Latest news with #JeffreyKleintop
Yahoo
19-05-2025
- Business
- Yahoo
'A little too enthusiastic': Wall Street warns against chasing stock rally despite trade breakthroughs
The stock market rally fueled by President Trump's tariff rollback on China is drawing caution from some strategists, who warn the rebound may be overextended. "I am concerned about the magnitude of the rally we've seen coming back," Charles Schwab chief global investment strategist Jeffrey Kleintop told Yahoo Finance on Friday. "The market might be a little too enthusiastic that the trade worries are behind us," he added. "The trade framework, so far, [is] far from completed agreements." The S&P 500 (^GSPC) has surged roughly 1,000 points from its April 9 lows, prompting some Wall Street firms to raise their year-end outlooks as trade tensions have eased. Earlier this week, the broad-based index finished erasing all of its 2025 losses after US-China talks resulted in a truce that paused and lowered tariffs on both sides. That followed a limited pact announced earlier this month between the US and the United Kingdom that lowered barriers on some goods, such as automobiles and agriculture. Meanwhile, Trump's 10% baseline tariffs — which apply to nearly all trading partners — took effect in April and remain in place. An additional set of reciprocal tariffs that could push rates even higher for some countries were temporarily paused last month for 90 days. Read more: What Trump's tariffs mean for the economy and your wallet Stock market optimism this week was also buoyed by a series of investment announcements made during Trump's recent Middle East visit, signaling the administration's openness to negotiate deals in that region. Still, strategists caution that without concrete trade resolutions, market volatility could return. 'The tariff cat is out of the bag,' Jay Pelosky, founder of TPW Advisory, said, adding that this signals a broader 'erosion of trust and confidence' in the US government and its policies. 'That trust has been severely bruised,' he added. 'Even with the reduction in tariffs on China, we're still looking at the highest US tariff levels since World War II or earlier — and that's going to have a negative effect" on the economy, he said. Despite the recent negotiations, tariff levels remain "significantly higher" than they were at the start of the year, according to UBS strategists in a note. They estimate the effective US tariff rate — the average duty on all imports — now stands at roughly 15%, six times higher than the 2.5% rate in January before Trump returned to the White House. That estimate assumes the tariff rollbacks announced in last month's 90-day pause will remain in place beyond the deadline. 'With the Trump administration signaling that the 10% baseline tariff is unlikely to be negotiated lower, these elevated tariffs could slow the U.S. economy and drive prices higher,' Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said in a client note Thursday. While more trade deals may be announced in the coming weeks, Marcelli warned that 'ongoing uncertainty could trigger further bouts of market volatility.' 'We haven't seen anything permanent,' said Alex Morris, CEO of F/m Investments, in an interview with Yahoo Finance on Thursday. 'I think the market will want to see that before we really take off. There's a bit of a bounce right now, but I think we're going to see a lot more volatility ahead.' Read more: The latest news and updates on Trump's tariffs While many companies reported strong quarterly results this season, management teams expressed uncertainty over tariff-related impacts, with some firms even withdrawing their forecasts. On Thursday, retailer giant Walmart (WMT) warned it may be forced to raise prices. 'Low prices are what we stand for, and we're going to keep them as low as we can for as long as we can,' Walmart CFO John David Rainey said on Yahoo Finance's Catalysts. 'But when you look at the magnitude of some of the cost increases on certain imported categories, it's more than what retailers or suppliers can bear.' Some strategists are pointing investors toward defensive sectors like utilities and international equities. Unlike the Federal Reserve, which has held rates steady, several foreign central banks have cut rates, helping lift overseas markets. 'If you've been underweight international stocks, now is the time to at least get back to that strategic weight,' said Brian Nick, head of portfolio strategy at NewEdge Wealth. Portfolio managers also caution against trying to time the market or reacting to short-term volatility, especially given the swift rebound since April. 'Ultimately, we still think it's an environment where the S&P can tick higher, stocks can do well, but it's not going to be straight up and to the right,' Tim Urbanowicz, chief investment strategist at Innovator ETFs, said. Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
Yahoo
18-05-2025
- Business
- Yahoo
'A little too enthusiastic': Wall Street warns against chasing stock rally despite trade breakthroughs
