may pursue alternative paths forward, including working with Congress to formalize tariffs through legislation or exploring other economic policy measures. Nevertheless, investors are interpreting this decision as a positive development for several reasons:

The Market Perspective

From an investment standpoint, this ruling represents a "risk-clearing event"—it removes an overhang that has created uncertainty for markets and business planning. Markets tend to react favorably when major uncertainties are resolved, and this appears to be the case here. We view this development as fundamentally positive for equity markets for two primary reasons:

First, the ruling reduces inflationary pressures from broad-based tariffs. This gives the Federal Reserve greater confidence in the inflation trajectory, potentially opening the door to additional interest rate cuts. Lower rates typically support stock valuations and make borrowing more affordable for businesses and consumers.

Second, the decision is viewed by many investors as a check on executive power, which has positive implications for market stability and long-term confidence in our economic and regulatory framework.

Sector Implications and Investment Opportunities

This ruling removes a significant piece of uncertainty, allowing for clearer decision-making and a better foundation for long-term investment positioning.

Please give Tom or I a call should you have any questions around your portfolio or investment strategy as we are never too busy to speak with you. Further, we can be made available to speak with any family members or friends who may need reassurance during these times.

Best,

Devin