July 28, 2025 • 9 mins
In this episode of Paramount Wealth Perspectives, Chris Coyle and Scott Tremlett break down what’s really behind the market’s record highs, even as trade tensions heat up and inflation data resurfaces. They explore the risks investors may be underestimating—from the expiration of tariff pauses to rising import costs from China—and assess the latest earnings trends across sectors. Scott shares which industries are driving performance, where cracks are forming beneath the surface, and why energy infrastructure and global equities may offer better balance in today’s uncertain environment. If you're looking for clarity on markets, inflation, and where portfolios may go next, this episode is packed with timely insights and data-backed guidance.
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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.
This is your host, Chris Coyle.
(00:21):
I am the marketing director anda financial advisor here at
Paramount Associates WealthManagement.
And today I'm joined by ScottTremlett, chief Investment
Officer here at ParamountAssociates Wealth Management.
We've seen a series of recordbreaking market highs recently,
even as trade policy tensionsresurface.
Scott, what's your take on whyinvestors seem so unfazed?
(00:44):
That hits the nail on the head,Chris.
Despite the potentialexpirations of tariff pauses,
investors remain remarkablycalm.
In fact, the s and p 500 has hitof new record highs several
times this month alone.
This reflects the market that'sbanking on economic endurance
and downplaying.
The risk of renewed tariffs, butI think that complacency is
(01:06):
really risky.
Only four trade deals have beensecured.
Vietnam, Japan, Indonesia, andthe uk, and the effective tariff
rate would rise above 20%, plusthe 8% drop in the trade
weighted US dollar hasn't evenbegun to show in inflation
numbers.
So you're saying inflation risksaren't off the table?
(01:28):
Not at all.
June's core goods inflation,excluding autos, jumped 0.5% the
fastest in three years.
Imports from China saw pricessurging over 20% annualized,
especially on consumer goodslike toys and electronics.
And while equities shrugged thisoff, bond markets have not.
(01:48):
One year inflation swaps rose 50basis points or 0.5% signaling
of 3.5% inflation forecast.
So no, the coast is not clear oninflation.
Got it.
Let's talk earnings.
Where do we stand so far inquarter two?
Well, so far we're about onethird of the way through quarter
(02:10):
two, uh, reporting season, andthe results are really mixed.
On the positive side, 80% of us.
S and P 500 companies havebeaten.
Earnings estimates above thefive year and the 10 year
averages.
But the size of those SUR prizesis smaller than usual, averaging
just 6.1% above estimates, whichis definitely below historical
(02:33):
norms.
However, for market purposes,there is a lower bar to beat.
So companies are beatingexpectations but not by much.
Exactly, and, and while earningsare coming in higher.
Than they were a week ago, oreven at the end of the second
quarter.
The blended earnings growth rateis just 6.4%.
(02:55):
If that holds, it'll be thelowest year over year earnings
growth since the first quarterof 2024.
Still it would mark the eighthstraight quarter of growth, so
there is still momentum.
Which sectors are driving thatperformance?
Well, communication services,tech and financials are, are
leading on earnings if you'relooking at the broad market.
(03:16):
But overall, it's a split field.
So five sectors are showinggrowth while six, you know,
really led by energy are in thedecline.
I see.
And what about revenue trends onthe revenue side?
You know, also 80% of thecompanies have beat expectations
with overall revenue up, youknow, five, 5%, 5.1% year over
(03:38):
year.
That's the 19th consecutivequarter of revenue growth.
Most sectors are growing withtech, healthcare, and
communication services leading.
Again, the only sector showing adrop in revenue right now is
energy.
Got it.
So most sectors are growing.
What about looking ahead?
Analysts are expecting earningsgrowth to pick up, uh, the
(03:59):
shooting at right now, 7.6% inthird quarter, 7% in the fourth
quarter, with the full yeargrowth expected at 9.6%.
However, in my mind, valuationsare rich.
The forward price to earningsmultiple for the s and p 500 is
now 22.4, and that's well abovehistorical averages.
(04:20):
Understood.
And which sectors are you, wouldyou say are shining or
struggling?
