April 25, 2025 • 7 mins
In this episode of Paramount Wealth Perspectives, host Chris Coyle and Chief Investment Officer Scott Tremlett dive into critical market updates following the recent tariff announcements. They discuss how negotiations have eased initial economic fears, the shifting inflation outlook, updates on Fed rate expectations, and the resilience of the bond and stock markets.
Scott also shares important adjustments to his investment strategy, including a shift away from U.S. equities, a focus on infrastructure and cybersecurity sectors, and an increased allocation to international markets. Tune in for timely insights, strategic positioning advice, and a clear breakdown of how global events are shaping the investment landscape.
🎙️ Stay informed. Stay ahead.
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Transcript
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.
This is your host, Chris Coyle.
(00:21):
I am the marketing director andfinancial advisor here at
Paramount Associates WealthManagement, and I'm joined by
Scott Tremlett, chief InvestmentOfficer here at Paramount
Associates Wealth Management.
Today I've prepared somequestions reflecting on points
in the last episode, as well asa few other ones I believe to be
extremely relevant at this time.
(00:42):
So now let's begin.
Last time you spoke about theunexpected magnitude of the
tariff announcements and howthey came at a fragile moment
economically.
Since then, Scott, what'schanged on the tariff front and
is the overall outlookimproving?
Thanks, Chris.
Well game on.
Absolutely.
The outlook is improving.
(01:04):
What we've seen is a significantdivergence from what could have
happened originally, if nothingchanged, we were looking at a
38% average effective tariff,and that would've been
incredibly disruptive.
But with pauses and negotiationskicking in, the actual rate is
now closer to 18%.
The US and the European Unionhave agreed to a 90 day pause on
(01:25):
many of the new tariffs.
The EU is proposing a zero forzero industrial tariff deal.
Sounds great, but the US wantsmajor commitments in return,
like a$350 billion energypurchase.
China, on the other hand, is anoutlier.
The US raised tariffs to 145% onChinese goods, and China
(01:46):
responded with 125% on USexports.
While there's been easing onspecific items like
semiconductors, this reallyessentially a halts.
Bilateral trade between the twocountries.
That said, countries like Japan,India, and Canada are moving
quickly in talks, and SouthKorea may actually ink a deal as
soon as next week.
(02:08):
So we're getting signs ofprogress, but it's not locked in
yet.
So yes, there have beenimprovements in the outlook.
That's good to hear that therehave been improvements in the
outlook.
I certainly know the marketshave appreciated the overall
negotiations.
Next question I want to ask youabout Scott is inflation.
Inflation fears really spikedafter the announcements I.
(02:31):
What's the picture now and whathas it done to the Fed rate?
Cut expectations?
Yes.
Inflation expectations didinitially jump.
We saw consumer inflationforecast really spike, but since
they've cooled down, the Fed isnow expecting CPI to end the
year around 2.7%, up from thecurrent 2.4%, and other
(02:53):
estimates I see are hoveringbetween 2.5 and 2.8%.
Still.
However, the consumerexpectations are sky high.
People see inflation at 6.5% inthe next year, which would be
the highest since 1981.
That fear pushed the 10 yearyield up to 4.5%.
(03:13):
Before it stabilized.
As for the Fed markets are stillpricing in three rate cuts this
year, but officials have beencautious.
They're saying it's too early tomake the call until the full
impact of the tariffs play out.
I appreciate the insights,Scott, and the, the data that
you provided sounds like there'squite the discrepancy between
the Fed expectations andconsumer expectations.
(03:37):
Next question, Scott, is whatabout the bond market?
Have we seen the foreignselling?
You warned against That was afear.
Yes.
But despite the noise, wehaven't seen China sell us
treasuries.
In fact, foreign investorsincreased purchases by 22% in
April compared to March.
There was a brief stretch inearly April where foreigners
(03:58):
sold treasuries, eight out of 11trading days.
This was largely driven byJapanese private investors, but
the biggest reductions actuallycame from investment advisors
and not central banks.
So the weaponized treasuryselling fear hasn't materialized
to this point.
It's good to hear that it hasn'tmaterialized.
(04:19):
Um, certainly will keep an eyeon that and I'll continue to ask
you questions about that, Scott.
Next question is there was a lotof concern about these tariffs
that they could tip us into.
A recession has that narrativeheld.
Great question.
