Delta Wealth Solutions Strategy Lab
Welcome to the Strategy Lab. The Delta Wealth Solutions Strategy Lab focuses on providing the necessary insights to help clients achieve optimal investment and planning outcomes. Please check back regularly for our quarterly market newsletter along with commentary on the stories that move markets.
July 2025
The Whole World's a Stage
Delta Strategy Lab - Market Update
At the beginning of the second quarter, Delta Wealth Solutions published our quarterly newsletter highly centered on tariffs. What they are, their impact on economics, impact on investments amongst other items. This seems like forever ago! Tariffs, while still important, are hardly at the top of mind. New headlines have taken hold, such as US strikes in Iran and the negotiations on the latest tax legislation. This brings about the old Shakespearean adage, “The Whole World’s a Stage!” In this context, we remember that we all have roles to play on a grander stage. Actors play different roles in a play and individuals play various roles in their lives, yet the play, or life, must go on. These events (tariffs, military strikes, economics) are all being played out on the stage in front of us, and investors have a front row seat.
Economics are constantly in motion and being effected by every little variable possible. Some variables, like geopolitics or tax legislation, take a huge role in the present day news cycle. What’s lesser mentioned, is that every miniscule transaction has a role to play on the economic stage. We transact and interact with the economy when we work, bank, shop, travel, partake, or any other activity. All of these actions go into the constant cycle of economics. So, when an act seems small or insignificant, remember we are performing on the economic stage regardless of what the latest news cycle proclaims.
Where do I stand with my financial plan?
We’re witnessing diverging economic data along side different sorts of shocks to the investment world. Starting with economic data, we see that the fed funds rate is now clearly over two percent above the pace of underlying inflation. Hiring is also slowing, however positive S&P 500 earnings guidance is accelerating. From a shock standpoint, the large tariff rollout was met unenthusiastically by markets. The military strikes in Iran threatened to pinch a key waterway, the Strait of Hormuz, which provides a trade route for approximately 20 percent of the worlds oil. What does this mean for investors? It’s business as usual! Markets, as priced by the S&P 500, fell nearly 20 percent from March to April, however markets have regained lost ground and closed the quarter at or near all time highs. This is the latest example of how being irrational of markets would lead an investor to underperformance if that investor would have sold investments in April. Executing an asset allocation strategy, rebalancing, and controlling what is in an investors control remain the safest way to weather any event on the economic stage.
"In Investing, what is comfortable is rarely profitable." Robert Arnott
Much Ado About Nothing
In what seems to be a more common occurrence recently, a quarter filled with significant commotion and volatility comes and goes while quietly making new all-time highs. Developed international markets are up 18% year-to-date, bonds are tracking at 4%, and quietly the S&P 500 closed above 6,200 rising 6% year-to-date including dividends. There was no lack of headline risk over the last three months. On April 2nd new tariffs were announced on “Liberation Day” causing US markets to correct ~20%. The US entered a 12 day war vs. Iran causing oil prices to rise nearly 20% before falling back to pre-conflict levels. The Federal Reserve refused to cut interest rates amid a slowing job market and static inflation. Last, but not least, the politicians continue to haggle over tax policy which if not passed would result in Americans across the economic spectrum receiving significant tax increases. Nevertheless, amid all this uncertainty within investor portfolios bonds paid made their interest payments, stocks paid their dividends, and investors were rewarded with modest price appreciation on both assets. This is only relevant for investors who were willing to ride out the temporary tantrums of both markets and politicians alike. Markets will always experience ups and downs from now through the end of time. Investors would be wise to learn that, and for those that have trouble we are here to coach you along the way.
Geopolitics and Market Performance
The news flow in today’s environment continues to see once in a generation type of events occur on the week to week basis. Though the “12-Day War” with Iran seemingly has come and gone without major ramifications, and there are important lessons investors would do well learn for the future. At some point in the current administration or the next there will be another large scale conflict. After all, wars and military conflicts have been going on since the beginning of time. It’s unreasonable to think human nature is going to change anytime soon. Vanguard completed a study in 2022 during the start of the Russia-Ukraine conflict looking at the 8 most recent geopolitical events going back to 19601. Some notable events include Brexit, Iraq War, Iranian Hostage Crisis, and the Cuban Missile Crisis. Vanguard calculated the S&P 500 return during the initial selloff from the geopolitical events in the range of 1%-5%, however the return 6 months after the geopolitical event occurring the SPX averaged a +5% and 1 year from the event the average SPX return was +9%. The take away for the next geopolitical conflict is investors should avoid reacting to the initial headline, and focus beyond the initial conflict. Geopolitical events while often tragic at the human level, very rarely have long-term market ramifications and investors that get caught in the head fake often experience inferior returns.
