LIVE MARKETS-Given tariff war, be more tactical, says Crossmark Global

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GIVEN TARIFF WAR, BE MORE TACTICAL, SAYS CROSSMARK GLOBAL

Aggressive shifts in U.S. economic policy by the second Trump Administration have undermined investors' prior growth expectations and led to a turbulent 2025 so far.

According to Bob Doll, chief investment officer at Crossmark Global Investments, foremost among the shifts involves tariffs.

"President Trump is also upending several of the foundations that have underpinned the global economic and capital markets backdrop in recent decades, many of which had helped buttress the U.S. exceptionalism theme," writes Doll in his latest "Deliberations."

However, Doll adds that the flipside is that U.S. policy is stoking selective pro-growth policies in Europe that should counter some of the fallout from the tariff war.

In any event, as Doll sees it, tariffs are a "self-inflicted stagflationary wound," and at least until the unfolding tariff war subsides, and there is less perceived danger to economic growth, equity volatility should remain elevated (VIX > 20.00), and a risk-off climate will persist.

Given the tariff threat to global growth expectations, higher volatility, and still-elevated U.S. equity valuations, Doll believes "a more tactical approach than normal will be appropriate" until the policy outlook uncertainty becomes clearer.

Additionally, Doll says that "sticky inflation and heavy debt issuance will limit bond yields from adjusting materially lower during risk-off phases, and will likely head higher if trade headwinds abate."

(Terence Gabriel)

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