Capital markets watch: Tax strategy, interest rates, and your investments
SARAH DARR: I'm excited to be here with you today, and a few of my esteemed colleagues. And I'd like to welcome you and thank you for taking time out of your day to join us. The market and economic environment is changing in ways that we haven't seen in decades. 
With the recent choppiness in the equity markets, ongoing inflationary pressures, trade policy negotiations, just to name a few, there's a lot going on that we want to discuss today. And our goal is to share what is temporary noise and what matters to you as investors in the face of this uncertainty. 
More than ever, we think it's important to pay attention to your financial situation, your goals, and rely on financial planning to achieve your long-term objectives. As always, our wealth management teams are here if you have questions or if you want to talk through your specific situations and concerns. 
I want to go through a few housekeeping items before we get started. If this is your first time in the system, you have the ability to customize your screen. So you can make any of the modules that you're seeing bigger or smaller by dragging those boxes at the edge of each box. You can hide any of the boxes by hitting the X in the upper right-hand corner of that module. 
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With that, I would like to welcome our presenters to the call. I am joined with two-- really excited to introduce two esteemed colleagues. Rob Haworth, Senior Investment Strategy Director with U.S. Bank Asset Management Group. Rob and his team guide our economic and policy analysis and world markets. 
They help advise clients in their investment strategy, and this includes economic outlook, strategic and asset allocation strategies, as well as developing asset class representation across a variety of portfolios. And it will come as no surprise to you, as you hear from Rob in a moment, that he is a frequent public speaker and spokesperson, and he really has a gift for distilling complex topics into digestible information. 
I'm also joined by Kate Phelan, Regional Director of Wealth Planning for U.S Bank Private Wealth Management. Kate leads our California wealth planning and trust advisory team, and they lead higt-net-worth individuals and families through very complex topics around estate planning, wealth transfer, and fiduciary strategies. And you will also find that Kate can make even the most difficult and dry topics, something like tax legislation, enjoyable to listen to. 
So welcome Rob and Kate. And I'm sure as the audience is excited for today's event, I am very eager for this discussion and to hear your thoughts on both of these items. 
For our agenda today, our goal is really to help share some insights and practical guidance that you might want to consider in light of the market and economic environment that I mentioned. You might find that it's a validation for where you are today, or you might find that there are some ideas that you can mitigate or capitalize in light of some of these opportunities. 
So to start our conversation, I'm going to hand it over to Rob, who is going to walk through some updates on those market dynamics and give us some views on the economic outlook. And then I'll hand it over to Kate, who will give us some helpful wealth and tax-planning considerations based on what we know today. So with that, Rob, I'll hand it over to you. 
ROB HAWORTH: Thank you very much, Sarah. I'm so happy to be with everyone today. It is amazing how fast this year has moved. We are now two months into the new year, starting our third month. And I think there's a lot of challenge as we started this new year. 
But from our point of view, we think it's still a constructive environment. We would call ourselves a still kind of a glass-half-full view on the markets and economy. We're coming off of 2024 with very robust growth, averaging about 2.5%. Inflation has been getting lower. 
The market and consumers were certainly happy to get through the uncertainty of the 2024 election. And as we look over the rest of the year, we think that's still enough for this market and economy to continue to move forward. 
Yes, there are some risks, but we can talk through those as we move ahead. So as we think about this, we really think that growth remains constructive. Maybe not as fast as we had last year, but certainly constructive. Inflation probably remains elevated, but probably not accelerating. And that's because we see shelter costs coming down. 
And we're really going to keep our eye on three key things that I'll talk about as we move through these slides. The consumer, the Federal Reserve, as well as interest rates. And finally, we'll get around to some of the policy questions that I think are on a lot of minds, whether it's tariffs, the debt ceiling, extending the budget. 
Those are a lot of questions, but those aren't really derailing our constructive view as we look forward. So let's get into the first of the three big things for us as we think about this environment, and that is the consumer. 
