The Market Update with EP Wealth Advisors Managing Director, Investments -
Adam Phillips, CFA^®, CAIA, CFP^®

Often quoted in major national media, Adam is a Chartered Financial Analyst (CFA^®), a CERTIFIED FINANCIAL PLANNER™ (CFP^®), and has been included on the Forbes NextGen Best-in-State Wealth Advisors 2019 list. He is a member of the CFA Society of Los Angeles and the CFA Institute. Adam helps establish asset allocation strategy as a member of the EP Wealth Investment Committee, which supports all EP Wealth Advisors and their clients. The Committee’s top-down approach to portfolio construction begins with an outlook on the economy’s likely direction, followed by the implications for different economic sectors and asset classes. This culminates in strategic selection of the individual stocks, bonds, mutual funds or other investments deemed most appropriate for each individual client’s portfolio.

Market Update: Policy Clarity and Market Resilience

President Trump’s “one big, beautiful bill” was signed into law on July 4th, beating expectations and easing a major source of market uncertainty. Among its provisions, the bill extends and makes permanent the individual tax cuts from the 2017 Tax Cuts and Jobs Act—avoiding what would have been a $400 billion tax hike if they had expired. 

While not a new economic boost, this move removes a potential headwind. Additional provisions like eliminating taxes on tips and overtime could support lower-income households, though their broader economic impact remains to be seen. 

Attention now shifts to trade policy. A soft deadline of July 9th looms for U.S. trade negotiations. Without agreements by then, paused reciprocal tariffs may return—introducing new risks to consumer prices, corporate earnings, and Federal Reserve policy decisions. 

Despite these uncertainties, the markets have shown remarkable resilience. The S&P 500 is up roughly 6% year-to-date and has rebounded about 26% from its April lows, marking the strongest rally after a 15% decline since 1950. However, with markets at all-time highs, some volatility would not be surprising. 

The key takeaway: Stay disciplined. Those who held firm during earlier volatility are now seeing the benefits of long-term focus. 

If you have questions, contact your financial advisor. 

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Video Summary: 

Adam Phillips: 

Well, welcome back in. I hope you enjoyed your 4th of July holiday. My 4th of July kicked off with news that President Trump had signed his one big, beautiful bill into law, and that was just in time, uh, to meet his self-imposed deadline of July 4th. And I'll mention that I didn't expect it to get through this quickly. 

We were hearing news as it went, made its way through the Senate and then back to, uh, the House of Representatives that there were several holdouts on the Republican side and with given their thin majority, they really couldn't lose too much support. And so we did expect a little bit of a delay here to get this bill passed. 

Um, and I was surprised that it made it, uh, through on July 4th. I'll share that. I spent part of the weekend having to rewrite parts of my newsletter that I produce every quarter because I had references in there to this, the ongoing negotiations and discussions to get this bill across the finish line. 

And obviously, we saw that that is now done. So, you know, look, this is actually good news for the, uh, for the economy and for markets. That's not a statement, a political statement. This is really just to acknowledge the fact that this removes a key source of uncertainty for investors, as we head into the second half of the year. 

There are, there are good things and there are bad things about this bill. Um, I, I will just mention that one of, as we are, as we view it through the lens of, of just an investor focused on how this impacts spending, the economic outlook. One of the major takeaways for me is that this does extend. And actually makes permanent the individual tax cuts that were originally announced as part of the Tax Cuts and Jobs Act in 2017. 

This was an issue that the president would have to face, whether he or she was a Democrat or a Republican. These tax cuts that were put in place in 2017 were set to expire at the end of the year. And so if no action was taken here and they reverted back to their previous levels, it would've essentially been equivalent to a $400 billion tax increase on individuals. 

And so I take that as good news, that we actually have that clarity. It is supportive, uh, of the economy, but it's, we're not going to get the same bang out of this as we did in 2017. These are not new tax cuts. It really just maintains the status quo. And so I want to be clear that this is not a new tailwind. 

For the economy, but it does remove a potential headwind within, uh, this, uh, this so-called one big, beautiful bill. We also saw that President Trump, uh, delivered on a couple of his campaign promises, such as no taxes on tips, no taxes on overtime. Uh, so that will help those in the lower income brackets. 

Obviously, the extent to which uh that helps individuals and supports consumer spending remains to be seen. It's something that we're going to want to watch. And, as I said, there are, I think, some good things and some bad things about this bill that was recently put in place. And so whenever we are looking at it, whenever we are talking about it, we are looking through, we are looking at this through a political lens, and really just focus on how it impacts the economy and the markets. 

So with fiscal policy uncertainty now behind us. Our attention is going to focus on, uh, back to trade policy, and the original deadline for these trade negotiations was actually July 9th. That's Wednesday. However, turns out this is a soft deadline, and we heard from Treasury Secretary Scott Besson over the weekend. 

He said that the real deadline is actually going to be August 1st, and if countries don't come to the negotiating table. Before then, and iron out these new trade agreements with the us. Then on August 1st, we will see these reciprocal tariffs that were originally put in place on August, or excuse me, on April 2nd, and then pause for, uh, for 90 days. 

Uh, we will see these get put back into place. And so what we would expect is over the next, uh, several days and, and coming weeks, we would expect, we would hope that we're going to hear a lot more, uh, about discussions with our major trading partners. We're going to see some, some, uh, agreements put in place. 

Uh. The hope would be that this provides much-needed clarity to investors around trade policy, because this really is still top of mind. It's something that's keeping the fed on hold. Something that keeps businesses on hold, uh, when they're considering capital spending projects, when they're considering hiring plans. 

So we do want to see this, uh, this, uh, uncertainty, um, start to start to fade away here now. I think it's always important as we're looking at market performance to, to just have a, a clear understanding, uh, of, of our surroundings and, and acknowledge how far we have come when we're looking at market performance. 

We're actually at an all-time high right now, and that's. If, if, as I said, I, I believe last week, you know, if you were, if you were living under a rock or if you were in a cave for the first part of the year and you would come out, maybe you would assume nothing happened. For those of us who actually did live through all these headlines, it might sound shocking to know that the market is up about 6% for the year. 

It's actually rebounded close to 26% from the lows, uh, in April. And so, historically speaking, this is actually the strongest rebound since 1950 following a 15% decline. It's the best rebound by a wide margin. And so I think that's really important. The uncertainty has not gone away just yet. 

I mentioned we still have plenty of uncertainty around trade, around, uh, the Fed and the timing of the next po uh, interest rate cut. Um, corporate earnings is, is something we're going to be watching in the coming weeks to see what type of, uh, of. Pressure companies might be under from tariffs that have been put in place to date, or what their plans are for hiring and spending going forward. 

So, where the market is is really important. We are, we always want to be mindful of complacency, and so I, I wouldn't be surprised if we did see volatility start to creep into the market again. Um, it, it's after a run like this, it's to be expected. So it doesn't necessarily mean that we need to run or capitulate, but I think this is really more than anything, it's a great, uh, example of why we maintain a long-term discipline when we're investing. 

If, if when we were, as we were living through, uh, the, the April, uh, drama related to tariffs, sure we had the urge to cut risk. Um, but we didn't do that. We stuck to the, we stuck to our long-term discipline, and we're happy that we did because as we know, these things can quickly. Reverse course, uh, as the drama, uh, unfolds and we start to get some, some much-needed clarity. 

So that was certainly the case this time around. Doesn't mean that we're out of the woods just yet, but I think it does speak to maintaining a long-term discipline and not trying to make short-term calls. So I'll leave it there for now, but if you have any questions, please don't hesitate to reach out to your financial advisor, and I'll look forward to catching up next week.