October 2025 KWP Newsletter

As the third quarter of 2025 has come to completion, we will visit a few new developments in addition to ongoing headlines. Nearly Six months ago, President Donald Trump’s “Liberation Day” tariffs sent unknowns through the global economy. Overnight, U.S. import duties jumped from 2.5% to 25%, the largest increase in modern history. Supply chains scrambled, investor volatility increased, and headlines were dominated by talk of a looming recession. However, resilient strength in the market has once again taken precedence, with corporate earnings coming in better than expected.

Themes to Watch

AI & Market Concentration: Growth continues, but valuations may be stretched.
Interest-Rate Path: The Fed may cut again before year-end if data softens further.
Policy & Politics: The ongoing budget debate and global elections could inject short-term volatility.
Diversification: Gains are dominated by a few large companies—balanced portfolios matter more than ever.

Tarrifs and the Government Shutdown

At first glance, U.S. tariffs average 18%, but companies are effectively paying closer to 11%. According to The Yale Budget Lab, estimates show tariffs have raised $88 billion in 2025, about 60% of expected collections so far. With new updates occurring week to week, long-term results are to be determined.

The Wahington gridlock has caused a government shutdown that has now entered its second week, furloughing roughly 40% of federal workers. Markets have largely shrugged it off, maintaining the expectations of one or more Fed rate cuts this year. So far, the plan to further reduce rates has offset fear of the current stalemate.

3 Takeaways to Remember in the Coming Months

Market volatility doesn’t always signal the end of a bull market. Strong fundamentals, innovation, and corporate adaptability have powered recent gains.
Diversification matters. Growth has been concentrated in a few sectors, so balance is key.
Stay focused on long-term goals. Use volatility as an opportunity to review allocations and position for year-end planning.

Year-End Planning Reminder: Maximize your tax-advantaged retirement savings!

2025 Contribution Limits:

401(k), 403(b), 457 Plans: Up to $23,500
Catch-Up (Age 50+): Additional $7,500
Traditional or Roth IRA: Up to $7,000
IRA Catch-Up (Age 50+): Additional $1,000

Deadlines:

401(k) contributions: By Dec 31, 2025 (through payroll)
IRA contributions: By the April 2026 tax filing deadline

_{https://www.ft.com/content/74224d84-8a7a-4d0d-a30d-1716e2d43b7a?utm}

_{https://www.theguardian.com/business/2025/oct/14/us-shares-correction-markets-imf-bonds?utm}

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