Thoughts from Themes: Cut and Thrust

This past week has brought two very different stages of action. In Washington, the Fed made its first move toward easier policy in nearly a year. Meanwhile in New York, the UN General Assembly is offering its own high-stakes speeches and debate, with world leaders crossing foils over global conflicts, climate, and the role of multilateral institutions.

For investors, the intrigue isn’t just in the headlines but in how these dramas ripple outward: a softer Fed reshaping market expectations while global leaders test each other’s resolve on everything from security to trade. The real cut and thrust is in watching how these forces, monetary and diplomatic, will keep shaping sentiment well past this week’s opening moves.

The Fed Eases

The Federal Reserve’s decision to initiate interest rate cuts on September 17, 2025—its first since December 2024—marks a pivotal shift in monetary policy aimed at countering a weakening labor market and sluggish economic growth. The benchmark federal funds rate was lowered by 0.25 percentage points to a range of 4.0%–4.25%, with projections indicating two additional cuts this year and one in 2026.

Several economic sectors are poised to benefit from this easing cycle, but others that may have been expected to do well may continue to struggle.

Consensus says that lower interest rates reduce mortgage costs, making homeownership more affordable and stimulating demand. Homebuilders and real estate investment trusts (REITs) typically see increased activity and valuations during rate-cut cycles. And while some analysts have already noted a rebound in housing-related stocks in anticipation of the Fed’s move, reality may be very different. The problem is not rates: it’s valuation and sellers that are not willing to reduce the ask price for properties that they are selling for fear of writing a check at closing. Lower interest rates could potentially make monthly payments more affordable, but buyers should still demand lower prices based on still-high interest rates. Also, lowering the Fed’s fund rate doesn’t solve the deficit issue, a major reason why the long end of curve remains persistently high. Sorry to dash hopes, but housing affordability is a bigger problem than a 25 bps cut…

So, who will win? To start, Financials. While banks often face margin pressure from lower rates, certain pockets of the financial sector—such as asset managers and fintech firms—can benefit from increased market activity and consumer borrowing. Additionally, the largest financial institutions on the planet, better known as the GSIBs, will benefit from any interest rate environment because of their size and scale, interconnectivity in the global economy, efficiencies through technology, and lack of sensitivity to interest rates. Defense will also win in any environment because global conflict, specifically Russia and Ukraine, has no end in sight and defense in US, Israel, and NATO member countries must be increased over the next 10 years.

Gold and crypto assets will benefit as well because they have proven to be stores of value that can outpace inflation in times of distress. In the case of crypto, specifically Bitcoin has shown it can become more valuable than the US dollar, even through volatile swings.

The UN Debates

As the United Nations General Assembly (UNGA) convenes its 80th High-Level Week in New York from September 23-29, global leaders are spotlighting pressing issues.

Economically, markets will fixate on flash Purchasing Managers' Indexes (PMIs) released September 23-24 across major economies. U.S., Eurozone, UK, German, French, and Japanese data will reveal manufacturing and services health, critical for assessing inflation trends and trade disruptions from U.S. policies. Germany's PMI may highlight fiscal stimulus offsetting export woes, while UK's will probe post-Brexit policy impacts on jobs and prices.

The week's pinnacle will be U.S. core Personal Consumption Expenditures (PCE) price index on September 26, the Federal Reserve's favored inflation metric. With forecasts hovering at 2.7% year-over-year, a hotter-than-expected reading could delay rate cuts, strengthening the dollar and pressuring equities. Chairman Powell spoke on Tuesday, September 23rd, but his comments didn’t deviate from last week’s FOMC meeting.

Diplomacy ‘Out of Order’

Trump has long lost faith in the United Nations ability to execute. A broken escalator on arrival and a broken teleprompter when he began his speech took Trump off-script and more directly on message this Tuesday morning. The President’s address clocked in around forty-five minutes, blending sharp critique with unapologetic American pride. The tone? Defiant yet confident, like a guy walking into a room full of skeptics and owning it. He started strong, declaring the future belongs to patriots, not globalists, firing a direct shot at multilateral setups he's long disliked. You could hear the edge when he mocked the UN's headquarters renovation, reminiscing about his failed bid to overhaul it for five hundred million bucks, promising marble floors over their plastic choices (classic Trump flex) turning a personal grudge into a jab at bureaucracy. It drew laughs, but the room tensed up quickly.