The consumer has been so strong over the last two years. I think there's a lot of questions as to how can they really continue. And when we look across this slide and think about how we might rank the consumer in various areas, I'd highlight some areas of particular strength. One would be the labor market. And Friday, we'll get a report on jobs which really impacts the consumers. 
We've got an unemployment rate of 4%, which is quite low. We're really not seeing layoffs or an uptick in initial jobless claims. Average hourly earnings are still in that 3.9 to 4% year over year growth range. So, again, very supportive for forward consumer spending. 
So when we think about the labor market, that's certainly a plus in the consumer column. When we think about incomes, I go back to average hourly earnings, wage growth, labor turnover. All those are also in that consumers favor. 
Spending. The consumer other than the last retail sales report we got, we're still seeing the consumer spending at moderate levels, but still levels that are supportive of this economy. If we think about all of 2024, we had very solid consumer spending numbers through the year. 
The January report does cause us to have some questions. But one report is not a trend. We need to see that that trend develops. And really when we look at some of the big-box retailers and their earnings reports, yes, they're a little concerned about the future, but the consumer hasn't yet tailed off in terms of their spending. 
There are a couple of areas, I think, where we have maybe some questions. And that's I think, very fair at this point. One would be borrowing. We saw the consumer last year ramp up borrowing, both on revolving lines, also called credit cards, auto loans, and other areas. We did see that ramp up. But that pace of borrowing has started to come down. 
And so it looks like the consumer is self-correcting on that borrowing fairly quickly. That means we may not get another surge from that in 2025 or 2026. But they're not really a challenging levels. And we see that as well when it comes to delinquencies, where we saw delinquencies tick up on credit cards. Meaning people are maybe taking their time with payments, but they're working that back fairly quickly. 
So when we look at consumer overall, we'll keep looking for that rate of change that may tell us that something is going wrong. But for now, there's a lot of things, a lot of strengths behind that consumer that leaves us at a point of strength for the year. 
On the next slide, we'll chat a bit about the Federal Reserve, because the Federal Reserve remains very important. We have Chair Powell speaking on Friday. We'll have another Fed meeting in March. And I think a couple of things, the Fed has been very instrumental in this environment for the last couple of years. 
One, they pushed interest rates up by more than five percentage points in their battle against inflation. And what this chart depicts is really that if we think about the pace that the market and the Fed kind of expect of themselves in terms of rate cuts, it's a fairly shallow cycle. 
When we compare this to past cycles, the Fed has typically had to be more aggressive in rate cuts in battling a challenging economy. That's really not the case right now when we think about inflation staying in that 2 and 1/2 to 3% range, which is where we've been oscillating for now. Again, coming down from very high levels. If we go back to the peak, it was more than 9% in terms of the consumer price index year over year change. 
We're now much closer to 2 and 1/2 to 3%. We're not quite getting to the Fed's 2% target, but we are trending down in that level. So they maybe don't have to cut rates quite as quickly, because the inflation battle is getting won. 
Two, the unemployment rate is quite low. So they don't really see a problem in the labor market. So again, the Fed doesn't need to get rates down to more normal levels very quickly. So I think when we think about the Fed, this has been and is a very shallow cutting cycle, which tells us something about the power right now of the US economy. It really speaks more to strength than problem. 
And yes, it means we do know the Federal Reserve is maybe a little elevated in terms of interest rates and where they'll end up. Right now expectations they'll probably end up somewhere below 4%, maybe 3.5% to be kind of normal or neutral. But they're not having to press ahead with those cuts because those factors are so strong. 
And additionally, I think they have some questions about inflation pressures from policy that could be coming, whether it's inflationary pressures from tariffs or on down the line. And they've been telling us they're fine, waiting to watch that economic data evolve. So the Fed will be very key as we move forward. But they're clearly in this wait-and-see mode. And that's being reflected with the low expectations for rate cuts. 