Sources: Vanguard calculations, as at 31 December 2021, using data from Refinitiv - Returns are based on the Dow Jones Industrial Average to 1963 and the Standard & Poor’s 500 Index thereafter. All returns are price returns and expressed in US dollar terms and do not include investment costs. Not shown, but included in the averages, are returns after the following events: the Suez Crisis (1956), construction of the Berlin Wall (1961), assassination of President Kennedy (1963), authorization of military operations in Vietnam (1964), Israeli-Arab Six-Day War (1967), Israeli-Arab War/oil embargo (1973), shah of Iran’s exile (1979), US invasion of Grenada (1983), US bombing of Libya (1986), First Gulf War (1990), President Clinton impeachment proceedings (1998), Kosovo bombings (1999), September 11 attacks (2001), multi-force intervention in Libya (2011), US. anti-ISIS intervention in Syria (2014), and President Trump impeachment proceedings (2019 and 2021).
Tariffs Don't Cause Inflation
Since April there has been much more discussion centered around tariffs and rightfully so. The April 2nd “Liberation Day” effectively shook markets causing a 20% selloff over the subsequent days before recovering later in the month. While Tariffs are generally a detriment to economic growth for all parties involved, it’s important to note even if the Tariffs stay in place long-term, the policy shouldn’t cause significant long-term inflation. Most economists agree inflation is caused by too much money chasing too few goods an services. Think back to 2022, the US government through both administrations had added $5 trillion to the money supply through multiple stimulus bills. This money was often directly deposited into participants bank accounts. Though at the same time, there wasn’t a reciprocal increase in the amount of products available. Cars weren’t being produced more efficiently, Pelotons had the same capacity, homes couldn’t be built any faster. As a result prices had to adjust to the new amount of money in circulation. M2 money supply rose ~41% from January 2020 to January 20222. There’s no surprise many goods and services have seen a subsequent rise in their nominal value over the last few years. According to the Zillow home index the average US home value in January 2020 was $252,000, today the average home value is $367,000 (a ~45% increase)3.
Moving on to the tariff discussion, there is no doubt tariffs cause temporary precise price increases on certain goods and services. The difference centers around there isn’t a broad based change in the money supply causing an across the board price increase. For example, if a consumer wants to buy an imported BMW which is now $5,000 more expensive, that $5,000 can no longer be spent elsewhere, potentially causing downward pricing pressure on other goods and services. It is our view even if tariffs stay medium to long-term it is unlikely to lead to sustained above trend inflation increases.
Earnings Trend is Positive
It wouldn’t be a quarterly newsletter if there wasn’t some commentary centered around corporate earnings. A reminder to new and old clients, stocks appreciate over time because corporate earnings are growing. If a company becomes more profitable, generally the company’s price appreciates in tandem. The same concept can be applied to the stock market as a whole. According to analyst estimates S&P 500 earnings are expected to grow by 9% in 20254. When you include dividends all else equal it wouldn’t be surprising in the least to see stocks up high single digits by the end of the year. Briefly in early April stocks saw their earnings estimates fall and stock prices declined in tandem. After the administration's moderation on tariffs earnings expectations have continued to rise and stock prices have risen in tandem.
Source: FactSet, Edward Jones
Big Beautiful Bill & America's Credit Rating
There’s rightfully a debate around whether the recently passed tax legislation is beautiful, but it certainly is big and does carry a number of direct and indirect impacts for Delta Wealth Solutions clients. As a baseline the original tax cuts from the 2017 Tax Cuts and Jobs act are made permanent. For reference these tax cuts were set to expire in 2025. The State and Local Tax Deduction (SALT) was increased from $10,000 to $40,000. This will likely result in significantly more high income earners itemizing their deductions, and as a result slightly lower federal tax bills. Clean energy tax credits are phased out in 2025 likely putting pressure on electric vehicle prices which are often priced higher than their combustion engine counterparts. Finally seniors 65+ earning less than $75,000 ($150,000 for married) will receive a temporary “bonus” deduction of $6,000. Outside of the EV space, nearly all taxpayers will be seeing their taxes either decrease or at worst stay the same.
