In this episode of Paramount Wealth Perspectives, host Chris Coyle sits down with Chief Investment Officer Scott Tremlett to unpack the macroeconomic forces shaping today’s investment landscape. Together, they explore five timely questions: what's driving Scott’s top-down macro view, how tariffs are influencing inflation and monetary policy, why U.S. equity positioning is shifting, where international markets offer better value, and what investors should focus on for the rest of 2025. From India’s market leadership to the inflationary bite of trade policy, Scott shares data-driven insights on portfolio strategy in a world where global divergence and selectivity matter more than ever. Whether you're navigating volatility or searching for smart global exposure, this episode delivers the strategic clarity investors need now.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Chris Coyle (00:00):
Intro song
Hello everyone.
Welcome to Paramount WealthPerspectives, your go-to podcast
for the latest updates on globalmarkets and current economic
events.
(00:20):
This is your host, Chris Coyle.
I'm the marketing director hereat Paramount Associates Wealth
Management, and today I'm joinedby Scott Tremlett, chief
Investment Officer at ParamountAssociates Wealth Management.
In today's episode, we'llexplore five key questions.
What's driving Scott's top-downmacro view right now?
How should investors interpretthe impact of tariffs?
(00:41):
How does this environment shapeScott's US equity stance?
Where is he finding better valueoutside of the United States?
And what should investors focuson for the rest of 2025?
So now let's begin to unpackthese dynamics and discuss how
to position portfolios in amarket that demand selectivity.
(01:01):
Scott, all of our clients knowyour investment philosophy
starts with a macro view.
What are the most importantsignals guiding your outlook
right now?
Thanks, Chris.
Yes.
I anchor everything to my globalrankings and there are three key
factors, current economic power,momentum, and the overlay of
(01:21):
monetary policy and valuations.
Right now, India ranks numberone across the board, strong GDP
falling inflation in a proactivecentral bank, cutting rates has
set the tone.
Meanwhile, Italy, China, Japan,and Spain are also
outperforming.
Contrast that with the us, whichis ranked number 19, the current
(01:45):
metrics, yeah, they're decentmanufacturing and retail sales
have been solid, even with theone month retail sales number
dropping in May.
But overall.
The momentum is lacking.
The big drag is policyuncertainty and inflation risk,
especially from tariffs.
I have seen estimates that forevery 1% increase in tariffs,
(02:07):
one would expect inflation toincrease by one basis point or
0.1%.
Consider tariffs have risenoverall over, you know, 10% from
where they were.
We should see this reflected ininflation numbers in the future.
Big picture.
When growth is being pressuredby policy, while others are
stimulating around the globe,you do begin to see divergence
(02:30):
in market performance.
That makes a lot of sense,Scott, especially given how your
framework captures both whereeconomies stand today as well as
where they're headed.
It's striking to see such astark contrast between the
United States and countries likeIndia or Japan, especially when
policy divergence is drivingperformance gaps.
The tariff driven inflation riskyou mentioned seems particularly
(02:51):
important.
Those compounding effects couldreally limit the Fed's
flexibility in the months ahead.
The next topic I want to discusswith you, Scott, is tariffs.
Tariffs seem to be reshaping thetrade and inflation
expectations.
What's the net takeaway fromrecent tariff shifts?
Tariffs are acting like astealth tax on the consumer.
(03:14):
The Fed estimates that the 20%increase in Chinese tariffs
added around 0.33 percentagepoints to the overall core goods
inflation.
Between just January and March,it's been estimated that there's
been about a 54% pass throughrate to the US consumer.
Consumers are paying more Plainand simple.
(03:35):
We're seeing FedEx and UPS Techon import duties, post-delivery
costs, so there's real Stickershock starting to happen at the
macro level.
JP Morgan pegs the impact at$400billion in annual costs just for
core goods in the United States.
That kind of pressure forcesbusinesses to either eat margin
(03:58):
or raise prices.
And households are projected topay around$2,800 more this year
for core goods than they didlast year.
There is divergence on thehousehold effects of these new
costs with low income earnersfeeling more pain, middle and
high income earners are at ornear record level wealth.
(04:19):
So the effect may be limited,but the biggest issue to me is
that it's also freezing theFed's hand a bit.
They pause cuts waiting to seethe full effect of these tariffs
on inflation, and that's policyfriction with some bite.
