President Donald Trump’s tariff plans have sent shockwaves across global markets, with futures pointing to a 1,200-point-plus plunge for the Dow industrials. Despite some calm voices trying to prevail, investors are grappling with the threat of inflation and recession. Charles Schwab’s chief investment strategist, Liz Ann Sonders, has offered a post-tariff-turmoil playbook for rattled investors.
Sonders believes that investors should focus on stable companies with high profit margins, which have been an anchor during a tough run for stocks. She recommends sticking to these stable companies and seeking non-U.S. diversification plays. International equity diversification has paid rewards in the past, and Sonders expects it to continue doing so.
Investors also need to consider the chances of an earnings recession, as companies struggle to pass on higher input costs. Earnings estimates have dropped for 15 straight weeks and may fall further. The consensus on 2025 earnings growth is “too lofty,” with the path of least resistance significantly down from here.
With earnings season around the corner, markets will begin to get an inkling of how companies plan to manage tariffs. Investors should navigate around sector leadership and focus on factors that are less volatile. Sonders suggests being more factor-focused in this landscape.
In her playbook, Sonders recommends avoiding sector-heavy investments and instead focusing on high-quality stocks with stable profit margins. The iShares Edge MSCI USA Quality Factor ETF has been a good anchor for investors during the recent tough run for stocks.
As the markets continue to navigate this post-tariff turmoil world, investors should stay informed and adapt their strategies accordingly. With earnings season around the corner, it’s essential to focus on stable companies with high profit margins and international diversification plays.
Source: https://www.marketwatch.com/story/what-investors-should-do-now-after-trumps-liberation-day-tariff-shock-says-this-top-strategist-facf5640