Trade-war panic is so overblown that it's a great time to buy, these Wall Street strategists say

Business Insider

27-04-2025

Thanks to the trade war, Americans are feeling downright awful about the economy. The latest University of Michigan consumer survey reported an 8% decline in sentiment from March, as consumers worried about inflation, unemployment, and their financial situation.
It's not only consumers — the American Association of Individual Investors recently reported the 12th consecutive week of a negative bull-bear spread, meaning that more investors were bearish than bullish on the stock market.
However, a growing cohort of market experts is shunning the doom-and-gloom narrative that the economy is on a collision course with recession. In their opinion, the bad vibes aren't quite aligning with reality. After all, corporate earnings are strong, the labor market is in good shape, and households have robust balance sheets.
Their advice? Don't let the negative news discourage you from buying into the stock market at a discount now. Often, overly bearish sentiment can be a contrarian indicator for a market rebound. Here's why these four strategists are keeping a cool head on tariffs and are ultimately optimistic about the market.
Alicia Levine, head of investment strategy and equities, BNY Wealth
To Levine, extremely low investor sentiment means that it's unlikely for markets to fall much further.
"Recession's on everybody's lips, and in some ways, that's a really good thing because, as you know, when the market is expecting something, the news of it itself is less likely to cause a downside whoosh," Levine told BI. "The market has de-risked a lot of the downside scenarios."
Ultimately, the stock market crash and negative sentiment are all self-inflicted by Trump, meaning that there's nothing wrong with the underlying economy, Levine said. On the bright side, any change in policy can also greatly reduce the chance of a recession.
Trump has shown himself amenable to negotiations, as he floated the idea of scaling back tariffs on China earlier this week. Levine believes that some sort of tariff deal will be struck before the 90-day tariff pause is up.
"There's some expectation that this is the peak of the tariffs, and so, as those move lower, that would seem to feed into the sense that there is right tail here," Levine said.
Tony DeSpirito, global CIO of fundamental equities and portfolio manager, BlackRock
DeSpirito, who oversees several income and value funds including the iShares Large Cap Value Active ETF (BLCV), has never been too concerned about Trump tariffs ruining the economy. Back in March, DeSpirito said on Bloomberg that it was a mistake for banks to be downgrading their stock market outlooks, and he's held steady to that view.
"Periods of uncertainty are actually great buying opportunities. Once the uncertainty abates, companies are very adaptive," DeSpirito told BI.
Right now, DeSpirito is seeing opportunities in healthcare services, medical devices, aerospace, and defense companies.
"In healthcare, I'm finding a lot more opportunity in services than I am in large-cap pharma. Large cap pharma has a lot of issues around where they locate their intellectual property," DeSpirito said. "A number of them have large patent expirations that are upcoming."
DeSpirito thinks the market is overly focused on the risk and overlooking opportunities down the road. He's confident that kinks in trade policy will be ironed out soon.
"In addition to greater certainty around trade, you'll also get deregulation, which will be a positive for the market and when you think about tariffs as a source of revenue, that revenue source will create more flexibility on the policy side," DeSpirito said.
Jonathan Curtis, chief investment officer, Franklin Equity Group
Tariff concerns have led many investors to diversify outside the US stock market, but Curtis believes the " sell America" narrative is overblown.
Instead of fleeing to international stocks, Curtis believes investors should be doubling down on US leaders like the Magnificent Seven. Especially now that many of the Big Tech names are down roughly 20% from all-time highs, Curtis sees a good opportunity for investors to add to their positions in high-quality companies for cheap.
"This productivity gain that we're going to get from artificial intelligence is going to be profound and those companies, many of them Mag 7, hold the keys to that," Curtis said at a Franklin Templeton conference on April 22.
Curtis is also bullish on defensive sectors like healthcare, where demand for treatments will remain constant no matter what part of the economic cycle we're in. He sees innovations in GLP-1 medications and AI driving sustained future growth for the healthcare sector.
"Those businesses are as good as they were over the long term prior to Inauguration Day, and those companies are incredibly well-positioned for what's about to come," Curtis said of the Magnificent Seven.
Jeff Schulze, head of economic and market strategy, ClearBridge Investments
It's easy to buy into a doomsday recession narrative, but Schulze doesn't see much evidence to back it up. There's been a lot of talk about how consumer sentiment is at historic lows, but actions are more important than sentiment itself, he said.
"In this cycle in particular, it's more important to watch what people do rather than what they say, because when you look at the University of Michigan's consumer sentiment survey, it's been low and declining, yet consumption has been fairly broad-based over the last couple of years," Schulze said at a Franklin Templeton conference on April 22.
US consumers might not feel so optimistic, but numbers show they're in great shape. Household debt levels are low, and many homeowners locked in low mortgage rates, insulating them from their biggest monthly expense, according to Schulze.
"This is a great opportunity to be dollar-cost averaging into the weakness that we've seen," Schulze said. "A lot of negativity has been priced in a short period of time for US equities, and I don't see any structural excesses in the economy that would cause a deep recession."