Tariffs, Fed Policy, and Finding Value in a Volatile Market | Lindsey Bell and Shannon Saccocia
Mar 13, 2025
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Lindsey Bell, Chief Market Strategist at Clearnomics, and Shannon Saccocia, Chief Investment Officer at Neuberger Berman, discuss navigating market volatility and economic uncertainties. They analyze the impact of tariffs on business decisions and economic growth, highlighting consumer resilience amid evolving spending patterns. Predictions for GDP growth are examined, alongside the Federal Reserve's balancing act between inflation and growth. They also explore opportunities beyond tech stocks and emphasize the importance of international investments for broader portfolio stability.
Ongoing tariff discussions are creating significant business uncertainties that affect capital expenditures and overall economic growth.
Consumer resilience remains strong, with positive wage growth supporting spending despite inflationary pressures and cautious sentiment about long-term conditions.
Investors are diversifying away from large-cap tech stocks toward sectors like healthcare and financials to seek value in a volatile market.
Deep dives
Impact of Tariffs on Economic Growth
Tariffs present a complex challenge for economic growth, as their unpredictable nature creates significant uncertainty for businesses and investors. The evolving rhetoric surrounding tariffs can lead to a freeze in capital expenditures, with companies hesitant to commit to hiring or expansion when faced with an unclear regulatory environment. A noteworthy concern is that the market requires clarity on tariffs to stabilize; without it, both investor confidence and business operations may falter. Investors are observing a shift in CEO confidence and small business sentiment, with many adopting a more conservative approach to decision-making in light of tariff uncertainties.
Consumer Resilience Amid Economic Shifts
The resilience of the consumer remains a vital element in the ongoing economic landscape, despite growing concerns about job security and inflationary pressures. Wage growth has been steadily positive, contributing to sustained consumer spending, although sentiment surrounding long-term economic conditions appears cautious. The discussion emphasizes the importance of jobs and income stability for consumer behavior, with part-time work on the rise as individuals seek alternative income sources amidst rising costs. This adaptability signals a consumer base that remains engaged, although inflation and fluctuating economic policies may test their resilience going forward.
Market Perspectives and Investment Behavior
Investors are increasingly exhibiting a desire for a broader market participation, moving away from over-reliance on large-cap technology stocks towards financials and healthcare sectors. There is a palpable shift in investor sentiment as they seek strong earnings growth in a more diversified portfolio, with many calling for a rebalance away from the tech-heavy S&P 500. Healthcare is positioned for strong earnings growth, and the financial sector is anticipated to benefit from increased M&A activity and regulatory changes. This diversification reflects a strategic move for investors to navigate the current economic volatility while seeking value beyond traditional high-flying stocks.
The Role of the Federal Reserve and Economic Projections
The Federal Reserve faces a critical balancing act between managing inflation and supporting economic growth amidst evolving macroeconomic conditions. Recent discussions suggest that the Fed's policy changes are becoming more data-driven, with an eye on employment metrics and inflation rates. Tariffs complicate this balancing act, introducing inflationary pressures that the Fed must address while cultivating a conducive growth environment. As uncertainty continues to loom, the Fed's approach will be crucial in shaping market expectations and stabilizing investor sentiment.
International Market Opportunities and Consumer Dynamics
The conversation highlights a renewed interest in international markets, particularly emerging economies, as U.S. investors look for diversification in their portfolios. With developed markets like Europe starting to become more enticing due to shifts in fiscal policies and economic reforms, the calls for reallocating capital internationally are gaining traction. Additionally, the consumer landscape in China is evolving, with indications that the government may shift focus toward domestic consumption and stimulus measures. This, coupled with cyclical opportunities outside the U.S., presents an intriguing backdrop for investors considering international exposure in their strategies.
In this episode of Excess Returns, Matt Ziegler is joined by Lindsey Bell, Chief Market Strategist of Clearnomics, and Shannon Saccocia, Chief Investment Officer of Wealth at Neuberger Berman. They dive deep into the current market volatility and economic uncertainties facing investors. From tariff concerns to shifting consumer behaviors, they provide valuable insights on navigating these challenging times while maintaining a long-term investment perspective.
Key topics discussed:
• Tariffs and Market Uncertainty: How ongoing tariff discussions are creating business uncertainty, affecting pricing decisions, and potentially impacting economic growth
• Consumer Resilience: Analysis of consumer spending patterns, the importance of employment stability, and how different consumer segments are responding to economic pressures
• GDP Growth Projections: Examination of current GDP forecasts, including the Atlanta Fed's concerning Q1 projections, and why these numbers might be overly pessimistic
• Federal Reserve Strategy: Discussion on potential interest rate cuts for 2025, how the Fed is balancing inflation concerns with economic growth, and the challenges of monetary policy during tariff implementation
• Market Broadening: Insights on investment rotation beyond the Magnificent 7 tech stocks into sectors like healthcare, financials, and consumer discretionary
• International Investment Opportunities: Why investors should consider international exposure, particularly in European markets and potentially emerging markets including China
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