The core message hammered on America's resurgence under his watch. He railed against empty words from the UN that don't end wars, blaming globalist institutions for decaying world order. He touted pullouts from outfits like the WHO and Human Rights Council, calling them wastes of cash, and pushed for sovereignty over endless aid. Immigration got spotlighted too: no more asylum shoppers; apply in the first safe country, period. He touted his foreign policy wins and name-dropped ceasefires he'd brokered, positioning the US as the dealmaker, not just another donor, and addressed wars in Ukraine and Gaza as disasters he'd fix with muscle, not talk.

He discussed climate as a side note, dismissing overreach and favoring US energy dominance instead, even needling NATO members who are building defense against Russia, but still buying Russian oil. Trump framed America as the indispensable power, refusing to fund badly run orgs anymore; he's already yanked a billion in dues this year. It's all about putting Americans first: rebuilding strength, securing borders, controlling chokepoints like the Panama Canal. No more letting rules bend for others; impunity ends with US leadership. Critics might call it isolationist, but he spun it as “liberation-globalists exploit, patriots protect.” The speech wrapped with a rally cry: the United States will lead, not beg or blend in. It rallied his base, irked allies, and reminded everyone: Trump's back, and America's not sharing the throne.

And as always, every message was a plug for the US across energy, commodities, technology, etc., positioning America as the partner to grow with and the economy to invest in.

This Week’s Major US Economic Reports & Speakers

Monday, September 22

10:00 AM St Louis Fed President Alberto Musalem speech

Tuesday, September 23

9:45 AM S&P flash U.S. services PMI

9:45 AM S&P flash U.S. services manufacturing PMI

10:00 AM Existing home sales

Wednesday, September 24

10:00 AM New home sales

4:10 PM San Francisco Fed President Mary Daly speech

Thursday, September 25

8:20 AM Chicago Fed President Austan Goolsbee speech

8:30 AM Initial jobless claims

8:30 AM GDP (third estimate)

8:30 AM Advanced U.S. trade balance in goods

8:30 AM Advanced retail inventories

8:30 AM Advanced wholesale inventories

8:30 AM Durable-goods orders

8:30 AM Durable-goods minus transportation

3:30 PM San Francisco Fed President Mary Daly speech

Friday, September 26

8:30 AM Personal Income

8:30 AM Personal spending

8:30 AM PCE index

8:30 AM PCE (year-over-year)

8:30 AM Core PCE index

8:30 AM Core PCE (year-over-year)

8:30 AM Richmond Fed President Tom Barkin speech

10:00 AM Consumer sentiment (final)

Disclosures:

All data sourced from Bloomberg as of September 23, 2025, unless otherwise cited.

Views expressed in this newsletter are the current opinion of the author (Paul Marino). The author’s opinions are subject to change without notice. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results.

Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success.

Themes Management Company LLC serves as an adviser to the Themes ETFs Trust. The funds are distributed by ALPS Distributors, Inc (1290 Broadway, Suite 1000, Denver, Colorado 80203). Themes ETFs are not sponsored, endorsed, issued, sold, or promoted by these entities, nor do these entities make any representations regarding the advisability of investing in the Themes ETFs. Neither ALPS Distributors, Inc, Themes Management Company LLC nor Themes ETFs are affiliated with these entities.

This report is provided for informational purposes only and is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Recipients should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Indices and trademarks are the property of their respective owners. Information is subject to change based on the market or other conditions.

Certain information contained herein has been obtained from third party sources and such information has not been independently verified by Themes. No representation, warranty, or undertaking, expressed or implied, is given to the accuracy or completeness of such information by Themes or any other person. While such sources are believed to be reliable, Themes does not assume any responsibility for the accuracy or completeness of such information. Themes does not undertake any obligation to update the information contained herein as of any future date.

Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.

Past Performance: There is no guarantee that the investment objectives will be achieved. Moreover, the past performance is not a guarantee or indicator of future results. Benchmarks: Any indices and other financial benchmarks shown are provided for illustrative purposes only, are unmanaged, reflect reinvestment of income and dividends and do not reflect the impact of advisory fees. Investors cannot invest directly in an index. Comparisons to indexes have limitations because indexes have volatility and other material characteristics that may differ from a particular hedge fund. For example, a hedge fund may typically hold substantially fewer securities than are contained in an index.

The S&P 500® index includes 500 leading companies and covers approximately 80% of available market capitalization.