Portfolio watch
• Capital Group writes that the overwhelming level of uncertainty of the Trump Administration’s first 100 days stands in contrast to expectations of orderly deregulation and “market-friendly tax cuts” that would lift stock prices. Now there is the prospect of “a permanent realignment in a system of global commerce that has been in place since the end of World War II,” it tells investors. “Beyond the tariffs themselves, many investors are also uneasy over the upheaval in Washington, including mass government layoffs, aggressive deportations and strained diplomatic relations with longtime foreign allies.” Proceed with caution, it warns investors.
• The National Association for Business Economics quantifies expectations for a chilling economy in its newest survey. A quarter of respondents expect negative GDP growth for Q2 and 22% think it will be negative in Q3, an increase from zero a month earlier. Recession probabilities “have ticked higher” with 37% now saying there’s a 50% or higher probability. Inflation expectations have moved up to 3.5% from 2.7% for the PCE index for 2025 but they are unchanged for 2026.
• Wall Street is taking note of the increased risks to the economy, with strategist Peter Oppenheimer at Goldman Sachs writing that the “event-driven” upheaval in the stock markets triggered by the unexpectedly large tariff increases could “easily morph into a cyclical bear market given the growing recession risk.” Historically, event-driven and cyclical bear markets have averaged 30% declines, with a sharper rebound in event-driven bear markets. Policy changes, low valuations and extreme pessimism are among the signs that a sustained turnaround could be ahead, he writes.
