I recently returned from a short summer vacation in Japan, eight days with the family where I try to unplug.

As I usually do, I downloaded about a week’s worth of research before the flight home and spent much of the eight-hour trip catching up on what I had missed.

When I left, markets were doing well. When I came back, they were even higher, but there had been plenty of volatility in between.

There was the usual noise: wars, tariffs, political rhetoric, and headlines around President Trump. These things matter, but as I’ve said many times before, I tend to focus less on what politicians and policymakers say and more on what they actually do.

And when it comes to what moves markets, one of the biggest variables is liquidity.

When talking about liquidity, two of the most influential people right now are U.S. Treasury Secretary Scott Bessent and Federal Reserve Chair Kevin Warsh.

Bessent has been actively supporting the long-term bond market through Treasury buybacks. Some estimates suggest there could be up to $1 trillion of capacity available. In other words, there is potentially a tsunami sized injection of liquidity heading into financial markets. Which is generally very bullish for stocks and other risk assets and was one of the main reasons markets recently moved sharply higher.

Warsh, on the other hand, has been talking about the possibility that interest rates may need to rise if inflation remains too high. Higher rates generally mean tighter financial conditions and less liquidity, which is not what stock markets want to hear. After his speech, markets reacted accordingly and sold off sharply.

On the surface, the two appear to be pulling in opposite directions.

One is potentially adding liquidity, while the other is talking about taking some away.

My own view is that the situation may be more coordinated than it appears.

Bessent and Warsh have known each other for a long time and have a significant history together. Warsh may be hoping that his words alone are enough to do some of the work for him.

Sometimes simply talking about higher rates is enough.

If markets believe the Federal Reserve may tighten policy, bond yields can rise, stocks can pull back and financial conditions can tighten on their own. In other words, the market can do some of the Fed’s work for it, which may ultimately mean Warsh does not have to raise rates at all.

If you believe that “actions speak louder than words,” here’s the bottom line: Bessent is actively preparing to add liquidity, while Warsh is still just talking about potentially taking it away. For now, I’m leaning toward more liquidity, not less— and that’s good for stocks and other risk assets.

Iran: Who’s Really Winning?

I think both sides are losers.

The U.S. went in wanting a nuclear deal and hoping for regime change. Neither happened. At this point, they would probably be happy just to get the Strait of Hormuz fully open again and move on.

Iran screwed this up too. They’ve taken a lot of damage and, in my opinion, badly overplayed their hand by disrupting shipping and energy flows.

Once you make a major route unreliable, the rest of the world starts finding ways around you. New routes get built, new suppliers get used and people stop relying on you.

I don’t see everyone simply going back to the old setup once this is over. Iran has lost influence, it is being circumvented, and I think that is going to take a real toll on the country for years.

From a market point of view, I’m focusing more on Russia and Ukraine than Iran right now. They are directly hitting refineries and energy infrastructure, which has already contributed to fuel shortages and export restrictions out of Russia. If that continues, it could push fuel prices higher, add to inflation and ultimately factor into how Bessent and Warsh think about interest rates and how much liquidity enters the markets.

Portfolio Management

From a portfolio management perspective, I’m not making any major changes right now. I’m happy with our returns and with how the pools have handled the recent volatility.

September has historically been one of the weaker months for markets, but context matters—something I discussed in my most recent CBC interview, which you can hear here. I’ll keep rebalancing where it makes sense, but I also want to stay positioned to take advantage of what has historically been a very strong fourth quarter in midterm election years.

J.P. Morgan’s data going back to 1937 shows the first three quarters of a midterm year have been roughly flat to slightly negative on average, while the fourth quarter has averaged a 6.6% gain.

Of course, history doesn’t have to repeat itself. But for now, I’m not chasing the day-to-day headlines, and I’ll make changes when the underlying facts change—not simply because September has a bad reputation.

Mark Ting, CFP®, CIM® is a registered Portfolio Manager at Foundation Wealth Partners. Foundation Wealth Partners LP (“FWP”) is registered as a Portfolio Manager and Exempt Market Dealer in all Canadian provinces and the Yukon territory.