The third area of concern for us is inflation. And this has been everybody's concern. And keep in mind, we as market observers tend to think of inflation as the rate of change rather than the level of prices. So the price of a good or a widget goes up by $1 from $1 a widget to $2 a widget, that's a 100% price increase. And the next year it stays at $2, so that's a 0% price increase. So we'd call that flat inflation. 
As a consumer, we're still concerned because the price is still much higher than it was. But from a rate of change perspective and what feeds into markets and future prices, that normalizes. 
What you can see on this chart of inflation is we are seeing normalization across both the blue lines, which represent inflation measures, and the green lines, which represent inflation expectations from a variety of places, especially the market. 
What we see is inflation expectations remain well anchored, and inflation itself is trending down to that level. That improvement has slowed significantly, but it is still trending down. And I think that's what the Federal Reserve is really looking at as they think about rate cuts. 
And what we think the market and the economy is looking at is we're still getting towards those low levels. It's something we'll have to be watchful for. Certainly we could have some pressures accumulate here in the market and the economy. But for now, those inflation trends are on a positive trend for us and give us that positive outlook as we look into the rest of the year, even with a lot of the concerns we have. 
So maybe to opportunities and then risks. I think one key opportunity, and we've kind of highlighted this, I think over the last three years it's been a little challenging to be a bond investor. If we think about 2022, returns were negative as the Federal Reserve raised interest rates. And they were relatively modest over the last two years. 
But one of the things this chart tells you, it kind of looks at-- if you look at your starting interest rate over the next seven years, that tends to describe your forward return environment. 
So if your starting interest rate is 1% over the next seven years, you probably more likely to get 1%. If your starting interest rate is 4.25% over the next seven years, you're more likely to get 4.25% is kind of what this regression tells you. 
And that's some of what we would really advocate for right now. Some of our constructive view is you're getting more on bonds than you have in a very long time. And with the Federal Reserve likely poised to cut rates to get back to neutral, that means rates on cash are going to keep coming down, and those higher rates on bonds are relatively attractive for investors. 
So we've been advocating is not a tilt towards bonds, but rather a reevaluation, and this will get into what Kate has to talk about a bit, but a reevaluation of your financial plan as to how much risk do you really need to take to achieve your goals? 
With bonds now paying you 4% to 5% and within some sectors, you can certainly get more, it may be time to look at that balance in your portfolio. We'd still advocate for global equity exposure through time. We think there's still earnings growth to come. But this really highlights that rates are quite attractive now, and allow investors to think through their risk tolerance. 
Last thing I'll highlight and then I'll turn it to Kate is around some of the risks. And there are lots of risks that we highlighted. It's tough to talk about, too many. But tariffs is one that's in the headlines really for the last couple of days as yesterday, we enacted 25% tariffs on Mexico and Canada, an additional 10% tariff on China, 10% tariffs on Canadian oil. 
And then we literally just got the news that US automakers are exempted from those tariffs-- exempted from those tariffs for another month. So we'll see how that plays out. But the thing this chart highlights is really from a trade perspective, it is modest for the US. 
We don't export nearly as much as a percent of our economy, and we don't import as much as a percent of our economy compared to the three trade partners we just highlighted. China, Canada, and Mexico are all much more dependent upon trade for their economic growth than we see in the US. Trade basically makes up 25% of US gross domestic product. Very modest compared to others where you see it reaches a third to 2/3 of their economies. 
So while there is likely to be an impact, and there are risks from, say, price increases due to tariffs, we certainly would say that those risks are a little more muted as we look forward. And we wouldn't put too much stock there in terms of determining the economy. There are certainly plenty of risks to go around, but it's modest from this perspective. So let me stop there and turn it back to Sarah, and then I'll certainly be around for questions and answers. 
SARAH DARR: Perfect. Thanks, Rob. I really appreciate just the overview and understanding around where do we stand with market and economic trends. I know helpful to hear just from a policy of pressure projection standpoint what we can expect going forward. 
