LEAWOOD, KS / AGILITYPR.NEWS / April 07, 2025 / PROPOSED SOURCE: Brian Huckstep, CFA®, CFP®, Chief Investment Officer at Advyzon Investment Management (https://www.advyzonim.com/)

I expect tariffs to continue to impact investment portfolios in the next weeks, months and years – but maybe not in the way some investors expect. The higher prices that tariffs create reduce the amount of goods and services that consumers can purchase, which reduces earnings for corporations inside and outside of the U.S. Stock and bond prices are very quick to adjust to incorporate the expected impact of lower future earnings forecasts, as we’ve seen in the last few weeks, and in particular during the last few days as the details around the unexpectedly strong tariffs were released Wednesday afternoon.

It is possible that the entire economic impact of lower future earnings has already been baked into stock prices, as we’ve seen a drawdown in the S&P 500 index since the February 19 all-time high. What we feel markets may not have positioned for yet is the inflationary impact on goods and services that takes multiple months and quarters to flow through into the marketplace.

Disclosure: Comments are the personal opinion of Brian Huckstep, CFA, CFP®, Chief Investment Officer of Advyzon Investment Management (AIM), and are intended for informational and educational purposes only. The views and opinions expressed in this content are made as of the date of submission and are subject to change over time. The comments are not intended as individualized investment advice, or as tax, accounting, or legal advice. When specific investments or types of investments are mentioned, such mention is not intended to be a recommendation or endorsement to buy or sell the specific investment. This information should not be relied upon as the sole factor in an investment-making decision.

About Brian Huckstep, CFA®, CFP®

Brian Huckstep, CFA®, CFP®, serves as Chief Investment Officer at Advyzon Investment Management. He has been in the investment industry for 30 years, starting in commercial banking at Bank One, moving to plan sponsor (401k and pension) auditing and accounting at Northern Trust, and working at Ibbotson Associates / Morningstar for seventeen years as a Portfolio Manager and Head of US Asset Allocation. Brian has extensive experience managing multi-asset investment portfolios, including Target Risk, Target Date, ESG, Alternative, High Income, Strategic, and Tactical strategies.

Huckstep earned his undergraduate degree from the University of Michigan in 1992, majoring in economics. He later attended the University of Chicago’s Booth School of Business to earn an MBA in finance, strategy, and entrepreneurship in 2003. He earned the CFA (Chartered Financial Analyst) designation in 2005 and the CFP® designation in 2021.

PROPOSED SOURCE: Jonathan Chandler, CFA®, Chief Operating Officer at Syntax Data

(https://www.syntaxdata.com/)

If you're a long-term investor, last week's tariff announcements should cause you concern. America has prospered under the economic order established in 1944 with the Bretton Woods agreement. The structures which enabled the US to prosper over the past 80 years have been shredded, creating a perilous economic environment This has negative long-term implications for investors. Short-term traders may in fact do better in this environment than long-term investors.

If President Trump stays the course he’s set, the tariffs will most certainly impact the retirement savings of Americans. The President’s unprecedented move has put in place a deconstruction of the global economy. That has negative implications for growth around the world, including here in America.

Global growth is bound to slow if these tariffs stay in place. Tariffs will have the effect of cutting off American exports, which results in the loss of jobs, while creating inflationary impulses at home and dampening demand. The stock market is signaling recession and recession is a possible outcome. Financial assets will pay the price. 

Market downturns we saw on April 3 are just bumps in the road. But the macroeconomic backdrop has been shredded, so the long-term trend is going to be negative. That’s because of the inflationary and recessionary impulses triggered by the tariff agenda are real and will take some time to play out in the underlying economy. This will manifest itself in lower corporate earnings and revenues.

Seldom have tariffs been imposed without retaliation. We have yet to see how our trading partners will retaliate. Uncertainty, along with a lack of confidence in US financial assets, is likely to be a characteristic of the US economy moving forward. There will be greater certainty – the certainty is that the global economy will be on a downward trajectory for some time to come. And unfortunately, tariffs are a ratchet, much easier to put on than to take off, as reducing them requires negotiating complex free trade agreements.

The Smoot Hawley Act of 1931 imposed broad-based tariffs, causing an unwinding of global trade. Many economists believe that Smoot Hawley deepened the Great Depression of the 1930s prior to World War II. A similar dynamic played out with respect to tariffs in the run-up to the First World War.

Cash is safe for the moment and pays around 4%. You’re unlikely to get that any time soon in the stock market.

Both the S&P 500 and NASDAQ will likely be impacted significantly by the tariffs. Syntax's data can be used to create indices and portfolios that may be better positioned to weather this storm. For example, Syntax uses its revenue data to precisely identify companies with "defensive" business models, those that should be more resistant to drawdowns and recessionary pressure (e.g. rate-regulated utilities, mature pharmaceuticals, certain consumer staples – but using more of a scalpel than the hatchet that traditional sector groups do), and uses this to construct a 50 stock Defensive index. Since the tariff announcements on April 2^nd, the market is down 10.66% while the Defensive index is down only 3.95%. This capability is also made available via the Syntax Direct platform. Syntax has published two pieces on this topic recently and plans to continue covering this topic this week.

Syntax also put this piece out on LinkedIn last Friday looking at how global companies performed after the tariff announcements based on how much revenue thy earn in the US.

About Jonathan Chandler, CFA®

Jonathan Chandler, CFA®, is Chief Operating Officer of Syntax Data and is experienced in developing innovative financial indices and data analytics. Syntax Data is a financial data and technology company that codifies business models into a relational system. Syntax operates through three segments: Affinity® Data, Syntax Direct℠, and Syntax Indices. Using its patented FIS® classification system, Affinity® Data offers the most comprehensive, granular, and accurate product line revenue data available. Syntax Direct℠ is a direct indexing platform that allows advisors to create rules-based, custom indices quickly – and at scale. Syntax Indices is predicated on collaboration. Our team works with clients to build highly bespoke indices, including core, global benchmarks; and thematic; smart-beta, defined outcome, and target volatility indices. These indices are foundational for financial products, including