This article is approved for Financial Broker Use Only
Published: 08 Apr 2025
Analysis by: Phil Byrne, Chief Investment Officer, Cantor Fitzgerald Asset Management (CFAM)
Although the level of tariffs announced on Wednesday 2 April was beyond the
upper end of even the most bearish expectations, we think this was very
much in keeping with the idea that this is, for markets anyway, the peak noise
around tariffs.
Economies and supply chains will naturally take longer to adapt if the worst of these tariffs actually do go into place. Treasury secretary Bessent, very much seen as a moderate towards tariffs has consistently pointed out these are the “ceiling” for tariffs with country-by-country deals to be struck quite quickly to alleviate some, but not all the impact. Most major trading partners have come out over the weekend with a similar message of negotiate over retaliate.
The Times is reporting the UK had a deal agreed but the US told them they wanted to put on the tariffs first before they signed. Israel similarly reduced all tariffs with the US yesterday so could probably be the first country to be given a reprieve. Also so far what’s lost in the noise is that Canada/Mexico have been left out of these reciprocal tariffs, marking significant progress on that ill- fated trade war he started with those countries. Doug Ford came out effusive in his praise for Secretary Lutnick, quite the change from 3 weeks ago when he threated to cut off Canadian Electricity supply. This is a good road map for how things can work out quickly with other allies.
On balance we still see this unprecedented turmoil as an opportunity to invest the remaining cash we have for our funds and as of Friday, we returned to the upper end of our investment ranges. By some market measures the sell-off and de-risking has now surpassed extreme historical events such as COVID and the Global Financial Crash (GFC) with record volumes of selling and de-risking. The S&P futures have never dropped this much over any 3 day period, ever. The risk reward here for equity investors is as good as its been since late March 2020.
Looking forward, the positives or potential positives for markets from
here are:
Global Rate cut expectations increasing as oil falls. Almost 5 cuts in the US are now priced for this year.
OPEC appears to have begun a price war amongst its own members last week, helping the deflation narrative.
The EU, China and similiar countries are responding with pro-growth policies of their own. China is bringing forward consumption stimulus.
The Trump Tax agenda is getting through congress.
The chances of a last minute reprieve/delay on tariffs is underestimated by markets post this unprecedented volatility.
Asian countries (India/Taiwan/Vietnam/South Korea) are offering concessions to the US that would actually REDUCE trade barriers, not increase them.
The EU has offered tariff free trade for Industrial products
Some republican members of congress and the senate (Ted Cruz), allies of Trump (Musk) and high profile republican donors (Ackman/Druckenmiller) are speaking out against the more excessive tariffs (ie the ones above 10%).
Rumours of legal challenge by a collection of corporates is building.
First order downgrades for earnings are limited so far, a real recession would have to kick in in H2 for that to change, a fact that congress/senate are unlikely to allow ahead of mid terms next year.
The 5% fall in the dollar, all else being equal, is a positive catalyst for US earnings given their international exposure.
Valuations across certain sectors are compelling. Technology sector relative valuation never gets lower than this.
Earnings season begins this week which will allow share buy backs to accelerate.
Our positioning in multi-asset portfolios
In portfolios where we have active discretion, we have maintained more defensive positioning, aiming to provide protection for investors in this volatile and uncertain environment.
We remain underweight equities. Meanwhile, we have structured our active fixed income positions to be less impacted by rising long-end US bond yields, by having more exposure at the five-year point of the Treasury curve.
We continue to monitor the situation to ensure the portfolios remain positioned appropriately. While cautious, we are still looking to add value where we have active discretion.
As longer-term investors, it is important to remain calm in these volatile and uncertain times. We continue to be confident that financial markets can provide the growth required by investors to meet their long-term goals.
Warning: Past performance is not a reliable guide to future performance. Warning: The value of your investment may go down as well as up. Warning: The income you earn from this investment may go down as well as up. Warning: If you invest in these funds you may lose some or all of the money you invest. Warning: These funds may be affected by changes in currency exchange rates. Warning: If you invest in a pension, you will not have access to your money until you retire.
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