And given these risks and opportunities, it's really important to us that we reiterate that importance of reviewing your overall financial situations and goals. Because despite what might be happening from a tactical and strategic standpoint, reviewing that financial planning process can provide clarity and confidence to ensure that you know where you're going and that you are on track from a long term perspective. And it helps you understand what adjustments you may need to make to achieve those goals. 
And so having that overview and that overarching plan can really ensure that you are on track. And so we're going to bring Kate into the conversation to talk through what are some things that clients should be looking at as you look at your situation, and what are some of the things that we're seeing from a legislation standpoint to make sure that you are making some of those prudent, long-term planning decisions and reviewing your situation going forward. So, Kate, I'll hand it over to you. 
KATE PHELAN: Thank you, Sarah. Wonderful to be here with all of you today. I'm going to do my best to make this as enjoyable as possible, as promised by Sarah. I want to start from a planning perspective first with some fundamentals, what are some things that we should be thinking about regardless of the noise that Sarah mentioned. And then I do want to get into what's happening right now from a legislation perspective, because I know that's really what's on everyone's mind. 
I want to start first by getting rooted in some really important principles from a financial planning perspective. And they're here on the slide. Let's start with know where you're headed. Nobody's goals are the same as their neighbors, in my experience. 
And so it's really important to know what your goals are, where you're headed. And conversely, what do you need to get there? All of this is going to inform what your level of risk is. Rob mentioned, are you taking the appropriate amount of risk relative to what your goals are? 
It's really important to have these foundational principles sort of identified for yourself so that when things get bumpy or confusing, or the capital markets or the economy are going through some times that may be uncertain, you can really be rooted in where are we going and what do we need to get there without being worried about, what are your neighbors doing or what are some of these other implications going to be. 
So with that said, I want to just go over a few really important things that we should be doing on a year to year basis. So if we could turn to the next slide. Let's walk through some of these ideas. So first, making a tax projection is a really good idea every year. 
I think it's important to know not only where you want to go, but where do you stand. You don't want to be blindsided in April or October, as the case may be, with a tax liability that you weren't expecting. 
So with that said, what can you do to help some of the things that might be going into what that tax liability is? My first one is kind of the favorite because it sounds so obvious. Find ways to reduce your income taxes. Hello, that's an important thing to do. 
Most notably, the way that you're going to do this is by reducing what your taxable income is. The ways that you do that are by making contributions to certain types of investment vehicles that enjoy single, double, or even triple tax advantages. 
So these are things like your retirement account, your FSA, and HSAs, your 529 plans. So these are vehicles that are really set to help you save for long-term lifetime goals, retirement, health expenses, education expenses. And in doing so, by using these specific vehicles, you can also enjoy some tax benefits. So it's really important to be maximizing your contributions to the extent that you can to those types of accounts. 
The other things that you want to think about in terms of reducing your tax liability is how can you minimize your capital gains tax? Obviously, capital gains tax is what is due when you sell something for more than you paid for it. 
Some of the things that we look at when you want to minimize this liability is potentially, can you pay it in two different years? So can you sell a portion in this year and a portion in next year, and then smooth it out over two years? Can you transfer some of the appreciated assets to a child who is perhaps in a lower tax bracket, or perhaps transfer them to charity? And I'll talk about charitable planning in a minute as well. 
You also want to look at taking advantage of the current gift and estate tax. So this is something that we're going to talk about in a little bit more detail in a minute. But right now, both the lifetime and annual exclusions are historically high. 
And so for those of you who are making annual gifts to children or grandchildren, or other folks who you're gifting to, you want to make sure that your gifting strategies makes sense for you, but also that it's maximizing those exemptions in a way that makes sense for your current situation. 
And then last but not least here, consider your charitable giving. This is one that we certainly talk about. Charitable giving is important for society and the communities that you live in. It's also great from a tax perspective. 