Initially, yes, recession risksurged markets dropped hard.
(04:41):
The s and p fell nearly 13% injust four days.
The steepest dropped since thebeginning of Covid.
European markets dropped over8%.
Indian China, they saw hits to.
But since then, there's been arebound.
The s and p is up nearly 10%from the bottom.
Those still below the Februarypeak, the forward price to
(05:02):
earnings ratio dropped to 19times earnings and has since
climbed back to 20 times.
More importantly, the messagingoutta DC suggests they're
actively avoiding recessionterritory.
Some tariffs are being rolledback and deal making is ramping
up all signs.
They wanna keep this expansiongoing.
(05:23):
Thanks Scott.
You make some good points aboutthe market's overall resilience
and I would have to agree thatthe recent negotiations out of
DC suggest they are activelytrying to avoid a recession as
well.
Another component of a recessionis unemployment and the recent
continuing jobless claims havecontinued to decrease throughout
the month showing stabilization.
(05:46):
Last point I want to touch onScott is positioning.
You said stay structured lasttime.
Has there been any changes toyour outlook or your portfolio
strategy since then?
Yes, I have made a few importantupdates.
I've lowered my s and p 500year-end target from 6,175 to 63
(06:07):
50 to a more conservative 5,500to 5,800.
So I'm really looking away fromUS stocks and towards.
Other types of assets or regionsto drive performance in 2025.
After the initial tariffannouncement, I did move away
from some high beta US stockpositioning, and I bought a
bunch of gold.
(06:27):
I took profits on my goldpositions and rotated into
infrastructure and cybersecuritytech themes tied more to
reshoring defense.
In a more digital economicsystem, I've cut all public bond
exposure except for some shortterm treasuries.
And my foreign stock overweight,which I've held for a while, has
(06:48):
helped offset losses in USequities.
I plan to maintain and evenincrease that exposure in the
future.
So yes, still structured, butmore tactical in response to
where policy winds are blowing.
Thanks for your sharing thoseinsights, Scott.
Sounds like you've been quitenimble.
Certainly the internationalexposure that you've been
(07:08):
holding has paid off and soundslike you've been, again, quite
nimble within the US markets.
So I, I really do appreciate youtaking the time to share your
insight.
Scott, I also want to thank allof our listeners for tuning in.
Remember, if you have a questionthat you would like us to
answer, please submit them viaemail to
general@paramountassoc.com.
(07:33):
But for now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
global economy.
Intro song
Hello everyone.
Welcome to Paramount WealthPerspectives, your go-to podcast
for the latest updates on globalmarkets and current economic
events.
This is your host, Chris Coyle.
(00:21):
I am the marketing director andfinancial advisor here at
Paramount Associates WealthManagement, and I'm joined by
Scott Tremlett, chief InvestmentOfficer here at Paramount
Associates Wealth Management.
Today I've prepared somequestions reflecting on points
in the last episode, as well asa few other ones I believe to be
extremely relevant at this time.
(00:42):
So now let's begin.
Last time you spoke about theunexpected magnitude of the
tariff announcements and howthey came at a fragile moment
economically.
Since then, Scott, what'schanged on the tariff front and
is the overall outlookimproving?
Thanks, Chris.
Well game on.
Absolutely.
The outlook is improving.
(01:04):
What we've seen is a significantdivergence from what could have
happened originally, if nothingchanged, we were looking at a
38% average effective tariff,and that would've been
incredibly disruptive.
But with pauses and negotiationskicking in, the actual rate is
now closer to 18%.
The US and the European Unionhave agreed to a 90 day pause on
(01:25):
many of the new tariffs.
The EU is proposing a zero forzero industrial tariff deal.
Sounds great, but the US wantsmajor commitments in return,
like a$350 billion energypurchase.
China, on the other hand, is anoutlier.
The US raised tariffs to 145% onChinese goods, and China
(01:46):
responded with 125% on USexports.
While there's been easing onspecific items like
semiconductors, this reallyessentially a halts.
Bilateral trade between the twocountries.
That said, countries like Japan,India, and Canada are moving
quickly in talks, and SouthKorea may actually ink a deal as
soon as next week.
(02:08):
So we're getting signs ofprogress, but it's not locked in
yet.
So yes, there have beenimprovements in the outlook.
That's good to hear that therehave been improvements in the
outlook.