Absolutely.
When you lay it out like that,it's clear.
Tariffs aren't just a trade toolanymore.
(04:40):
They're actively shapingconsumer behavior and monetary
policy.
That$2,800 annual hit tohouseholds is no small burden,
especially for lower incomefamilies who feel it most, as
you pointed out.
And with the Fed, essentially ina holding pattern waiting to see
how inflation evolves.
It really underscores howinterconnected trade policy and
(05:03):
interest rate decisions havebecome.
Now, let's talk positioning.
You've shifted from overweightto underweight US equities.
What triggered that move?
Three things, Chris.
Valuations, earningsexpectations.
To me seem overly optimisticconsidering the macro backdrop
(05:23):
and the Fed US equities.
Yes, they've rebounded from lowsearlier this year, but given the
uncertainty, it is difficult tosee what may push broad markets
much higher from where they areright now.
The market is pricing in a softlanding and strong earnings
growth year over year in thefourth quarter of this year, but
I think that's.
(05:43):
Too ambitious earnings pershare.
Beats have been strong, butforward guidance hasn't
necessarily kept up.
The fed isn't going toaggressively cut, in my opinion.
One, maybe two cuts max and onlyif inflation behaves.
I really believe we are in thecalm before the storm when we're
(06:03):
talking about inflation.
But core pressures do persist.
Wages are still running hot at3.9% growth year over year, and
long bonds are yielding about4.4% right now.
Add the risk of tariff driveninflation and you've got a
recipe for market volatilitygoing forward.
(06:24):
I think the s and p 500 does endthe year between 61 75 and 63
50, which is just about three to5% from where we are now.
But the risks, valuation, policyand inflation definitely lean in
my mind to the downside.
I agree that perspective reallyhighlights how stretched market
(06:46):
expectations might be.
Right now, with valuationsalready elevated in earnings,
optimism, possibly outpacingreality, it's hard to see a
strong catalyst for broad upsideadd in, limited fed flexibility
and persistent inflationpressures.
And it does feel like investorsshould be preparing for more
volatility than the currentpricing suggests.
(07:09):
Which leads me to my nextquestion.
If the United States isexpensive and there's
uncertainty, where do you seemore attractive opportunities?
Well, internationally I am muchmore constructive.
non-US stocks are trading at amuch larger discount to US peers
than historical averages, andthe expectations are lower,
(07:30):
creating a lower hurdle to beatto impress investors.
So I am now overweight,developed international markets
and equal weight emergingmarkets.
Europe is really starting tobenefit from rate cuts and
improving sentiment.
The M-S-C-I-E fee is up over 18%year to date versus under 2% for
(07:51):
the s and p 500.
That's a huge gap.
Even emerging markets like Chinaare getting more interesting.
Again, Beijing is stimulatingand any kind of tariff
deescalation would be atailwind.
It's not about blanket exposure,it's selective.
Look at countries with monetarysupport, reasonable valuations,
(08:12):
and manageable geopoliticalrisk.
That's where the upside exists.
Well, you definitely make acompelling case for looking
beyond the United States, and Ilike your point about being
selective.
It's not just about movingcapital abroad, but being
strategic about where the realopportunity lies.
Which leads me to my finalquestion.
(08:33):
What's your core advice toinvestors through your end?
Focus on fundamentals.
This isn't a year in my mindfrom what might be called
passive beta or just blind indexexposure.
I.
Stock selection matters morethan ever.
You want companies with pricingpower, consistent earnings, and
(08:55):
strong balance sheets.
As for other asset classes, I amunderweight government bonds.
I do prefer private credit andinfrastructure.
Instead, alternatives likeprivate equity, venture capital,
and infrastructure canoutperform in this rate
environment.
Commodities and REITs, I'mcautious there due to macro
(09:16):
headwinds, however.
There is a looming deadline forthe originally announced tariff
amounts to go back into effect,and precious metals will seem
more interesting to me in thatenvironment.
Ultimately, it's about adapting.
Blind optimism doesn't workhere.
You need to be nimble,selective, and think globally.
(09:37):
That's how you stay on offensein a defensive market.
Absolutely.
This underscores how critical itis to stay nimble in today's
environment.
Where broad exposure simplywon't cut it, and success
depends on focusing onfundamentals, quality, assets,
and global opportunities.