Right now with the way that the tax code is, oftentimes because the standard deduction is so high, we see fewer people making charitable deductions for the deduction because they're not itemizing. So for that reason, I consider-- think about things like perhaps bunching. So making two years worth of giving in one year. So in one year, you're using that standard deduction, and the next year you're using the itemized charitable deduction. 
Or consider vehicles like a donor advised fund, perhaps a foundation, if that's appropriate for your situation. And then looking at the distributions from your retirement account that are qualified. So some different ways to look at charitable planning. 
These are things that we recommend all year, year round. I think it's top of mind right now because we're coming up on April 15. But these are the kinds of things that you want to be doing, really on a regular basis, to make sure that you're taking advantage of all of your options in a way that makes sense for you in any given year or scenario. 
So with that, maybe we will turn to what's going on from a legislation perspective. And like I said, I know this is really what's on everybody's mind right now. Right now we are living under the Tax Cuts and Jobs Act. And it's important to really get rooted in the fact that this is still the law. 
And I want to go over what it means that right now, the law is set to expire at the end of this year. And then let's talk through a little bit about what we think may or may not happen relative to the fact that it's supposed to expire. 
So this set of law had some really sweeping implications for taxpayers, both individuals and corporations. If you look at it from an income tax perspective, the tax rates, when this is set to sunset, will go back to a pre 2017 rate. Which means that for a lot of individual taxpayers, their tax rate may be going up. 
There's also implications for that standard deduction that I mentioned. It is very high right now, which is a part of the TCJA. The alternative minimum tax is another thing that we look at right now. Only a handful of Americans need to worry about it. 
If we go back to a pre '17 tax environment, now suddenly a handful of millions of Americans need to think about it. So that's another thing that we're looking at. Certainly, we're looking at the SALT limits. So the state and local tax, particularly if you're in a high income tax state or otherwise high tax state like Illinois or California. That's something that people are looking at. Set to expire under this tax code. 
And the estate and gift tax. This is one that we spend a lot of time with clients who are doing wealth transfer planning, because right now the estate tax exemption is very high, nearly $14 million for an individual taxpayer and double that for a married couple. If the current tax code were to expire, that would go really in half to about $7 million. 
From a corporate perspective, there are a number of tax breaks that would expire for small and large corporations. So really kind of a cornucopia of things that we need to be thinking about that are included in the current tax cut. Or excuse me, in the current tax bill. 
I spent a lot of time last year talking with clients and associates and colleagues about the fact that we were all really pretty certain that this tax code was probably going to expire. Not because we knew what was going to happen in the election, but we felt pretty confident that there would probably be a split of power, and therefore there would be a lot of give and take. 
Obviously, that's not how things went in November. And so we look now at the red sweep and the control in Washington. I think most people can agree that it is likely that a lot of what I just discussed, is not going to expire. I think it's certainly that we can agree that Congress intends to extend maybe not all of the provisions, but probably a large set of the provisions. 
But it is really important to remember that in order to do that, Congress has to act. They can't just say you know what? We're not going to let this expire. They really need to get to the drawing board. They need to decide which provisions they want to extend, which they don't. And that requires that they act, as I mentioned. 
So it's really not as simple as saying, OK, we know now what the control of power in Washington is. So therefore, we know there's nothing doing about the tax code. It's going to stay exactly the way it is. It's really not that simple. 
So now we're in a situation for you as taxpayers, thinking about what you're planning is going to look like. We're in a little bit of uncertainty. And by a little bit, I mean a lot of uncertainty. And what I really want to encourage people today to think about is trying your hardest not to wait until we know what's going to happen with the tax code. 
And I say that for a few important reasons. The first is, if you're going to do estate planning as a result of the changes that may or may not happen in the tax code, that's a slow process. When we saw this happen-- thanks for the slide change. 
When we saw this happen in 2012 with the tax code where, again, we were looking at a coming sunset, we saw a lot of practitioners, attorneys, and CPAs who were involved in that process simply say, I can't take on any more clients. We don't have time to get these transactions done. And so there is risk in waiting until we really know what's going to happen. 
