As Tariffs Torment Investors, Not All Is Gloomy on Wall Street
Here's my take on the what's tough -- and what's giving me optimism -- in the markets right now.
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Last week was a good one for investors, at least for the ones able to maintain their focus and composure in an increasingly tumultuous market environment. The Nasdaq ended the week 7.3% higher than where it was starting Monday. The S&P 500 was up 5.7% and the Dow rallied nearly 5%. Of course, to garner those stock gains investors had to through a roller coaster of a week with massive daily gyrations. It was enough to give some angina even to long-time market veterans.
Tariff policies continue to be adjusted on the fly, and absolutely no one knows how all this will play out in the end. Toy and apparel makers will be deeply impacted given how much of their goods come from China. Given roughly half of all furniture comes to the U.S. via China, that industry will have major issues. The near 60% decline in the stock of RH RH so far in 2025 attests to those challenges. The agricultural complex will face some tough times, especially soybean farmers, given how much of their crop is sent to China.
I spoke to two friends who run restaurants here in Delray Beach over the weekend. Some key items have already become much harder to find, and they worry about increasing costs to their supplies new tariff policies will usher in. I spent Sunday afternoon with another friend watching Rory finally get his Grand Slam by winning the Masters. He is a chief financial officer with a real estate investment trust focused mainly on retail. The recent gyrations of the credit markets have complicated his role, and a planned refinancing has been on hold for now. In addition, several prospective retail tenants that were about to sign long-term leases have pulled out of negotiations at the last minute. It is hard to commit to additional fixed expenses when you do not know what your margins will be going forward.
Not all, however, is gloomy. The recent selloff in crude oil should push gasoline prices down significantly in coming weeks. The southern border is now as secure as it has been in a generation. This should help on the rental inflation front, all things being equaled. The March Bureau of Labor Statistics jobs report came in significantly stronger than expected, but we will have to see what impacts new tariffs will have on the jobs market in the months ahead. The yield on the 10-Year Treasury has quickly rose from just under 4% to close at 4.5% on Friday. But the yield was near 4.8% earlier in January before the new administration was inaugurated it should be noted.
There is always the hope that new trade deals will be agreed to with at least one major trading partner in the coming weeks, or at least enough of a framework to call off the new tariffs pending working out all the details. A major trade agreement would likely trigger a significant rally in the market.
My view remains the markets are likely to be quite volatile in the weeks ahead. Therefore, when the market rallies, I will be rolling some of my covered-call positions forward. When equities sell off, I will deploy some of my dry powder back into the market using covered call orders. I am trying to stick to stocks with reasonable valuations in companies that are profitable, have great balance sheets, and should see manageable or minimal impacts from the emerging trade wars. I highlighted one of these names, Exelixis EXEL, in my weekend column. Wednesday, I will profile some similar ideas as we all try to navigate through a fast-changing macroeconomic backdrop.
At the time of publication, Jensen was long EXEL.