Financials and communicationservices have been the primary
drivers of upside surprises inthe general US stock market
within our portfolios.
International equities andselect individual stocks, you
know, particularly in aerospace,alternative energy,
(04:41):
cybersecurity, and specificsoftware companies have really
led on performance.
We're broadly outperforming thes and p 500 by over two to one
year to date.
On the flip side, uh, energyearnings have really dropped 24%
drop, and the worst really amongall sectors are at this point,
(05:01):
and that's largely due to a 21%decline in oil prices year over
year.
Sub-sectors like integrated oiland gas and exploration and
production have really got hithard.
So would you say there are anybright spots in energy or
utilities?
Yes, definitely.
Uh, energy infrastructure is astrong investment right now due
(05:22):
to the rising global demand forreliable power, driven by AI
growth, electrification andreindustrialization.
Uh, governments and companiesare, are really committing
significant capital, uh, toexpand and modernize grids,
pipelines and LNG facilities.
These assets offer stableinflation, linked cash flows and
(05:43):
long-term growth tied to theenergy transition.
We're also seeing encouragingperformance from a group of more
innovative utility companies.
Those focused on gridresilience, energy technology,
and supporting power demand fromboth AI and data infrastructure.
Names in this category have heldup well in our.
Really viewed as a growth pocketwithin an otherwise defensive
(06:07):
sector.
Got it.
And switching gears, how areglobal macro conditions
influencing your positioning?
Great question, Chris.
Uh, I mean, while the globaleconomy continues to expand,
investors face a more, let'ssay, fragile, uh, backdrop
heading into the third quarter.
Policy uncertainty, especiallyaround potential US and EU
(06:29):
tariffs, uh, which we may seenews this weekend and, and shift
shifting.
Fed dynamics is weighing onsentiment, uh, even as earnings
beat expectations and, and majorindices.
You have hit new highs recently,with growth risks.
You know, tilting downward andheadline numbers masking
underlying weakness.
I'm interested really in, innon-US equities and real assets,
(06:51):
uh, particularly ininfrastructure plays as some
more resilient allocations inthis environment.
You know, countries around theworld right now are in an
earlier economic cycle than theUS and many central banks have
begun, you know, accommodativepositioning, and I, I recently
rebalanced my equity allocationto equal weight as it had really
grown to an overweight position.
(07:13):
That makes sense.
And, and how about sectorleadership in the United States?
Well, in 2025, US marketleadership has really been
driven, like I said, technology,industrials and selective areas
within utilities andcommunication services.
You know, tech continues tooutperform on strong AI and
cloud demand, while industrialsreally benefit from
(07:34):
infrastructure and reshoringtrends.
Right now, uh, utilities tied togrid modernization and power
demand.
Are really gaining momentum andcommunication services has
rallied on strength in streamingand digital media.
Despite index highs, the rallyremains really narrow.
You know, highlighting theimportance of stock and sector
selection and reallyconcentration risk is back in
(07:57):
the focus, the top 10 stocksreally now make up about 40% of
the s and p 500 with mega technames like Nvidia, Microsoft
driving a disproportionate shareof the returns this year.
That makes the market veryvulnerable when these names
stumble, the whole index feelsit.
And finally, before we wrap,let's zoom out a bit.
(08:19):
How are international marketsperforming relative to the
United States?
They've been surprisinglystrong.
In fact, international equitiesbroadly outperform US markets in
the first half a year.
And this was really driven byseveral key factors, a weaker US
dollar, improving sentiment inEurope and emerging markets, and
(08:39):
continued monetary easing andreally abroad.
Europe has really led the waywith double digit gains.
Fueled by renewed fiscalstimulus and falling rates,
especially really in Germany,and, you know, emerging markets,
particularly in Latin Americaand Asia, posted gains with
Latin America rising over 12% inthe first quarter despite
(09:00):
volatility.
Where the performance has beendriven.
It's not all equities.
And we've seen private credit,private equity, and
infrastructure step up.
As you know, effectivediversifiers this year, private
credit is benefiting fromelevated yields.
While private equity has addedvalue through selective growth
opportunities, infrastructurewith inflation and cash flows
(09:22):
has shown real resilience thisyear, and even money markets are
back in play.
