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JP Morgan CEO Jamie Dimon says a recession is a likely outcome of the recent market turmoil tied to President Donald Trump's tariffs. Likely, but not certain, and our next guest has a slightly rosier outlook for the US economy. Joining me now, in studio, we've got Raquel Oden, who is the HSBC US Head of Wealth and Personal Banking. Great to see you once again. Raquel, you're you're saying that you're not expecting a recession here. Why is that, and and where are you still seeing strength in the US economy?

So, thanks for having me. And to that point of that question, so what I would say is I've definitely committed to a slower growth that we can expect in the markets. Uh, that we can expect in the markets. I say there are signs that could trend to a recession. So I want to clarify the statement, but we're not declaring recession at this point. Um, a couple of reasons for that. Uh, if we think it take a look at what's actually happening, we take a look at corporate earnings. We predicted corporates would be up about 15%. We've now recast that to about 11%. So slower growth. Uh, I take a look at what's happening with, you know, inflation. Point two going up to about point one percent. So that's a month-over-month increase that we can expect, but at the same time, if I take a look at how we're seeing consumer confidence, that's about 57%. So still within that reason. Uh, we take a look at what we're thinking about from an unemployment standpoint, four point two percent. But importantly, we think there's going to be a slight uptick with unemployment due to the tariffs, right? And so, where I would say all of us are believing the tariffs are a temporary 90-day situation, which then says, if this is really just a bargaining tactic, that's the reason why we wouldn't expect a recession. If this goes past that, that would definitely put us in line to potentially be leading into recession. So because most of us at this point are looking at the tariffs as more of a international tactic, and not a permanent decision, which is why we're not committing to the statement of recession.

And so, with that in mind, what are the areas that you could see the Fed potentially starts to notice a trend that would then change how their assessment ultimately shifts rate policy as well?

So, I think what you said here. I think the Fed is already taken, you know, from a standpoint, from an inflation standpoint, right? They've gone from two point one to one point seven. So they've already recast that slightly, which I think is important. I think at the same time, I think what we have to really think about is what we've been telling our clients. It really is making sure we say what I call active management. And the reason why that's important is there are going to be certain sectors that will absolutely be impacted by tariffs, right? So if I think about where we were at the beginning of the year, we probably we were very focused on tech, financials, we were doing industrials, and then we were doing health. I would tell you tech and financials right now, absolutely going to feel the impact of tariffs, right? So back to my statement of active management. So within your diversified portfolio, this is the time for you to really be focusing more on that health care and those industrials, right? So does it mean get out of the market? And I also say, when I look at the VIX, which really actually is what I call the glimmer of hope, because you were looking for some good news here.

Really? The VIX? The fear gauge index as a glimmer of hope?

Glimmer of hope. The only reason why I say that is when it's above 40 plus, and it's about 56 right now, we've seen historically about a 16% increase in equity markets over a 12-month period, 75% of the time, historically. So one would say if, at this point, we're at 56%, and importantly, you have to actually watch that VIX. Because if the VIX goes below 40, again, that tells you go beyond neutral on equities. We would actually say we'd actually see that dip in the equities market. But I do think the glimmer of hope here is this could be a buying season for diversified portfolios. Let's really focus on those sectors that matter most. But importantly, when we look at equities, there is still opportunity out there.

So let's get to people's portfolios here. Where, beyond equities, do you recommend that people stay exposed?

Yeah. So the way I look at this and it depends what, you know, what is going on in your portfolio personally, I would say what we've really heard from our clients right now is that short-term cash need, like the concern there, right? So I could always say stay focused on the long term. We know markets always recover. It's about diversification. Um, I would say right now what we're seeing a trend towards is Treasuries, for sure. Uh, I would say gold. The old classic gold is back, and and I would say the importance of hedge funds, right? And so it really is, uh, defining whether it's short-term needs or long-term needs. And in a short term, there are things that you should be focused on, and then, of course, back to my really important statement of that active management. It isn't sit and watch, you have to actually actively engage on diversification of those portfolios.

Just lastly here, you you said that people should be comfortable with volatility in this current environment here.

I didn't say should be. We'll need to embrace it because we can no longer control it. And the reason why I say that is if I take a look, since the beginning of the year, we've seen the Dow, uh, close up or down by a thousand points six times this year. That's extreme volatility. So, I mean, we can use the statement, but when you're seeing that extreme volatility, it really means you have to get comfortable with embracing that because when we say uncertainty and volatility, it's going to be extreme volatility that we're going to see.

Even with that in mind, it's hard not to look at your 401k and not get nervous here. So what's your advice to investors to help stay the course that they may have charted going into the volatility?

You're correct. So that's why you have to separate short-term needs versus long-term needs. And that's really the logical answer you have to give yourself. And so you just said 401k. That is a long-term need, right? So you shouldn't be reacting based on the extreme volatility we're seeing for this period of time. But for short-term reasons, if you need to have that cash on hand, you really shouldn't be in the market for short-term reasons right now because of the extreme volatility.

Raquel, great to see you. Great to have you back in studio.

Thanks for having me.

Absolutely.