4 Issues That Keep This Investor Up at Night

The markets sold off around 2.5% last week as the yield on the 10-Year Treasury touched 4.6%, before pulling back. Meanwhile, the yield on the 30-Year Treasury moved to about the 5% level.

Despite the tariff delay with the EU, outside a slew of new trading deals being announced, the news flow is likely to lean to the negative side in the coming weeks and months.

Here are the issues that are causing me some sleepless nights as an investor.

As I have mentioned in these columns, both Citigroup and Raymond James have reduced their S&P 500 earnings forecasts by just over 5% over the past month. Jamie Dimon of JPMorgan Chase JPM stated at the bank’s recent Investor Day that he could see S&P 500 profit growth projections taken down to zero over the next six months depending on how tariffs eventually get implemented. This is due to the fact that tariffs will take down profit margins across many industries. It all depends on what the eventual tariff percentages become, what amount the exporter will eat and what portion can be passed down to customers, without them balking.

This is why I am focused on growth plays that have few if any tariff impacts. One of these, Travere Therapeutics TVTX, I profiled this weekend. Other names in this category I have recently highlighted are Exelixis EXEL and CorMedix CRMD. Both of these companies reported better-than-expected first-quarter results earlier this month. As a result, analyst firms have nicely boosted their earnings estimates significantly in recent weeks — a rarity in this market.

There has been some nice progress on the inflation front over the past couple of years since it peaked early in the summer of 2022. Tariffs, being a tax, could upend that progress depending on how they get applied. They could also dampen consumer spending ever further. The Federal Reserve is also likely to continue to be on hold until it sees how tariffs impact inflation.

This most likely means no cuts to the Fed Funds rate until late in summer. That isn’t going to help investor sentiment. In addition, it will bring no relief to the beleaguered residential and commercial real estate markets. As I highlighted in my column last Wednesday, both sectors are showing significant deterioration.

I am becoming more and more worried about the prospects for multi-family real estate. I listen to a lot of real estate podcasts and the narrative that multi-family is the new or next subprime is getting a lot of traction. That will happen when the delinquency rate for commercial mortgage-backed securities, or CMBS, against this CRE sector has gone from 1.44% to 6.54% over the last 12 months, according to Trepp. Apartment REITs that have built or bought a lot of complexes in the Southeast and Sunbelt could have particularly tough times now that intrastate migration to these regions has slowed noticeably.

Along with the valuation of the overall market, these are the key issues giving this investor significant angst at the moment.

At the time of publication, Jensen was long CRMD, EXEL and TVTX.