The stock market rally fueled by President Trump's tariff rollback on China is drawing caution from some strategists, who warn the rebound may be overextended. "I am concerned about the magnitude of the rally we've seen coming back," Charles Schwab chief global investment strategist Jeffrey Kleintop told Yahoo Finance on Friday. "The market might be a little too enthusiastic that the trade worries are behind us," he added. "The trade framework, so far, [is] far from completed agreements." The S&P 500 (^GSPC) has surged roughly 1,000 points from its April 9 lows, prompting some Wall Street firms to raise their year-end outlooks as trade tensions have eased. Earlier this week, the broad-based index finished erasing all of its 2025 losses after US-China talks resulted in a truce that paused and lowered tariffs on both sides. That followed a limited pact announced earlier this month between the US and the United Kingdom that lowered barriers on some goods, such as automobiles and agriculture. Meanwhile, Trump's 10% baseline tariffs — which apply to nearly all trading partners — took effect in April and remain in place. An additional set of reciprocal tariffs that could push rates even higher for some countries were temporarily paused last month for 90 days. Read more: What Trump's tariffs mean for the economy and your wallet Stock market optimism this week was also buoyed by a series of investment announcements made during Trump's recent Middle East visit, signaling the administration's openness to negotiate deals in that region. Still, strategists caution that without concrete trade resolutions, market volatility could return. 'The tariff cat is out of the bag,' Jay Pelosky, founder of TPW Advisory, said, adding that this signals a broader 'erosion of trust and confidence' in the US government and its policies. 'That trust has been severely bruised,' he added. 'Even with the reduction in tariffs on China, we're still looking at the highest US tariff levels since World War II or earlier — and that's going to have a negative effect" on the economy, he said. Despite the recent negotiations, tariff levels remain "significantly higher" than they were at the start of the year, according to UBS strategists in a note. They estimate the effective US tariff rate — the average duty on all imports — now stands at roughly 15%, six times higher than the 2.5% rate in January before Trump returned to the White House. That estimate assumes the tariff rollbacks announced in last month's 90-day pause will remain in place beyond the deadline. 'With the Trump administration signaling that the 10% baseline tariff is unlikely to be negotiated lower, these elevated tariffs could slow the U.S. economy and drive prices higher,' Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said in a client note Thursday. While more trade deals may be announced in the coming weeks, Marcelli warned that 'ongoing uncertainty could trigger further bouts of market volatility.' 'We haven't seen anything permanent,' said Alex Morris, CEO of F/m Investments, in an interview with Yahoo Finance on Thursday. 'I think the market will want to see that before we really take off. There's a bit of a bounce right now, but I think we're going to see a lot more volatility ahead.' Read more: The latest news and updates on Trump's tariffs While many companies reported strong quarterly results this season, management teams expressed uncertainty over tariff-related impacts, with some firms even withdrawing their forecasts. On Thursday, retailer giant Walmart (WMT) warned it may be forced to raise prices. 'Low prices are what we stand for, and we're going to keep them as low as we can for as long as we can,' Walmart CFO John David Rainey said on Yahoo Finance's Catalysts. 'But when you look at the magnitude of some of the cost increases on certain imported categories, it's more than what retailers or suppliers can bear.' Some strategists are pointing investors toward defensive sectors like utilities and international equities. Unlike the Federal Reserve, which has held rates steady, several foreign central banks have cut rates, helping lift overseas markets. 'If you've been underweight international stocks, now is the time to at least get back to that strategic weight,' said Brian Nick, head of portfolio strategy at NewEdge Wealth. Portfolio managers also caution against trying to time the market or reacting to short-term volatility, especially given the swift rebound since April. 'Ultimately, we still think it's an environment where the S&P can tick higher, stocks can do well, but it's not going to be straight up and to the right,' Tim Urbanowicz, chief investment strategist at Innovator ETFs, said. Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre. Sign in to access your portfolio
Economic Times
18-05-2025
- Business
- Economic Times
Is Canada headed for a recession? Here're the details
Canada is facing a possible recession because of global trade issues. Traditional signs like GDP growth and job losses are worrying. Unemployment has increased, and forecasts predict slow growth. Consumer confidence is mixed, with some fearing a downturn. Unusual economic indicators are also being watched. The future is uncertain due to tariffs and other economic problems. Tired of too many ads? Remove Ads Traditional Indicators Point to Trouble Deloitte warns of a looming downturn, citing weak GDP growth and falling investment. Oxford Economics projects just 0.7% growth in 2025, followed by a 0.2% contraction in 2026, driven by global trade shocks and reduced immigration. RBC anticipates continued slowing of growth into 2026. Tired of too many ads? Remove Ads Consumer Confidence: A Mixed Signal Reading the Quirky Economic Tea Leaves The 'lipstick effect': People splurge on small luxuries during tough times. Greenspan's 'men's underwear index': Underwear sales dip during recessions, as it's one of the easiest purchases to delay. The 'cardboard box