Well, I really appreciate youtaking the time to share your
(09:58):
insights.
Scott.
I also want to thank all of ourlisteners for tuning in.
And remember, if you have aquestion you would like to hear
our perspective on, pleasesubmit them via email to
general@paramountassoc.com.
For now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
(10:20):
global economy.
Intro song
Hello everyone.
Welcome to Paramount WealthPerspectives, your go-to podcast
for the latest updates on globalmarkets and current economic
events.
(00:20):
This is your host, Chris Coyle.
I'm the marketing director hereat Paramount Associates Wealth
Management, and today I'm joinedby Scott Tremlett, chief
Investment Officer at ParamountAssociates Wealth Management.
In today's episode, we'llexplore five key questions.
What's driving Scott's top-downmacro view right now?
How should investors interpretthe impact of tariffs?
(00:41):
How does this environment shapeScott's US equity stance?
Where is he finding better valueoutside of the United States?
And what should investors focuson for the rest of 2025?
So now let's begin to unpackthese dynamics and discuss how
to position portfolios in amarket that demand selectivity.
(01:01):
Scott, all of our clients knowyour investment philosophy
starts with a macro view.
What are the most importantsignals guiding your outlook
right now?
Thanks, Chris.
Yes.
I anchor everything to my globalrankings and there are three key
factors, current economic power,momentum, and the overlay of
(01:21):
monetary policy and valuations.
Right now, India ranks numberone across the board, strong GDP
falling inflation in a proactivecentral bank, cutting rates has
set the tone.
Meanwhile, Italy, China, Japan,and Spain are also
outperforming.
Contrast that with the us, whichis ranked number 19, the current
(01:45):
metrics, yeah, they're decentmanufacturing and retail sales
have been solid, even with theone month retail sales number
dropping in May.
But overall.
The momentum is lacking.
The big drag is policyuncertainty and inflation risk,
especially from tariffs.
I have seen estimates that forevery 1% increase in tariffs,
(02:07):
one would expect inflation toincrease by one basis point or
0.1%.
Consider tariffs have risenoverall over, you know, 10% from
where they were.
We should see this reflected ininflation numbers in the future.
Big picture.
When growth is being pressuredby policy, while others are
stimulating around the globe,you do begin to see divergence
(02:30):
in market performance.
That makes a lot of sense,Scott, especially given how your
framework captures both whereeconomies stand today as well as
where they're headed.
It's striking to see such astark contrast between the
United States and countries likeIndia or Japan, especially when
policy divergence is drivingperformance gaps.
The tariff driven inflation riskyou mentioned seems particularly
(02:51):
important.
Those compounding effects couldreally limit the Fed's
flexibility in the months ahead.
The next topic I want to discusswith you, Scott, is tariffs.
Tariffs seem to be reshaping thetrade and inflation
expectations.
What's the net takeaway fromrecent tariff shifts?
Tariffs are acting like astealth tax on the consumer.
(03:14):
The Fed estimates that the 20%increase in Chinese tariffs
added around 0.33 percentagepoints to the overall core goods
inflation.
Between just January and March,it's been estimated that there's
been about a 54% pass throughrate to the US consumer.
Consumers are paying more Plainand simple.
(03:35):
We're seeing FedEx and UPS Techon import duties, post-delivery
costs, so there's real Stickershock starting to happen at the
macro level.
JP Morgan pegs the impact at$400billion in annual costs just for
core goods in the United States.
That kind of pressure forcesbusinesses to either eat margin
(03:58):
or raise prices.
And households are projected topay around$2,800 more this year
for core goods than they didlast year.
There is divergence on thehousehold effects of these new
costs with low income earnersfeeling more pain, middle and
high income earners are at ornear record level wealth.
(04:19):
So the effect may be limited,but the biggest issue to me is
that it's also freezing theFed's hand a bit.
They pause cuts waiting to seethe full effect of these tariffs
on inflation, and that's policyfriction with some bite.
Absolutely.
When you lay it out like that,it's clear.
Tariffs aren't just a trade toolanymore.
(04:40):
They're actively shapingconsumer behavior and monetary
policy.
That$2,800 annual hit tohouseholds is no small burden,
especially for lower incomefamilies who feel it most, as
you pointed out.
