Inflation and Tariff Uncertainty

May 30, 2025

Seema Shah, Chief Global Strategist at Principal Asset Management, shares her insights on navigating the turbulent waters of the current financial landscape. She discusses the complexities of ongoing tariff negotiations and their potential upheaval for traders. Seema highlights the concept of 'tariff fatigue' as investors reassess their risk tolerance. The conversation also touches on strategies for adapting to inflation and market volatility while remaining cautiously optimistic about future equity returns.

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ADVICE

Covered Calls for Income and Hedge

Use covered calls by owning stock and selling upside options to generate income while hedging.
This strategy balances risk by giving up some upside potential for premium income.

INSIGHT

Early Tariff Effects in Data

Tariff impacts are just beginning to show in data; markets await clearer signs in summer.
Resilience in data so far could challenge bearish views if it continues.

ADVICE

Fund Hedges with Covered Calls

Fund macro hedge options with covered calls, especially in sectors like energy.
This approach allows purchasing protection without large capital outlay.

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Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyMay 30th, 2025
Featuring:
1) Greg Boutle, Head of US Equity & Derivative Strategy at BNP Paribas, Aoifinn Devitt, Chief Global Strategist at Moneta, and Ira Jersey, Chief US Interest Rates Strategist with Bloomberg Intelligence. react to PCE. April’s so-called core personal consumption expenditures price index, which excludes food and energy items, rose 0.1% from March. From a year ago, it advanced 2.5%, Bureau of Economic Analysis data out Friday showed. Both readings were in line with economists’ forecast.
2) Seema Shah, Chief Global Strategist at Principal Asset Management, joins to talk about any potential upheaval that could come as continued on-again, off-again tariffs. The Trump administration is exploring alternative options to pursue tariffs, including using other legal authorities, but these options may be more complicated and time-consuming, and could take months to execute. As a result, traders are reassessing their appetite for riskier assets amid concerns over weaker growth and fiscal strain.
3) Pat Haskell, Head: Muni Bond Group at BlackRock, on muni performance through 2025 and how munis function as a safe haven amid tariff uncertainty. Investors are also parsing data for clues on how the policies are affecting the economy amid concerns over weaker growth and fiscal strain.
4) Lindsey Piegza, Chief Economist at Stifel, brings us into the market open and talks about the outlook for inflation in the US after today's PCE report. Meanwhile in Washington, President Trump pushed Federal Reserve Chair Jerome Powell to lower interest rates at their first in-person meeting since the president's inauguration. Powell stressed that the path of policy will depend on incoming economic information.
5) Phillip Diehl, President of US Money Reserve and 35th Director of the US Mint, talks about recent fluctuations in gold prices and gold buying trends among consumers. Gold fell, putting it on track for an almost 2% weekly loss, amid a technical pullback in prices ahead of key US economic data. Despite the declines, bullion's haven appeal remains intact due to uncertainties surrounding Trump's tariff agenda and tensions with China.

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