Source: Bloomberg, Inc.

Key Takeaways:

• Global trade war unsettles markets.  Baseline 10% tariff is levied and further reciprocal tariffs paused for 90 days
• Fed guides to two 25 basis point cuts in 2025 but will support markets in recession scenarios
• 2025 GDP estimates revised lower to 1.7% from 2.1% earlier in December as stagflation scenarios unfold
• The headline Consumer Price Index ends 1Q2024 at 2.8%, down from 3.8% in the 1Q2024. Inflation expectations moving higher with tariff news
• Unemployment finishes March at 4.2%, down from 4.3% in July as economy currently solid
• S&P 500 down 11.5% as of April 10, 2025

Equity Strategy

With trade uncertainty and recession probabilities increasing; we expect valuation multiples to reset lower to more historic levels and will continue to assess portfolio shifts after the shock and surprise that the trade war has inflicted on capital markets. Our investment process remains consistent as we look for attractive entry points for profitable, high-quality, long-term investment ideas.  

Fixed Income Strategy

As of April 8, 10 year investment grade corporate bond spreads to the treasury have widened by 40 basis points and have moved to August 2024 levels. In short, the bond market is still not pricing a recession but is pricing a stagflation scare, with stagflation indicating slower GDP growth with higher inflation. The corporate bond market is now offering yields greater than 5% for maturities greater than 7 years. Fixed income allocations have finally become a hedge to equity market weakness during this trade war correction.

Click here to read the entire Q1 2025 Market Review.

Non-Deposit Investment Services are not insured by FDIC or any government agency and are not bank guaranteed. They are not deposits and may lose value.

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