⛔ The government has shut down and stock futures are lower this morning. The markets don't tend to react strongly to lapses in federal funding, but if it's different this time, we will be watching.

• Today: Citizens Financial CEO warns of the policy risks investors ignore.
• Plus: The fourth quarter, the best time of year for stocks, kicks off today.

Let's get into it. All in 1,000 words in 4 minutes.

Stocks keep grinding higher and Wall Street remains sanguine about policy risks, however, the view of the economy from a large regional lender is more cautious. Tariffs, the CEO of Citizens Financial tells Axios, continue to have the potential to trigger an economic slowdown.

Why it matters: While ignoring tariffs has been a critical part of the bull market formula, Bruce Van Saun warns investors to check their "unbridled enthusiasm."

What they're saying: "The one thing that's still the wild card really is the tariffs," the bank CEO says in an interview with Axios. He adds that "the biggest risk for a bank is always the external environment, the macro."

• "Unbridled enthusiasm for tariffs" could cause "more of a slowdown" if the levies creep up to what Van Saun calls "worst-case scenario" levels.

Catch up quick: The sweeping global tariffs unveiled by President Trump back in early April initially spooked investors, with the S&P 500 hitting an intraday bear market.

• The back and forth on tariffs since then has left investors fairly numb to any news about them. That could be a concern if the levies do eventually cause an economic slowdown once their effects are fully realized.

Zoom in: Companies have been having "pretty good years," Van Saun says. Still, the uncertainty around the tariffs is holding back "what should be an even better environment given some of the other policies."

• Reduced regulation has led to a more "pro-business orientation," Van Saun says. He adds that regulators are now going to him to ask what headwinds are getting in his way for the first time in his career.
• The tax bill also "avoided a train wreck" by continuing 2017 tax cuts.

Yes, but: While the tariff risks remain, Van Saun notes that "the good news is companies are pretty adaptable and resilient."

• This sentiment echoes what many strategists are banking on: corporations that can withstand the policy risks to eke out continued earnings growth.

Friction point: Immigration policy is another concern for Van Saun.

• "It's good to clamp down on illegal immigration," he says, but "a lot of the immigrants who come to this country have actually been very positive economic contributors."
• The current approach "could cause some things to slow down," he says.

Follow the money: Citizens Financial's stock has rallied 29% over the past 12 months, significantly ahead of U.S. Bancorp, PNC and other regional banks.

• The outperformance follows the company's earnings growth, which could be a signal that Van Saun's focus on expansion in wealth, private banking, and across new regions is paying off for shareholders.

For investors, it's the most wonderful time of the year: the fourth quarter, typically the best performing period of the year for stocks.

Why it matters: After a 13% rally so far this year, history suggests stocks have more room to run.

By the numbers: Wall Street gets excited about the final quarter of the year for good reason.

• Going back to 1950, the final quarter has been positive for stocks 80% of the time, with an average gain of 4.2%, according to the Carson Group.
• That gain is nearly double the second highest performing quarter of the year — the first quarter — which delivers an average gain of 2.2%.

State of play: Historic early weakness in fall didn't materialize this year. The S&P 500 closed September up on the month, marking its fifth month of gains.

What they're saying: "The market has blatantly ignored the seasonal weakness we've historically seen during August and September," writes J.C. Parets, a chartered market technician and the founder of Trend Labs. "This is probably the most bullish part of it all."

• Stocks just defied historic weakness. For Parets, that's a bullish signal.

Yes, but: For other investors, that's a sign of the market's biggest risk: complacency.

• "It is hard to argue with a bull market that is making new highs and is powered by cyclical leadership. However, recent overbought conditions paired with diverging market breadth suggest this melt-up could be due for some cooling off," George Smith, portfolio strategist at LPL Financial, writes in a note.
• Yet even Smith reminded investors to buy the dip when the opportunity presents itself, saying the setup heading into October is more treat than trick this year.

Between the lines: Equities keep rising regardless of several market risks, including but not limited to evolving tariffs, weakness in the labor market, high valuations, and slowing earnings growth for Big Tech, which is driving the majority of earnings growth.

Portfolio managers who have to beat the S&P 500 can't afford to stay out of the market, even if the continued rally starts to be justified by technicals more than fundamentals.

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The average IPO in 2025 returned 30% on its first day of trading, according to research from Goldman Sachs. This rate has only been exceeded in 1999, 2000, 2013, and 2020.

Why it matters: It's the latest signal of growing risk appetite for investors.

By the numbers: Goldman Sachs also notes that IPO activity this year has been outpacing 2024 activity by 18% thus far, with 2025 on track to be the strongest open year since 2021.

• That's still well below the historic average volume of issuance.

Thought bubble: It's no surprise then that retail investors are flocking to invest in new companies with that kind of single day performance.

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