SCHNEIDER INSURANCE UPDATE

Navigating Volatility: Why Professional Management Matters Now More Than Ever

We’re in the middle of our newsletter publication cycle, but given the current uncertainty driven by U.S. federal politics, we wanted to take a moment to expand on our last market update—and remind you why we rely on teams of professionals to manage our money in the first place.

Political Winds and Fiscal Shifts

As we write, partisan politics in the U.S. are once again front and center. The House of Representatives has just passed its so-called “Big Beautiful Bill,” which proposes raising the debt ceiling by approximately $4 trillion over the next decade. While it still needs Senate approval and the President’s signature, the bill aims to fund increased military spending, expand child tax credits, and broaden trade school eligibility. However, it also extends roughly $3.5 trillion in tax cuts for the ultra-wealthy while slashing funding for Medicaid, Medicare, and food assistance programs.

This move may curb fraud, but it will also likely disadvantage the most vulnerable, further widening the wealth gap. It’s a troubling sign of what’s to come—and a stark reminder: A storm is brewing. Economic conditions are tightening, and prudent wealth management is more critical than ever.

Market Snapshot: Where We Stand Now

Equities:
Despite recent volatility, equity markets have rebounded strongly. Many portfolio managers found value during the downturn triggered by tariff announcements. Though we’re not at all-time highs, most portfolios remain well-positioned.

Bonds and Interest Rates:
Bond yields continue to rise globally, suggesting higher interest rates for mortgages, car loans, and other forms of credit. A slowdown appears imminent.

Currency and Debt:
The U.S. dollar is weakening—an unusual trend amid economic uncertainty. Rising debt and deficit concerns are increasingly dominating headlines. Money is moving at a record pace, and several sectors are undergoing dramatic transformations.

The Tale of Two Cycles

We’re at the intersection of two major global cycles: a rising-rate debt cycle and a sweeping technological revolution fueled by AI and robotics. Like the transformative eras of the steam engine and the automobile, this shift presents both menace and opportunity.

This is why professional money management is more essential than ever.

While these transitions will be painful for many, the upside potential mirrors that of previous industrial revolutions. As old companies falter, new leaders will rise. Professional managers help position portfolios to take advantage of these shifts.

Political leaders are reacting—often dramatically—to stay ahead of the curve. Capital is flowing rapidly in response, and with it comes the potential for significant volatility.

Navigating the Storm

Periods of massive change are unsettling, but history shows they also bring growth and innovation. There will be winners and losers, and divisions may deepen. The long-term outlook isn’t bleak, but it is increasingly concerning.

The fundamentals remain concerning:

• Tariff revenues are touted at $2 billion/day, but the U.S. Commerce Department reported only $285 million for April 2025.

• Tourism losses alone are projected to hit $12.5 billion this year, more than offsetting tariff revenue.

• Federal workforce cuts (12%) may save $50 billion annually, but daily interest on federal debt is now $3 billion.

• Moody’s downgrading U.S. debt is concerning and it’s adding to the recent run on the dollar and the increased interest rates we will all start to see.

Despite global rate cuts, the U.S. Federal Reserve is holding firm—unwilling to reward what it sees as unsustainable economic behaviour. The U.S. must either grow, cut, print or borrow its way out of its fiscal hole.  The recent House approval of the Big, Beautiful Bill points to the first three.  The Federal Reserve have pretty much said that they’ll bail things out in an absolute crisis, but not before.

Meanwhile, de-dollarization accelerates with platforms like MBridge and the digital Yuan gaining traction. That process, along with tepid treasury market auctions are continuing to push the U.S. dollar down.  As we’ve long said, diversification is no longer optional—it’s essential.

What This Means for Investors

No, this doesn’t signal a “lost decade.” Far from it. But it does mean navigating the future will require skill, strategy, and adaptability.  That’s what you pay professional managers for.  You let them worry about it, so you don’t have to.

We are living through a once-in-a-generation societal transformation. It won’t be smooth—but it could be revolutionary. Just as with past disruptions, some companies will thrive, others will collapse, and entirely new players will emerge.

And history is clear: in volatile inflationary environments, ownership—equity in innovation and productive assets—has consistently outperformed.  Volatility seems like the enemy but it’s really the opportunity in disguise that allows your portfolio managers to take advantage of the situation over the longer term.

Bottom line: Professional management today isn’t a luxury. It’s a necessity.

And as always, if you’re worried, call us.

Mark, Sean, Cass, Nancy, Simone