Though the tax cuts are generally viewed as stimulative to growth, the long-term impacts to the US economy are more uncertain. The Congressional Budget Office (CBO) estimates this bill will add $3.4 trillion to the federal deficit over the next 10 years; however, that does exclude any increase in potential tariff revenue which is currently running around $250b/yr. The only certainty is neither political party is serious about reigning in federal spending. As a result Moody’s recently downgraded the US credit rating to Aa1 from Aaa. Though the long-term trajectory of the US deficit is alarming, we don’t anticipate this to be a near term issue impacting financial markets. Changes in credit ratings are often a lagging indicator. Even amid the credit downgrade US interest rates as measured by the 10 year treasury are down 0.20% on the year as of this writing.
Climbing the Wall of Worry
As stated before in our view, the years of 15% annual returns in US markets are likely over, but that doesn’t mean investors won’t be able to earn above inflation rate of returns in diversified portfolios in the coming years. Earnings growth and diversification are likely to be key contributors to portfolio return over the coming years and on that front markets are performing nicely in 2025. Fixed income has generated coupon payments and small price returns, international stocks have appreciated nearly 20%, and US markets have put in a respectable 6% return. The headlines continue to jump from crisis to crisis while global markets continue to climb the wall of worry. We would encourage investors to stay focused on the long-term, enjoy the summer months, and tune out the political drama.
Disclosure: Indexes shown: S&P 500 Value, S&P 500 Growth, S&P Mid Cap 400, S&P SmallCap 600 Growth, S&P SmallCap 600 Value, ICE BofA High Yield Bond Index ETF, Bar-clay's Aggregate Bond Index, MSCI World Index ex. US, S&P 500 Real Estate, and Morgan Stanley Capital Index Emerging Markets. This is not an official representation of your asset allocation. The percentages shown were calculated manually and could be subject to transcription error. Your official record of your asset allocation is shown on your official statement from Charles Schwab. Past Performance isn’t indicative of future results. *Performance Date as of 06/30/2025
1. “Geopolitical sell-offs have often been short-lived”. Vanguard 2022
2. “M2.” FRED, 24 June 2025, fred.stlouisfed.org/series/M2SL.
3. “United States Housing Market.” Zillow, www.zillow.com/home-values/102001/united-states/. Accessed 7 July 2025.
4. JP Morgan Guide to the Markets 7 July 2025
5. Sergent, Jim, and Janet Loehrke. “Big Beautiful Bill 101: What You Need to Know about the New Law.” USA Today, Gannett Satellite Information Network, 5 July 2025, www.usatoday.com/story/graphics/2025/07/04/trump-big-beautiful-bill-tax-details-explained/84461981007/.
This commentary on this newsletter reflects the personal opinions, viewpoints and analyses of the Delta Wealth Solutions, LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Delta Wealth Solutions, LLC or performance returns of any Delta Wealth Solutions, LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website/newsletter constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Delta Wealth Solutions, LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. Delta Wealth Solutions, LLC a Registered Investment Adviser. This newsletter is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Delta Wealth Solutions, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Delta Wealth Solutions, LLC unless a client service agreement is in place.
The hypothetical information provided is back-tested performance, was compiled after the end of the period described and does not represent decisions made by Delta Wealth Solutions, LLC.
Specific note concerning graphs, images, charts, formulas, or any other visuals: Delta Wealth Solutions, LLC provides such exhibits for informational purposes only and the data provided alone should not be considered investment advice and should not in and of itself be used to determine which securities to buy or sell, or when to buy or sell them. Any graph, image, chart, formula, or visual should be only be considered in its specific context within this newsletter and from the original source where it is derived. Any use of a graph, image, chart, formula, or other visual is not a solicitation to buy or sell securities in any manner. Any investments should be considered thoroughly and discussed with the readers Financial Advisor.
This publication has been prepared by Delta Wealth Solutions LLC and may not be reproduced or distributed without the consent of Delta Wealth Solutions LLC. This document is for informational purposes only and is not an offer, or solicitation, to buy , sell or hold any financial product or investment. The analysis contained within this publication should not be considered a recommendation and does not take into account the specific goals, objectives, or needs of any recipient. Past performance is no indication of future results and different assumptions could create results that materially alter from the information conveyed in this publication. The opinions and information conveyed within this publication were procured by sources deemed to be reliable. This report is up to date as of the date and time reported on page 1 of this publication.
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