Despite early optimism surrounding tax reform and deregulation, the conversation has shifted toward ongoing concerns over tariffs and a global trade war.
US Bank Asset Management Group chief investment officer Eric Freedman joins Market Domination Overtime host Josh Lipton and Barron senior market analysis writer Paul La Monica to discuss how these economic factors influence investor behavior.
To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.
You talk about tax reform, and I think a lot of investors are sitting back and wondering, hey, where where do those animal spirits go that everyone was talking about after November where we were going to be getting deregulation and tax reform. Instead, it's been almost a relentless barrage of more negative news in the form of tariffs and now a global trade war. Does the president finally begin to shift to the proverbial dessert after serving us all the spinach first, and it's not cream spinach from Peter Luger, mind you?
Yeah, well, listen, that that's very good spinach what they serve. But you know, Paul, to your point, you know, typically geopolitics sits well in the back seat of the car, if you will, and every once in a while, the driver, which is either interest rates or or corporate profits, who tends to sit shotgun, looks back and says, hey, pipe down. That's just not the case right now. We have this unfortunate series of events where we we obviously have the immediacy of tariffs, but we don't have the clarity on when we'll actually see tax reform, nor, as I mentioned earlier, when will we actually see more of an active dialogue across global officials. And so the initial salvo with respect to responses from Macron, with responses to what we heard from China was, we're not necessarily going to come immediately to the negotiation table. So what I think that means is there's probably some more spinach, if you will, being handed out by the by the passenger in the back seat to mix metaphors. But more importantly, what I think this challenges investors like us to think about is just, okay, where does that fundamental case ultimately kick in? What will consumers do? And we'd already seen before the tariff announcements some bifurcation between higher income, middle income, and lower income consumers. And if anything, the risk is that gap widens and it widens more quickly. So some of the market reaction we think is that that time gap between moving from the the spinach course to the dessert course, but it also, I think, begs the question of when will we see a deterioration in consumer activity. We're not going to learn a lot from the jobs data tomorrow. We will learn from what Chair Powell has to say with more of his forward views. But I'll also just say this, this is actually not very well covered, but we had Vice Chair Jefferson present today in Atlanta. And again, very intelligent economist. He mentioned in the course of a 3,000 word presentation, this is the parsing that we do, he used the word tariff once in that entire presentation. So what I think that says is there may be a little bit of a of a hold off of a firm communication from the Fed if we're to use Vice Chair Jefferson's guidance today. There'll be a lot of focus on what we hear from Chair Powell tomorrow.
