In light of ongoing uncertainty and tariff impacts, companies are facing a challenging environment when forecasting business outcomes. NYSE senior market strategist Michael Reinking joins Morning Brief hosts Brad Smith and Madison Mills to discuss the difficulty in positioning businesses amid shifting consumer sentiment.
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How how do you think that companies right now are trying to best position themselves though in in forecasting even through some of the uncertainty of how tariffs could impact their business because it's not just what we're putting out there for other countries to have to deal with, but also what the retaliation efforts might look like.
Yeah. And and and I think it's it's just really a very very difficult environment. As you know, as you as you kind of look at what's going on, I try to think back through my career and and try to find like a similar analog and and there really isn't one, right? Because there's just the range of of potential outcomes here are just so wide. Right? So, you know, you think about that from uh, you know, a consumer perspective or a business perspective, it's very difficult to make, you know, kind of those decisions. We've seen kind of that consumer sentiment survey and business sentiment surveys have have clearly moved lower. Uh and you're starting to get a sense from companies that that that's starting to actually impact, you know, kind of business, right? I've been looking at some data from a New York Stock Exchange listed company similar web, which looks at kind of web traffic, right? Looking at web traffic for travel and retail, right? That's been moving lower, right? So, it's not just the sentiment, you're starting to see the clicks start to move lower. And then we've had some weakness in, you know, kind of in in kind of the airlines and some of the the retail uh names, you know, kind of in in terms of their guidance recently as well.
And even some weakness in Lulu lemon as of this morning here. What is that telling you just about the health of the consumer and more broadly kind of what the impact on profit margins of the health of the consumers sort of waiting might look like.
Right. Look, I think there's a, you know, there's there's clearly caution, you know, kind of from a consumer's perspective. I would say, you know, just in uh, you know, in my town there was just recently a Nordstrom rack that just opened up, you know, a night or two ago. And there were lines around the corner, right? So, people were were showing up for deals. Right? So, I think, you know, the consumer is, you know, kind of is is cautious right now. Um, and you know, from a retail perspective, those companies have a difficult environment not only to deal with in terms of that, you know, kind of in terms of that that consumer, but dealing with tariffs and and um, you know, kind of the impacts of that as well. So, you know, I'd imagine you kind of as we head into Q2 earning season, you're going to see uh, you know, kind of management teams be very conservative, right? There's not a whole lot of upside in terms of raising your guidance, right? And I think there's going to there's going to be this conservatism conservatism, um but uh, but you know, we've we've seen um, you know, kind of some guidance cuts. We're just coming out of a of a period of time where you had multiple investor conferences. We saw some guidance cuts there. We're in this pre-announcement window. We're not seeing a wave of pre-announcements, so that's kind of somewhat positive.
Right. You know, one of the things that I was looking at, uh, a note from Torsten Sock, Apollo's chief economist here, who had said the performance of the S&P 500 will depend upon the size of the adjustment costs as companies adjust to a new situation with permanently higher tariffs. And he was taking a look at some of the previous correction performance of the S&P 500 after 10% corrections, just as you're kind of positioning your portfolio around what the rebound after corrections has looked like in the past versus the the analog that we're trying to look for at this point in time, and they're not being one, how should investors be positioning themselves.
Yeah. So so I think, you know, right now just kind of given the uncertainty, you have to kind of extend your time horizons a little bit, right? Think about, you know, kind of investing for the longer term, right? Uh, continue with your plan, right? And understand, you know, I think it, you know, we've seen kind of markets kind of pull back on risk, right? And so just understand why you're in investments, right? Be comfortable, kind of move up the the quality scale a little bit, right? So, you know, I think it's there's there's just be cautious for the time being, right? And and see how things play out over the next couple months.