So logistically speaking, I worry about people who say, I'm just not even going to worry about it until we know exactly what's going to be in the tax code, because that may be this summer. But it may be as late as this winter by the time Congress really decides what they want to do and they get it through. Right? There's a lot of implications to changing the tax law. 
Rob talked a lot about things around the debt and what we're seeing in the economy. All of that is going to go into what they can agree to from a tax perspective. So I think it's really important not to wait, just simply logistically speaking. 
More important than that, I really encourage people to remember that the tax code shouldn't always be the only driver of your decisions. If you are doing irrevocable tax planning, wealth transfer planning, those are decisions that you're making because they make sense based on your net worth, based on the nature and extent of your assets. It's what makes sense for your family and for your tax situation, regardless of what does or doesn't happen with the tax code. 
And so I really remind people not to let the tax code be the tail that is wagging that estate planning dog, if you will. I want people to be really careful about making decisions around their estate planning because it's what makes sense for them, not because it's based on what do I think is going to happen with the tax code, which right now is a bit of a Magic 8-Ball question. 
We have some indication from President Trump, both while he was campaigning and since taking office, some of the things that he wants to look at. And so not-- like I mentioned, it's not as simple as just saying we're going to extend it. Are we going to have changes to things like the taxation of wages or overtime? 
I mentioned those state and local deductions. Those are something that people have talked a lot about maybe letting that expire, having some changes there. So it's really not straightforward. And so I know people maybe were hoping to come today and say, great, we're going to know exactly what to do or exactly what's going to happen in Washington. 
My bottom line for folks is, look at your own scenario. Stay rooted in what your plan is. Sarah very well articulated that. It's important to have that plan. It's important to come back to it as the foundation of all of your decision-making. Work with a professional to that end, so that you really can know what is the plan that makes sense for me regardless of all of this noise. So with that, I think I'll hand it back to you, Sarah. 
SARAH DARR: Perfect. Thanks, Kate. And as you all heard, there is no shortage of both timely planning opportunities to pay attention to as there are legislative decisions as well as evergreen planning, that you should be reviewing on a regular basis to make sure that you can maximize your situation and take advantage of some of those opportunities. And so we would encourage you to bring up those conversations with your advisor and your relationship team in your next meeting. 
We are getting a lot of great questions from our audience members. So we will transition over to those now. The first question that we have is for you, Rob. Over the last two years, stock market gains have been driven in large part from technology companies and that sector. Do you see equity gains broadening to other sectors or genuinely remaining concentrated within a narrow band of the tech stocks again in 2025? 
ROB HAWORTH: Yeah, our view is we should see this broaden out. And we're starting to see that in performance as we start 2024, particularly global securities and then income-oriented securities. We still think technology stocks have a place in your portfolio over the next two years and would continue to have them in your portfolio, but we would look to broaden out and diversify that equity exposure because we are seeing this performance really rotate out of technology and into other sectors. 
SARAH DARR: Perfect that's very helpful. Earlier, Rob, you mentioned around the high interest rate environment that we've been in. And the next question is around that has attracted trillions of dollars into cash equivalent securities over the last couple of years. 
But as the stock market continues to garner headlines and maybe a bit of discomfort, how are both of you discussing strategies with clients who have maybe a lot of cash on the sidelines? So, Rob, maybe we'll start with you and then Kate, interested your thoughts as well. 
ROB HAWORTH: Yeah. For us, from an investment perspective, we really start with what is your plan for that cash. Most people don't hold cash just for cash's sake. They have other long-term needs. So we'd really start by setting a strategic portfolio allocation, a blend of stocks, bonds, maybe real estate. 
I think the good news, as we point out, is you're really seeing the highest interest rates in the last 14 years. So there's a bit more of a balance and ability to have lower risk in a portfolio, meaning own more bonds and still maybe achieve your financial goals without having to overallocate to equities, which we still think are attractive over that longer term plan. 