And with the Fed, essentially ina holding pattern waiting to see
how inflation evolves.
It really underscores howinterconnected trade policy and
(05:03):
interest rate decisions havebecome.
Now, let's talk positioning.
You've shifted from overweightto underweight US equities.
What triggered that move?
Three things, Chris.
Valuations, earningsexpectations.
To me seem overly optimisticconsidering the macro backdrop
(05:23):
and the Fed US equities.
Yes, they've rebounded from lowsearlier this year, but given the
uncertainty, it is difficult tosee what may push broad markets
much higher from where they areright now.
The market is pricing in a softlanding and strong earnings
growth year over year in thefourth quarter of this year, but
I think that's.
(05:43):
Too ambitious earnings pershare.
Beats have been strong, butforward guidance hasn't
necessarily kept up.
The fed isn't going toaggressively cut, in my opinion.
One, maybe two cuts max and onlyif inflation behaves.
I really believe we are in thecalm before the storm when we're
(06:03):
talking about inflation.
But core pressures do persist.
Wages are still running hot at3.9% growth year over year, and
long bonds are yielding about4.4% right now.
Add the risk of tariff driveninflation and you've got a
recipe for market volatilitygoing forward.
(06:24):
I think the s and p 500 does endthe year between 61 75 and 63
50, which is just about three to5% from where we are now.
But the risks, valuation, policyand inflation definitely lean in
my mind to the downside.
I agree that perspective reallyhighlights how stretched market
(06:46):
expectations might be.
Right now, with valuationsalready elevated in earnings,
optimism, possibly outpacingreality, it's hard to see a
strong catalyst for broad upsideadd in, limited fed flexibility
and persistent inflationpressures.
And it does feel like investorsshould be preparing for more
volatility than the currentpricing suggests.
(07:09):
Which leads me to my nextquestion.
If the United States isexpensive and there's
uncertainty, where do you seemore attractive opportunities?
Well, internationally I am muchmore constructive.
non-US stocks are trading at amuch larger discount to US peers
than historical averages, andthe expectations are lower,
(07:30):
creating a lower hurdle to beatto impress investors.
So I am now overweight,developed international markets
and equal weight emergingmarkets.
Europe is really starting tobenefit from rate cuts and
improving sentiment.
The M-S-C-I-E fee is up over 18%year to date versus under 2% for
(07:51):
the s and p 500.
That's a huge gap.
Even emerging markets like Chinaare getting more interesting.
Again, Beijing is stimulatingand any kind of tariff
deescalation would be atailwind.
It's not about blanket exposure,it's selective.
Look at countries with monetarysupport, reasonable valuations,
(08:12):
and manageable geopoliticalrisk.
That's where the upside exists.
Well, you definitely make acompelling case for looking
beyond the United States, and Ilike your point about being
selective.
It's not just about movingcapital abroad, but being
strategic about where the realopportunity lies.
Which leads me to my finalquestion.
(08:33):
What's your core advice toinvestors through your end?
Focus on fundamentals.
This isn't a year in my mindfrom what might be called
passive beta or just blind indexexposure.
I.
Stock selection matters morethan ever.
You want companies with pricingpower, consistent earnings, and
(08:55):
strong balance sheets.
As for other asset classes, I amunderweight government bonds.
I do prefer private credit andinfrastructure.
Instead, alternatives likeprivate equity, venture capital,
and infrastructure canoutperform in this rate
environment.
Commodities and REITs, I'mcautious there due to macro
(09:16):
headwinds, however.
There is a looming deadline forthe originally announced tariff
amounts to go back into effect,and precious metals will seem
more interesting to me in thatenvironment.
Ultimately, it's about adapting.
Blind optimism doesn't workhere.
You need to be nimble,selective, and think globally.
(09:37):
That's how you stay on offensein a defensive market.
Absolutely.
This underscores how critical itis to stay nimble in today's
environment.
Where broad exposure simplywon't cut it, and success
depends on focusing onfundamentals, quality, assets,
and global opportunities.
Well, I really appreciate youtaking the time to share your
(09:58):
insights.
Scott.
I also want to thank all of ourlisteners for tuning in.
And remember, if you have aquestion you would like to hear
our perspective on, pleasesubmit them via email to
general@paramountassoc.com.
For now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
(10:20):
global economy.
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