I certainly know the marketshave appreciated the overall
negotiations.
Next question I want to ask youabout Scott is inflation.
Inflation fears really spikedafter the announcements I.
(02:31):
What's the picture now and whathas it done to the Fed rate?
Cut expectations?
Yes.
Inflation expectations didinitially jump.
We saw consumer inflationforecast really spike, but since
they've cooled down, the Fed isnow expecting CPI to end the
year around 2.7%, up from thecurrent 2.4%, and other
(02:53):
estimates I see are hoveringbetween 2.5 and 2.8%.
Still.
However, the consumerexpectations are sky high.
People see inflation at 6.5% inthe next year, which would be
the highest since 1981.
That fear pushed the 10 yearyield up to 4.5%.
(03:13):
Before it stabilized.
As for the Fed markets are stillpricing in three rate cuts this
year, but officials have beencautious.
They're saying it's too early tomake the call until the full
impact of the tariffs play out.
I appreciate the insights,Scott, and the, the data that
you provided sounds like there'squite the discrepancy between
the Fed expectations andconsumer expectations.
(03:37):
Next question, Scott, is whatabout the bond market?
Have we seen the foreignselling?
You warned against That was afear.
Yes.
But despite the noise, wehaven't seen China sell us
treasuries.
In fact, foreign investorsincreased purchases by 22% in
April compared to March.
There was a brief stretch inearly April where foreigners
(03:58):
sold treasuries, eight out of 11trading days.
This was largely driven byJapanese private investors, but
the biggest reductions actuallycame from investment advisors
and not central banks.
So the weaponized treasuryselling fear hasn't materialized
to this point.
It's good to hear that it hasn'tmaterialized.
(04:19):
Um, certainly will keep an eyeon that and I'll continue to ask
you questions about that, Scott.
Next question is there was a lotof concern about these tariffs
that they could tip us into.
A recession has that narrativeheld.
Great question.
Initially, yes, recession risksurged markets dropped hard.
(04:41):
The s and p fell nearly 13% injust four days.
The steepest dropped since thebeginning of Covid.
European markets dropped over8%.
Indian China, they saw hits to.
But since then, there's been arebound.
The s and p is up nearly 10%from the bottom.
Those still below the Februarypeak, the forward price to
(05:02):
earnings ratio dropped to 19times earnings and has since
climbed back to 20 times.
More importantly, the messagingoutta DC suggests they're
actively avoiding recessionterritory.
Some tariffs are being rolledback and deal making is ramping
up all signs.
They wanna keep this expansiongoing.
(05:23):
Thanks Scott.
You make some good points aboutthe market's overall resilience
and I would have to agree thatthe recent negotiations out of
DC suggest they are activelytrying to avoid a recession as
well.
Another component of a recessionis unemployment and the recent
continuing jobless claims havecontinued to decrease throughout
the month showing stabilization.
(05:46):
Last point I want to touch onScott is positioning.
You said stay structured lasttime.
Has there been any changes toyour outlook or your portfolio
strategy since then?
Yes, I have made a few importantupdates.
I've lowered my s and p 500year-end target from 6,175 to 63
(06:07):
50 to a more conservative 5,500to 5,800.
So I'm really looking away fromUS stocks and towards.
Other types of assets or regionsto drive performance in 2025.
After the initial tariffannouncement, I did move away
from some high beta US stockpositioning, and I bought a
bunch of gold.
(06:27):
I took profits on my goldpositions and rotated into
infrastructure and cybersecuritytech themes tied more to
reshoring defense.
In a more digital economicsystem, I've cut all public bond
exposure except for some shortterm treasuries.
And my foreign stock overweight,which I've held for a while, has
(06:48):
helped offset losses in USequities.
I plan to maintain and evenincrease that exposure in the
future.
So yes, still structured, butmore tactical in response to
where policy winds are blowing.
Thanks for your sharing thoseinsights, Scott.
Sounds like you've been quitenimble.
Certainly the internationalexposure that you've been
(07:08):
holding has paid off and soundslike you've been, again, quite
nimble within the US markets.
So I, I really do appreciate youtaking the time to share your
insight.
Scott, I also want to thank allof our listeners for tuning in.
Remember, if you have a questionthat you would like us to
answer, please submit them viaemail to
general@paramountassoc.com.
(07:33):
But for now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
global economy.
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