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President Donald Trump introduced new tariffs that sent US stocks (^DJI, ^GSPC, ^IXIC) spiraling lower. Trump has sent mixed signals about whether he's willing to negotiate on tariffs, saying his policies "will never change" in a Truth Social post on Friday after expressing openness to negotiations on Thursday.
PNC Financial Services Group chief economist Gus Faucher and Annex Wealth Management chief economist and strategist Brian Jacobsen join Morning Brief with Julie Hyman and Madison Mills to discuss the impact of ongoing tariff uncertainty on the economy and market.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
Um, Gus, um, so not only are we seeing sort of some contradictions amongst White House staff as to whether these tariffs are open to negotiation. There's sort of contradiction from the president himself. He said last night, yes, these are up for negotiation. We're ready to start the negotiation now. Then he came out in a post this morning and said, my policies will never change. So if you're trying, if you're in another country and you're trying to negotiate with him, how do you even do that? And how does the market interpret whether that's going to happen?
Well, well, I'm an economist and not a political scientist, so I can't tell you how other countries are going to respond. But what I can tell you is if this means that US consumers and businesses are likely to remain on hold. Uh, we have these very large tariffs that are in place or are supposed to be put in place over the next week or two, uh, but the president is talking about potentially rescinding at least part of them. How do you make a decision under those circumstances? You simply can't. And we need more clarity one way or the other, so businesses feel comfortable making investment decisions, consumers feel comfortable making decisions about a big purchase such as a car, and until we get some clarity, I think things are going to remain very complicated. I think we're going to see that uncertainty in and of itself is a drag on the economy until there's at least a clear picture of what these tariffs are going to look like over the longer run.
Well, Brian, going back to you, if if you are potentially wrong and these tariffs are going to stick around for the longer run, where do investors need to potentially be hiding out while these tariffs take their effect?
Yeah, that's a great question. That's one of the things that we really focused on when coming into this year is about what if we are wrong. Where do we want to be? And it's trying to really assess what's the distribution of possible outcomes. And so one of the things that we have been really focused on is focusing on profitable companies, those that are profitable even in the face of perhaps heightened tariffs on intermediate goods, final goods and the such that they have that margin of safety, not just from a valuation perspective, but even from the fundamentals perspective. And so I think that's what's really a little bit unique about the approach that we took coming into this year, which is why we've a lot of our portfolios have held up fairly well. I mean, it hasn't been completely unscathed is that almost double focus on not just the valuation, but also on the fundamental side of things. And really right now, we're positioning more for, let's say, healthcare, financials, even some of the industrials that we think are going to be able to be relative beneficiaries. Maybe everybody loses in this game, but it's more a question of just kind of that story about if you're out hiking and you encounter a bear, you don't have to outrun the bear, you just have to outrun the person that you're with.
