Roundup by Asset Allocator Journal Staff
Today’s markets offer wealth managers insights to navigate trade wars, economic resilience, and diversification strategies. From fixed-income stability to tariff-driven volatility, here’s a concise roundup to guide allocations.
Despite trade tensions, the U.S. economy shows strength, with Advisor Perspectives citing robust job growth, consumer spending, and manufacturing as reasons for optimism. However, the U.S. dollar’s resilience, bolstered by global trust, faces pressure from Trump’s tariffs, per Advisor Perspectives, which could elevate inflation and impact currency hedges. The Financial Times warns that tariffs on Chinese ships and tech supply chains threaten U.S. AI dominance, urging caution in tech-heavy portfolios.
Fixed income remains a cornerstone for diversification, per Advisor Perspectives, with municipal bonds offering stability amid a three-day selloff in munis, where ETFs proved agile for trading. The 2025 muni outlook advises staying invested but nimble, favoring short-duration bonds for flexibility. Small-caps, per Advisor Perspectives, show potential for a rebound, suggesting selective exposure to undervalued domestic firms over tariff-sensitive large-caps.
Trade wars loom large. The Financial Times notes Trump’s team may abandon Ukraine peace talks swiftly, adding geopolitical risks that could spike volatility. Advisor Perspectives warns that escalating trade conflicts will take a toll, with Canadian investors still pouring into U.S. stocks despite tensions. Netflix, however, defies tech slumps, per Advisor Perspectives, emerging as a tariff-resistant haven due to its domestic revenue base.
Banks outperformed in Q1, per Advisor Perspectives, but cautious outlooks for 2025 signal potential dividend cuts, prompting scrutiny of financials. Bitcoin miners’ hash rate gains, per Advisor Perspectives, could lift crypto prices, though volatility warrants limited exposure. The Fed’s flexible “alphabet” of tools, per Advisor Perspectives, offers hope for rate adjustments, but Trump’s policies keep markets on edge.
In the UK, Starmer and Carney’s dual approach to Trump—placation or retaliation—reflects trade strategy dilemmas, per the Financial Times. Wealth taxes, critiqued by the Financial Times, face political hurdles, potentially stabilizing markets by avoiding new levies. Volatility spikes, per Advisor Perspectives, call for gauging fear factors to time equity entries. Wealth managers should lean on munis, small-caps, and tariff-light sectors like streaming, while hedging dollar and tech risks.
Sources: Advisor Perspectives, Financial Times