In the shorter horizon, as we adapt to what's going on in the current environment, we would emphasize a couple of things in portfolios. One, within equities, we would look to globally diversify that equity exposure. We're seeing improving returns and more inexpensive valuations for foreign stocks. And we think that trend can continue. But that's also happening in other sectors of the US equity market. So we'd look to emphasize that relative to cash or high quality bonds. 
Secondarily, we'd look to other segments of the bond market to add value to portfolios, things we call structured credit, like non-government agency-backed, residential mortgage-backed securities. Quite a mouthful, a very complex security. But we're seeing excess return opportunities coming from that more unique segment because we're not seeing a lot of people evaluate it, and we tend to see strong fundamentals in the homeowner segment of that market. 
But we'd also, for certain clients, look towards insurance-linked securities, which get us diversified away from the business cycle into a higher income stream. That also helps add value to the portfolio. 
And then for municipal bond investors, we'd actually look into that lower quality segment in the municipal bond market, where especially adjusted for taxes, you're getting real extra benefit in terms of income, after-tax income that you're able to keep in your portfolio. So there's a number of opportunities to add value once you've kind of established that long-term strategic target as you migrate away from cash. 
SARAH DARR: That's helpful. Kate, how about you? Any additional thoughts? 
KATE PHELAN: I would echo those sentiments. And then I would say one of the things that we talk with folks a lot about is the timing. Right? So for most people, they don't want to say, I'm going to move from cash to another strategy all at once. 
And so we recommend that they consider dollar cost averaging where they can deploy in tranches and sort of time it out a little bit. We also encourage people, and I said it earlier, is to stay rooted in their plan. So if holding too much in cash has made it so that your plan has wandered out of the objective that you've set for yourself, it's probably time to rebalance and redeploy those assets. So really getting rooted back in the plan. And I think Rob said it well, what's the long-term really strategic objective that you're looking at? 
SARAH DARR: Perfect. So Rob, we've seen impressive performance both 2023, 2024, thanks to strong economic and financial markets, consumer spending, corporate earnings. How do you see the economic and market dynamics evolving in 2025? Are there any headwinds with the government budgeting process and debt limit that we should be aware of? 
ROB HAWORTH: I think it's a relatively complex question, I think, and challenging to answer at the moment because yes, there are headwinds, but they're known headwinds. And I think what we're seeing is the market is adapting to that. 
And the question is, how do they play out? What is the size? How high do tariffs go or how many countries do they impact? Or how long do they go on? As we've seen in the market volatility to start this year, as tariffs get delayed, the market sets that issue aside. 
I think the next two things that the market has to pay attention to are the budget and the debt ceiling, which is before we get to Kate's very apt issues with the Tax Cuts and Jobs Act getting extended. But we need a budget so that we avoid a government shutdown and we ultimately have to fund all this with debt. And that wraps-- that extraordinary measures wrap up as we get to August. 
The interesting thing about the market is it's not going to price those risks until those are actually risks. And the reality is the government is still spending money today. They're spending down the Treasury General Account instead of issuing debt. So the government is doing OK now, and the market will look to those problems as we get there. And worse, we will certainly evaluate as we get there. 
In the meantime, I, and we at Asset Management Group, go back to the fundamentals. The consumer remains healthy. The Fed is on an accommodative path, even though they're not accommodative yet. And inflation is somewhat under control. And that's allowing corporate earnings to stay fairly solid this year and into next. 
So when we look at those fundamentals, oh, and by the way, we're seeing improving fundamentals outside the US too in terms of earnings expectations. So that's why we kind of maintain that glass-half-full view right now as we evaluate those incoming risks for what they may mean. But right now, that's not impacting the fundamental data until we see how much, how long, how far. 
SARAH DARR: Perfect. So maybe for the last question, Kate, what are the fundamentals that you would recommend from a planning standpoint for clients who may be feeling uncomfortable with some of the uncertainty relative to their financial situation? 
