Barron's Streetwise How to Invest for Tariff Purgatory
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May 9, 2025 In this discussion, Bhanu Baweja, Chief Strategist at UBS Investment Bank, delves into the complexities of current investment landscapes. He analyzes the implications of ongoing tariffs, particularly with China, urging investors to focus on defensive sectors. Baweja also reflects on Disney's unexpected earnings boost and the launch of a new theme park in Abu Dhabi. Additionally, he emphasizes the need for adaptive strategies in the face of declining globalization and warns against complacency among investors during uncertain market conditions.
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Tariffs to Drag Consumer Demand
- Tariffs on China are likely to remain high, posing a long-term drag on US consumer spending and investment.
- Markets are complacent, not fully pricing the economic impact of sustained tariffs and slowed growth.
Sell Rallies, Buy Bonds Advice
- In the short term, sell rallies in equities and buy bonds during dips to protect portfolios.
- Focus on defensive stocks like consumer staples, REITs, and utilities amid expected earnings downturns.
Changing Fed Impact on Markets
- The Fed cutting rates may not drive long-term bond yields lower due to massive fiscal deficits.
- The cost of equity might not drop even with Fed cuts, weakening traditional market responses.