They're offering solid yieldsand helping manage short-term
volatility.
Takeaway here is clear globaldiversification is working
again.
Well, thank you, Scott, fortaking the time to share your
thoughts.
Thank you to our audience fortuning in, and remember to
(09:43):
please submit your questions toGeneral at Paramount as SO
c.com.
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 anda financial advisor here at
Paramount Associates WealthManagement.
And today I'm joined by ScottTremlett, chief Investment
Officer here at ParamountAssociates Wealth Management.
We've seen a series of recordbreaking market highs recently,
even as trade policy tensionsresurface.
Scott, what's your take on whyinvestors seem so unfazed?
(00:44):
That hits the nail on the head,Chris.
Despite the potentialexpirations of tariff pauses,
investors remain remarkablycalm.
In fact, the s and p 500 has hitof new record highs several
times this month alone.
This reflects the market that'sbanking on economic endurance
and downplaying.
The risk of renewed tariffs, butI think that complacency is
(01:06):
really risky.
Only four trade deals have beensecured.
Vietnam, Japan, Indonesia, andthe uk, and the effective tariff
rate would rise above 20%, plusthe 8% drop in the trade
weighted US dollar hasn't evenbegun to show in inflation
numbers.
So you're saying inflation risksaren't off the table?
(01:28):
Not at all.
June's core goods inflation,excluding autos, jumped 0.5% the
fastest in three years.
Imports from China saw pricessurging over 20% annualized,
especially on consumer goodslike toys and electronics.
And while equities shrugged thisoff, bond markets have not.
(01:48):
One year inflation swaps rose 50basis points or 0.5% signaling
of 3.5% inflation forecast.
So no, the coast is not clear oninflation.
Got it.
Let's talk earnings.
Where do we stand so far inquarter two?
Well, so far we're about onethird of the way through quarter
(02:10):
two, uh, reporting season, andthe results are really mixed.
On the positive side, 80% of us.
S and P 500 companies havebeaten.
Earnings estimates above thefive year and the 10 year
averages.
But the size of those SUR prizesis smaller than usual, averaging
just 6.1% above estimates, whichis definitely below historical
(02:33):
norms.
However, for market purposes,there is a lower bar to beat.
So companies are beatingexpectations but not by much.
Exactly, and, and while earningsare coming in higher.
Than they were a week ago, oreven at the end of the second
quarter.
The blended earnings growth rateis just 6.4%.
(02:55):
If that holds, it'll be thelowest year over year earnings
growth since the first quarterof 2024.
Still it would mark the eighthstraight quarter of growth, so
there is still momentum.
Which sectors are driving thatperformance?
Well, communication services,tech and financials are, are
leading on earnings if you'relooking at the broad market.
(03:16):
But overall, it's a split field.
So five sectors are showinggrowth while six, you know,
really led by energy are in thedecline.
I see.
And what about revenue trends onthe revenue side?
You know, also 80% of thecompanies have beat expectations
with overall revenue up, youknow, five, 5%, 5.1% year over
(03:38):
year.
That's the 19th consecutivequarter of revenue growth.
Most sectors are growing withtech, healthcare, and
communication services leading.
Again, the only sector showing adrop in revenue right now is
energy.
Got it.
So most sectors are growing.
What about looking ahead?
Analysts are expecting earningsgrowth to pick up, uh, the
(03:59):
shooting at right now, 7.6% inthird quarter, 7% in the fourth
quarter, with the full yeargrowth expected at 9.6%.
However, in my mind, valuationsare rich.
The forward price to earningsmultiple for the s and p 500 is
now 22.4, and that's well abovehistorical averages.
(04:20):
Understood.
And which sectors are you, wouldyou say are shining or
struggling?
Financials and communicationservices have been the primary
drivers of upside surprises inthe general US stock market
within our portfolios.
International equities andselect individual stocks, you
know, particularly in aerospace,alternative energy,
(04:41):
cybersecurity, and specificsoftware companies have really
led on performance.
We're broadly outperforming thes and p 500 by over two to one
year to date.
