ALIT - Aristotle Small/Mid Cap Equity Q2 2025 Commentary
2025-07-29 04:34:00 ET
Markets Review
The second quarter began with a continuation of the risk-off environment from the first quarter. Markets troughed on April 8th (Liberation Day), before staging a high beta, low quality rally for the remainder of the quarter. Elements that sustained the rally were administration delays in the tariff implementation date, hyperscale commitment to outsized AI capex plans among growth-oriented SaaS technology companies, and the resilience of broader consumer spending trends as both individuals and companies front-loaded imports ahead of tariffs. Solid labor market readings and stable-to-lower than expected inflation data kept the Federal Reserve (Fed) on the more hawkish course they took in December. Chairman Powell held rates steady at the June FOMC meeting and is not bowing to political pressure to cut rates sooner than the committee’s analysis indicates. The Fed will continue to maintain a measured approach going forward, updating their economic projections and forecasts to two rate cuts in 2025. Deficit scrutiny increased as the One Big Beautiful Bill Act proceeded through Congress. This was highlighted by Moody’s downgrading the U.S. credit rating from Aaa to Aa1 – the last of the major rating agencies to downgrade the U.S. over the past 14 years....
Aristotle Small/Mid Cap Equity Q2 2025 Commentary