recession': A drop in demand for cardboard boxes, according to Charles Schwab's Jeffrey Kleintop, may indicate a slowdown in manufacturing. The 'Skyscraper Index': Economist Andrew Lawrence notes that the construction of record-breaking skyscrapers often precedes economic downturns. Uncertainty Reigns As global trade tensions escalate, Canada finds itself on the brink of a potential recession, with both traditional and unconventional indicators flashing warning C.D. Howe Institute defines a recession as a "pronounced, persistent, and pervasive decline in aggregate economic activity," typically marked by two consecutive quarters of declining GDP. Current forecasts suggest storm clouds may be gathering:Meanwhile, Canada's job market is under strain. As of April 2025, the unemployment rate rose to 6.9% — the highest since November 2023 — leaving more than 1.6 million Canadians out of work. That month, the economy lost 30,000 jobs, while adding just 7,400 new Bank of Canada, in its recent Financial Stability Report, outlined scenarios in which prolonged U.S. tariffs could trigger a year-long recession, with GDP declining for four consecutive sentiment is sending more ambiguous signals. The Bloomberg-Nanos Canadian Confidence Index rebounded to 48.6 as of May 9, approaching the neutral 50-point threshold. Data scientist Nik Nanos attributes the boost to the election of Prime Minister Mark some economists warn the rebound may not last. Walid Hejazi, professor at the University of Toronto, notes that fear alone can drive downturns. 'If consumers fear a recession is coming,' he says, 'they may reduce their spending, and reduced consumer spending makes the economy slow down even more.'Beyond the traditional data, economists are watching more unusual trends:The road ahead is anything but clear. Isabelle Salle, a behavioral macroeconomics professor at the University of Ottawa , says we're navigating uncharted waters.'Tariffs and this uncertainty shock just added to existing problems, at the worst time possible,' she explains. 'With uncertainty, you cannot easily assign probabilities to the different scenarios. You really have to operate with just options.'
Time of India
18-05-2025
- Business
- Time of India
Is Canada headed for a recession? Here're the details
Canada is facing a possible recession because of global trade issues. Traditional signs like GDP growth and job losses are worrying. Unemployment has increased, and forecasts predict slow growth. Consumer confidence is mixed, with some fearing a downturn. Unusual economic indicators are also being watched. The future is uncertain due to tariffs and other economic problems. Tired of too many ads? Remove Ads Traditional Indicators Point to Trouble Deloitte warns of a looming downturn, citing weak GDP growth and falling investment. Oxford Economics projects just 0.7% growth in 2025, followed by a 0.2% contraction in 2026, driven by global trade shocks and reduced immigration. RBC anticipates continued slowing of growth into 2026. Tired of too many ads? Remove Ads Consumer Confidence: A Mixed Signal Reading the Quirky Economic Tea Leaves The 'lipstick effect': People splurge on small luxuries during tough times. Greenspan's 'men's underwear index': Underwear sales dip during recessions, as it's one of the easiest purchases to delay. The 'cardboard box recession': A drop in demand for cardboard boxes, according to Charles Schwab's Jeffrey Kleintop, may indicate a slowdown in manufacturing. The 'Skyscraper Index': Economist Andrew Lawrence notes that the construction of record-breaking skyscrapers often precedes economic downturns. Uncertainty Reigns As global trade tensions escalate, Canada finds itself on the brink of a potential recession, with both traditional and unconventional indicators flashing warning C.D. Howe Institute defines a recession as a "pronounced, persistent, and pervasive decline in aggregate economic activity," typically marked by two consecutive quarters of declining GDP. Current forecasts suggest storm clouds may be gathering:Meanwhile, Canada's job market is under strain. As of April 2025, the unemployment rate rose to 6.9% — the highest since November 2023 — leaving more than 1.6 million Canadians out of work. That month, the economy lost 30,000 jobs, while adding just 7,400 new Bank of Canada, in its recent Financial Stability Report, outlined scenarios in which prolonged U.S. tariffs could trigger a year-long recession, with GDP declining for four consecutive sentiment is sending more ambiguous signals. The Bloomberg-Nanos Canadian Confidence Index rebounded to 48.6 as of May 9, approaching the neutral 50-point threshold. Data scientist Nik Nanos attributes the boost to the election of Prime Minister Mark some economists warn the rebound may not last. Walid Hejazi, professor at the University of Toronto, notes that fear alone can drive downturns. 'If consumers fear a recession is coming,' he says, 'they may reduce their spending, and reduced consumer spending makes the economy slow down even more.'Beyond the traditional data, economists are watching more unusual trends:The road ahead is anything but clear. Isabelle Salle, a behavioral macroeconomics professor at the University of Ottawa , says we're navigating uncharted waters.'Tariffs and this uncertainty shock just added to existing problems, at the worst time possible,' she explains. 'With uncertainty, you cannot easily assign probabilities to the different scenarios. You really have to operate with just options.'
