Goldman Sachs The Markets
Tariffs could spark “a new rotation” in US equities
Apr 4, 2025
Shawn Tuteja, who manages ETF and custom baskets volatility trading at Goldman Sachs, drops valuable knowledge on navigating market turbulence caused by rising tariffs. He discusses their unexpected effects on equity markets, urging investors to remain agile in uncertainty. Tuteja highlights a potential rotation towards large-cap tech stocks as the 'Magnificent Seven' falter. The conversation also touches on the intricacies of the upcoming earnings season, stressing the importance of corporate expectations over historical performance.
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Quick takeaways
- Higher-than-expected tariffs have caused significant market turmoil and increased volatility, leading to a strategic rather than panic-based investor response.
- Amidst the uncertainty, investors are advised to focus on undervalued stocks with strong fundamentals, particularly in the tech sector, for potential opportunities.
Deep dives
Impact of Tariff Announcements
Recent tariff announcements by the Trump administration have led to significant market reactions, with an average effective tariff rate reported around 20%. Investors anticipated lower rates, around 9% to 10%, and were surprised by this increase. The tariffs are set to take effect immediately, leaving little time for negotiations, which has spurred a sharp decline in market activity. This sudden shift has generated a sense of panic among traders, as the expected volatility becomes a reality.
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