Economic uncertainty persists as President Trump's tariffs are set to go into effect in less than a week.
Federated Hermes senior equity strategist Linda Duessel joins Market Domination to discuss risk management in portfolios amid market uncertainty.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
What what is gold telling you here, Linda, do you think? What what messages is the metal sending sending to investors? Is it rises to a record?
Yeah, it's it's risen to a record and when I see that, of course, not saying that I don't like that we don't like gold at all per se, but uh so many other things have been at a record and welcome to the record area gold, but the kind of the um attitude towards gold is at the highest that it has been for the last 10 years. It's in the 100th percentile, which, you know, is actually the opposite for the more bullish areas of the markets like plumbing versus rising. What am I supposed to do in a period of uncertainty? Maybe I should run to gold then or maybe I should run to treasuries then. We acknowledge it's a period of uncertainty, but we could be getting maximum uncertainty if we don't see unemployment rise and fairly dramatically. Knock on wood, not yet and we'll wait and see next week's figures on the payroll.
And and so Linda, what what are you telling clients amidst all of this? What are you guys doing in terms of your risk appetite or lack thereof in portfolios?
So, you know, uh we have a very um uh unconventional president here. He said he'd be predictable. He's being unpredictable just as you said, you know, Canada said, you know, we we're going to come back right at you. This is going to be a news-filled presidency. That being the case, who knows what the next months hold? And so if you don't know and you're willing to say that, then you won't make any major bets. So we're basically diversifying uh in in terms of where we would invest. No particularly big bets we're making, but we do expect that a Trump presidency will see a higher yield curve. He promised lower regulations. For the banks love that, financials in general love that. They loved that in his first presidency. So financials still look inexpensive to to us. We like that. The energy patch is as cheap as any sector in the S&P and we like that and the big ones two very, very strong companies. And as you brought up at the uh at the start of this segment, they've absolutely crushed these big tech names. It's not as if the big tech names aren't doing well. It's that we were all crowded in them and they're not nearly as expensive as they were at the end of the year. So knock on wood or whatever's nearby, we don't get a recession this year. We could potentially have a buying opportunity set up. In the meantime, we're diversifying.
So financials and energy, um where don't you see the opportunity though? Are there sectors where you say, hey, that that just doesn't look as attractive to me here?
Well, in general, we would say this is not an early cycle time and I mean, I acknowledge that financials are an early cycle play. Consumer discretionary is a typical very early cycle play and so might, you know, steer clear of that. We're in general, we like value, uh in particular value very much. That includes uh that includes both defensive value and cyclical value, but we may hold back on that cyclical value for the moment here as we wonder if earnings are going to slow down. Have liked it, maybe pull back on that a little bit, you know, and if we're going into tech, which we do like tech, particularly on a pull back, we want to make sure we're buying high quality tech and not the big swath of it. It's truly more of a stock picker situation, as I said, diversified and quality.
Linda, thanks so much for your time. Appreciate it.
Thank you both very much.