What explains the durability of the post-liberation day equity rally? How will the Moody’s Ratings downgrade of U.S. debt affect bond markets? And will balanced portfolios offer global investors adequate diversification going forward?

In this episode, Northern Trust Wealth Management CIO Katie Nixon and Northern Trust Asset Management Head of Tactical Asset Allocation Peter Wilke take the pulse of global markets following the furious rebound in risk assets from their early April lows.

Katie and Peter discuss the state of tariff negotiations and the varying impacts they will have on U.S. corporate earnings. They outline the reasons for outperformance of non-U.S. equities—particularly for dollar-based investors—including improving governance trends in emerging markets. They then turn to the outlook, including which U.S. sectors may be more resilient, how U.S. fiscal strategy may impact bond markets, and how investors can pursue portfolio diversification and battle inflation in the balance
of 2025.

(1:38) What factors drove the 90-day pause in elevated tariffs, and what is your base case for where tariff rates will end up?
(5:51) Will tariffs have a greater impact on S&P 500 earnings than they will on the broader U.S. economy?

(7:13) - What has driven the outperformance of non-U.S. equities this year?
(12:18) - How has the weaker dollar affected returns for U.S. based investors?
(14:05) - What is the case for investing in emerging markets today?
(17:49) - What is the outlook for U.S. equity markets, and what segments are most attractive?
(20:50) - What are the biggest risks to U.S. equity markets?
(23:02) - How will U.S. fiscal strategy and a weakening growth environment affect the outlook for bonds?
(29:01) - Will bonds be a good portfolio diversifier in the future, and what is the role of TIPS?

Should the U.S. seek balanced trade? What would a potential “decoupling” with China look like? And what’s driving the current divergence between the “soft” and “hard” economic data?

In this episode of Market Currents, Northern Trust Wealth Management CIO Katie Nixon sits down with BCA Research Chief Strategist Peter Berezin for a deep dive on the state of tariff negotiations between the U.S. and its trading partners, and the many implications for the economy and capital markets.

In the discussion, Katie and Peter explore the premise of seeking balanced trade, a potential decoupling of the most important bilateral trade relationship— the U.S. and China — and outline the complications of resetting trade between the U.S., Canada and Mexico. They also discuss the current contrast between the soft and hard economic data, the direction of inflation and growth, and Peter’s outlook for a 4,450 finish for the S&P 500.

(1:34) - Should the U.S. seek to have balanced trade with each of its trading partners?

(5:13) - Will the U.S. face retaliation from countries that import U.S. services?

(7:56) - Will a trade war accelerate the economic decoupling between the U.S. and China?

(9:59) - How might Canada and Mexico react to trade negotiations with the U.S.?

12:06) - Why is there divergence between the weak soft survey data on business and consumer confidence and the more resilient hard economic data?

(13:35) - What is the likely Fed response if the economy weakens later this year and inflation picks up?

(16:33) - What is the probability of recession in the U.S.?

(18:26) - If we had a recession, how deep would it be and how long would it last?

(20:48) - How will the Trump administration balance the need for tariff revenues with the need to avoid a weakening economy?

(22:59) - What is the rationale for a 4,450 price target on the S&P 500 Index for 2025, and what might change this forecast?

The views and opinions expressed by Peter Berezin are solely his and do not necessarily reflect the views or opinions of Northern Trust Corporation or its affiliates. Northern Trust takes no position with respect to such views and opinions in distributing this publication.

In this installment of Market Currents, Katie Nixon, Chief Investment Officer for Wealth Management at Northern Trust, demystifies the world of market volatility with Northern Trust Asset Management’s Deputy CIO and CIO of Global Equities Michael Hunstad.

Katie and Michael level set the discussion with a review of changes to the market’s structure since the Global Financial Crisis that have shaped its current volatility profile. They discuss the declining role of institutions in price discovery and the rise of retail investors, algorithmic trading, and the use of options leverage to explain how markets are more sensitive and reactive to new information. They also describe how market concentration among MAG7 and tech-adjacent stocks has, perhaps counterintuitively, muted market volatility in recent years.

Recent spikes in market volatility have demonstrated the role that quality has played — and can in the future play — in portfolio protection and expected alpha generation. In conjunction with quality, value stocks are poised to play a significant role in overall portfolio diversification, with value priced attractively relative to its own history and to higher growth segments of equity markets. Katie and Michael close with their thoughts on volatility during election cycles, and how emphasis on quality, value and low-volatility names can benefit investors post-election.

(0:52) – What is the VIX index, and what is its recent history?

(2:38) – What structural factors have driven recent market volatility and will likely impact the market going forward?

(7:09) – Is the market less efficient than in the past?

(8:13) – Is the rise of the “Meme Stocks” evidence of the growing importance of retail investors in price discovery?

(9:55) – How has high market concentration affected market volatility?

(13:25) – How did different market segments perform amid recent spikes in overall market volatility?

(16:28) – How have bonds affected portfolio-level diversification?

(18:01) – Is value another area that can offer diversification?

(19:45) – Do relative valuations between value and growth suggest a shift into value stocks may be warranted?

(20:51) – What happens to volatility around presidential election periods?

(22:57) – Should investors be afraid of what’s to come — or be taking advantage?