UBS On-Air: Market Moves

With the summer season now officially underway, it is already shaping up to be an eventful one for investors. In addition to this past weekend’s geopolitical developments in the Middle East, policy developments on tariffs and taxes, the potential impact of tariffs on the economy, and corporate earnings will keep investors preoccupied. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

We live in a world of political polarization and soundbite economics. That encourages sensationalism. Deckchair generals will offer extreme opinions on the US attacks on Iran. Both supporters and opponents the attacks are likely to dramatize events. Investors should be cautious of knee-jerk overreactions.

UBS WM Chief Economist Paul Donovan discusses the current hostilities between Israel and Iran and what they might mean for the global economy and markets. Why have geopolitical crises historically dominated the headlines, but faded so quickly from the attention of investors? And are there tectonic shifts in global politics that investors can’t afford to ignore? Paul is joined by co-hosts Christopher Swann and Belinda Peeters

On this week’s episode of Viewpoints, Burkhard outlines potential scenarios as to how developments in the Middle East involving Israel and Iran could evolve, and how to prepare your portfolio accordingly. We also touch on what has been a busy week for the Fed, and other global central banks.

European powers begin nuclear talks with Iran, and the US has signaled that it does not intend to decide on military strikes against Iran for two weeks. That means two weeks of uncertainty for financial markets, but investors are still inclined to see the Middle East conflict as a local, not a global, economic issue.

The US Federal Deserve did as expected yesterday—nothing. The Fed’s dilemma can be summed up by a comment from US President Trump (in a different context) “I mean, nobody knows what I’m going to do”. The uncertainty about trade taxes, fiscal policy, and the reactions of US companies and consumers means (as Fed Chair Powell noted) there can be very little certainty about the future path of interest rates.

Burkhard Varnholt, an expert in global markets, delves into the evolving situation in the Middle East, particularly between Israel and Iran. He discusses potential geopolitical scenarios and their impacts on global trade and investment. The conversation emphasizes strategies for navigating market tensions, focusing on diversification and portfolio resilience. Additionally, Varnholt explores the influence of central banks amid these developments, shedding light on how rising oil prices may shape interest rates and broader economic stability.

In this enlightening discussion, Justin Waring, a Senior Total Wealth Strategist at UBS, shares crucial insights for retirees on managing taxes effectively during withdrawals. He introduces the intriguing 'spending waterfall' strategy, emphasizing tax deferral and its implications for future financial health. The conversation explores essential tax strategies like capital gains management and Roth conversions. Waring highlights the benefits of personalized withdrawal plans and the importance of working closely with financial advisors to optimize retirement lifestyles.

Recent US data reveals a decline in retail sales linked to trade tax effects, particularly impacting auto purchases. Anticipation of new tariffs has shifted consumer behavior, with Japan's automakers absorbing some costs in export pricing. The discussion shifts to the Federal Reserve's upcoming decisions based on these economic signals. Additionally, the podcast addresses how geopolitical tensions, especially between Israel and Iran, and rising energy prices in the UK, are influencing market outlook and investor sentiment.

In this discussion, Sudip Mukherjee, Senior Fixed Income Strategist at UBS, shares insights on the municipal bond market's steady performance amidst macro uncertainties. He highlights attractive yields and the impact of inflation and policy changes on investment strategies. The conversation also touches on the challenges local governments face with funding cuts and federal policy shifts, while emphasizing the resilience of municipal bonds. Listeners gain valuable perspectives on credit selection and the positive outlook for the market.