Yahoo
16-05-2025
- Business
- Yahoo
Are investors 'too enthusiastic' trade worries are behind us?
US stocks (^DJI, ^GSPC, ^IXIC) are set to end the week higher with gains fueled by the US and China reaching a 90-day tariff truce. Charles Schwab chief global investment strategist Jeffrey Kleintop tells Morning Brief co-hosts Madison Mills and Brad Smith that he's "concerned about the magnitude of the rally" and fears markets are "a little too enthusiastic that the trade worries are behind us." To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. It's time now for today's strategy session. Stocks opening in the green today as tariff concerns moved to the back burner for investors. However, the president did reveal he plans to send out tariff plans for trading partners in the coming weeks. So, should you stick with US stocks or look to emerging markets? Joining us now, Jeffrey Kleintop, Charles Schwab's chief global investment strategist. Jeffrey, always great to have you on here. So, given the backdrop that we're in, the pending tariff negotiations to come, do you buy US or do you go global? I am concerned about the magnitude of the rally we've seen coming back. The markets just might be a little too enthusiastic that the trade worries are behind us. Remember in the first Trump trade war with China, after a 90-day trade truce that began on December 2nd of 2018, the two sides did not resolve their differences and tariffs increased again. And, you know, the the trade frameworks so far are far from completed agreements. They can take a long time. Also, this the semiconductor tariffs and related hardware supply chain, along with pharmaceuticals are now out of their comment periods. Those ended May 7th and the new tariffs could be announced at any time. So, I'm a little concerned about leadership that we're seeing in the markets right now, particularly in tech hardware. I think that's vulnerable. Instead, I am looking to emerging markets. They're outperforming this quarter. They outperformed last quarter. And you know what they did in every single quarter of Trump's first year of his first term, as we saw better growth out of China and other parts of the world. That's echoing in and a lot of what we're seeing so far this year. So, I think we could continue to see emerging market outperformance along with your P&L performance of US markets. Does that mean that you're trimming some of the US exposure or just holding for now? I think if you're an investor that over the last several years has really let your US and tech exposure really drift to be a dominant portion of your portfolio, it is not too late to rebalance. Europe, emerging markets have outperformed this year, but only by a small amount relative to the last, say, 10 years. So, I think there's still room to move your portfolio more into emerging market and developed market equities. And I wonder too, how you're thinking about emerging markets like China. We obviously had Michael Burry of Big Short fame out with his 13F filing indicating that he is trimming exposure to Chinese stocks. To what extent do you think investors should follow that move? Uh, you know, I think China's still got some room to go. Look, China has really been a dismal place to invest for the last three or four years. Valuations are way below their long-term average. And this year, China has three budgets. And if you combine the three of them, you get total deficit spending equivalent to 11% of GDP unveiled this year at China's national leaders of the National People's Congress meeting back on March 5th. They've only just started to implement that after April 2nd. So, we're just starting to get the data on this massive amount, record breaking amount of stimulus in China to turn around the 40 to 50% of their GDP that is consumer spending. Remember only 3% of China's GDP is tied to US exports. So, if they can really turn that around, that can continue to mean strong momentum for Chinese equities which are already up nearly, uh, 15, 16% this year. You know, it's not too early to start thinking about next earning season because that's when a lot of companies are going to be giving us some updates on where they ultimately performed given the amount of clarity or lack of clarity, I should say, that they were citing in this most recent and this current still yet to end, as we're waiting for a few more retail names, uh, that are going to be scattered over next week, uh, and then a few other companies trickling out. So, what does that set up for the next earning season and whether there is certainty that's put back on the table. Obviously, we heard a lot this earnings season about the uncertainty and and and maybe two different paths that earnings could take for many big companies. We are still in the European earnings season. It tends to lag those in the US. We're only about two-thirds of the way through it. So, we're hearing these comments way post liberation day now on what they're seeing going forward. Of the 230 companies in the stock 600 index in Europe that have reported earnings so far, 60% beat estimates in 60, 60% beat estimates in the first quarter. That's 6% better than usual, and the guidance has been improving here in recent weeks. As a matter of fact, we continue to see rising earnings estimates in Europe in contrast to maybe the the downgrades that we saw in US earnings growth. So, I continue to favor European stocks on that rising earnings and economic growth backdrop, the combination of fiscal and monetary stimulus this year, regulatory reforms as right leaning governments elected last year begin to implement policy along with attractive valuations and relative political stability adding to a rising euro.