On the flip side, uh, energyearnings have really dropped 24%
drop, and the worst really amongall sectors are at this point,
(05:01):
and that's largely due to a 21%decline in oil prices year over
year.
Sub-sectors like integrated oiland gas and exploration and
production have really got hithard.
So would you say there are anybright spots in energy or
utilities?
Yes, definitely.
Uh, energy infrastructure is astrong investment right now due
(05:22):
to the rising global demand forreliable power, driven by AI
growth, electrification andreindustrialization.
Uh, governments and companiesare, are really committing
significant capital, uh, toexpand and modernize grids,
pipelines and LNG facilities.
These assets offer stableinflation, linked cash flows and
(05:43):
long-term growth tied to theenergy transition.
We're also seeing encouragingperformance from a group of more
innovative utility companies.
Those focused on gridresilience, energy technology,
and supporting power demand fromboth AI and data infrastructure.
Names in this category have heldup well in our.
Really viewed as a growth pocketwithin an otherwise defensive
(06:07):
sector.
Got it.
And switching gears, how areglobal macro conditions
influencing your positioning?
Great question, Chris.
Uh, I mean, while the globaleconomy continues to expand,
investors face a more, let'ssay, fragile, uh, backdrop
heading into the third quarter.
Policy uncertainty, especiallyaround potential US and EU
(06:29):
tariffs, uh, which we may seenews this weekend and, and shift
shifting.
Fed dynamics is weighing onsentiment, uh, even as earnings
beat expectations and, and majorindices.
You have hit new highs recently,with growth risks.
You know, tilting downward andheadline numbers masking
underlying weakness.
I'm interested really in, innon-US equities and real assets,
(06:51):
uh, particularly ininfrastructure plays as some
more resilient allocations inthis environment.
You know, countries around theworld right now are in an
earlier economic cycle than theUS and many central banks have
begun, you know, accommodativepositioning, and I, I recently
rebalanced my equity allocationto equal weight as it had really
grown to an overweight position.
(07:13):
That makes sense.
And, and how about sectorleadership in the United States?
Well, in 2025, US marketleadership has really been
driven, like I said, technology,industrials and selective areas
within utilities andcommunication services.
You know, tech continues tooutperform on strong AI and
cloud demand, while industrialsreally benefit from
(07:34):
infrastructure and reshoringtrends.
Right now, uh, utilities tied togrid modernization and power
demand.
Are really gaining momentum andcommunication services has
rallied on strength in streamingand digital media.
Despite index highs, the rallyremains really narrow.
You know, highlighting theimportance of stock and sector
selection and reallyconcentration risk is back in
(07:57):
the focus, the top 10 stocksreally now make up about 40% of
the s and p 500 with mega technames like Nvidia, Microsoft
driving a disproportionate shareof the returns this year.
That makes the market veryvulnerable when these names
stumble, the whole index feelsit.
And finally, before we wrap,let's zoom out a bit.
(08:19):
How are international marketsperforming relative to the
United States?
They've been surprisinglystrong.
In fact, international equitiesbroadly outperform US markets in
the first half a year.
And this was really driven byseveral key factors, a weaker US
dollar, improving sentiment inEurope and emerging markets, and
(08:39):
continued monetary easing andreally abroad.
Europe has really led the waywith double digit gains.
Fueled by renewed fiscalstimulus and falling rates,
especially really in Germany,and, you know, emerging markets,
particularly in Latin Americaand Asia, posted gains with
Latin America rising over 12% inthe first quarter despite
(09:00):
volatility.
Where the performance has beendriven.
It's not all equities.
And we've seen private credit,private equity, and
infrastructure step up.
As you know, effectivediversifiers this year, private
credit is benefiting fromelevated yields.
While private equity has addedvalue through selective growth
opportunities, infrastructurewith inflation and cash flows
(09:22):
has shown real resilience thisyear, and even money markets are
back in play.
They're offering solid yieldsand helping manage short-term
volatility.
Takeaway here is clear globaldiversification is working
again.
Well, thank you, Scott, fortaking the time to share your
thoughts.
Thank you to our audience fortuning in, and remember to
(09:43):
please submit your questions toGeneral at Paramount as SO
c.com.
For now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
global economy.
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