WEBVTT

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The selling
had been orderly, focused on technology

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and consumer discretionary stocks
through April 1st,

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but since April 2nd, selling
has been chaotic and rapid.

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The nature of lingering uncertainty
is that positive and negative developments

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can both come along and reinforce
either apprehension or give false hope

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before market prices
finally stop falling and reach a bottom.

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If the uncertainty about tariffs
continues, corporate leaders

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may have to wait to learn how to allocate
capital to their growing businesses.

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The economy could then fall into recession
during this

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time, and lower
equity prices could follow.

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Or as we expect,
the economy could continue to grow

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with help from lower
interest rates and ample liquidity.

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We would not present

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the issue of recession
only if tariffs remain in place.

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One of the important points to remember
is that we're about to see

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first quarter earnings,

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and we'll be looking for two signals.

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First, we need to see how much guidance
from the companies comes down

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for future earnings.

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And second are there any early reads

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on cost increases
from the reporting firms.

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From these reports, we'll see
which companies are struggling more

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with tariff adjustments.

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The more companies that struggle,
the greater chance of recession.

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We anticipate significant tariff impacts.

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And so we have brought our economic growth
forecasts down from 2.5%

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to 1% near recession
level, but still positive.

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For investors who have

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cash and want to take advantage of lower
prices, even amid uncertainty,

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we would stick with quality
in the portfolio.

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Among the U.S. markets, we favor large and
mid-cap U.S. equities and select sectors:

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Information Technology, Communication
Services, Financials, and Energy.

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For fixed income, we are selective.

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We favor investment grade fixed income
and would focus on corporate bonds

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and essential service
municipal securities.

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As for fixed income maturities,
the middle range of the maturity spectrum,

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let's say 3 to 7 years, we think offers
the best value at this time.

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For investors who have a long-term focus
and want to remain cautious here,

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some cash buffer can make sense.

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Money market
rates are a lot higher than they were

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the last time major uncertainty
landed on financial markets.

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So, for now, rates above 3%

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are one solution for a cash buffer.

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As market prices
settle, legging back into those markets,

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especially if underweight to strategic
targets, remains a portfolio priority.

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So, planning on where you want to take
your portfolio next

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is an essential conversation
to have with your financial advisor

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we strongly recommend.