KATE PHELAN: It's the advice that I come back to time and time again, which is you build a plan for a reason. We talked about it at the outset. The plan is rooted in where you want to go, right? What are the goals for you and your spouse and your family? Stay rooted in that. 
There's going to be a lot to talk about between now and the next time that we get together on one of these webinars. There is just constant shift in the capital markets and the economy, and the news out of Washington. This is a really interesting and exciting, but also confusing time. 
And so the more that you can just come back to, what is our plan? What do we need to see out our plan? Are you saving for your kids to go to college or to retire? Are you contemplating the sale of a business that you've worked your whole life to build? Those are the things that you really need to stay rooted in, because they're the things that you can control and that you need to worry about. 
And as much as you can, use that plan to be a north star that helps you say, OK, right now this is just noise and I don't need to worry about it because I'm rooted in what my own goals are and what I need to do in order to achieve it. 
I know that's a lot simpler for me to say than it is sometimes to practice. But if you have a plan, that's the first step. It makes it a lot easier to stick to the plan if you actually have it. And you can hold it and you can look at it, and you can come back to what are those goals and how do I get there. 
SARAH DARR: Perfect. Thank you, Rob and Kate, for your insights and your expertise. That's very helpful. Really appreciate the comments. And in a really great segue too, Kate, to your point, as we work with our clients and understanding your goals, creating a plan to achieve those goals, we really do believe that that is an ongoing process. And especially important during times of shifting dynamics and uncertainty. 
And we know that there are a lot of factors that can impact your ability to achieve those goals. And so we want to make sure that your goals remain appropriate, that they're realistic, that we're making adjustments to that process. And so our team and our planning process really is centered on understanding what's most important to you. And so that includes identifying those appropriate strategies. It's delivering customized advice, and it's all based on your needs. 
And so whether you are growing your wealth through investing, retirement savings, college savings, or maybe you've built your wealth and now you are focused on protecting and providing for loved ones, that's something that we also spend a lot of time working with our clients around. 
You might find yourself saying, I am more focused on health care, gifting, estate planning, as Kate mentioned earlier. Those are all things that we want to engage in conversations around and make sure that we have the right solutions so that you can continue to feel comfortable in light of all of the variables that we talked about here today. 
So wherever you are, we want to make sure that we are having those collaborative conversations with you, that you have the confidence about where you are, and more importantly, the clarity around where you're headed in the future. 
If you haven't had part of those conversations, in the future, want to know what you can expect and how that looks like as part of your team process. This is an interactive process and capabilities that we look forward to engaging with you. There is real-time transparency and capabilities that we have within our tools. 
Your advisor or planner can guide you through a process that not only starts with your goals and your concerns, but it will develop a plan that will really dig into that analysis and look at different scenarios to ensure that we're looking at the options and considerations should things play out in a different manner. 
And so we will vet those scenarios with you. We want to make sure that we are looking through a variety of lenses and then adapting to the scenarios, as Kate and Rob mentioned, based off of the known and the unknown as we move forward. 
So as we end our time today, I just want to offer a few resources to you and next steps if you're interested in learning more about today's topics and our approach to wealth management. Within the next 24 hours, you'll be able to access the replay of the webinar on our website usbank.com. 
In the meantime, the resources at the bottom tab of your screen, you'll be able to see the link to our latest insights, analysis, and guidance on the markets. You can also go to usbank.com/MarketNews and you'll be able to find this information and much more. 
If you're not a wealth management client, but you're interested in knowing more in how to apply some of the insights here today or talking more about your financial situation, there's a few ways that you can get started with that. You'll see a phone number listed here. You can also go to usbank.com/advisor to find a banker advisor that are located near you. 
You can also fill out the Contact Me, which is located in the screen at the bottom tab, and we'd be happy to reach out to you as well. So we're at the end of our time here today. I just want to thank Rob and Kate again for all of your great insights. But thank you to all of you, just for taking time out of your day to meet with us today. And hope you have a great day and week. Thanks, everyone.