By coinnews 
00:00 Speaker A
More on the latest market moves as stocks are jumping amid trade hopes. Let’s welcome in now Ross Mayfield, Baird Investment Strategist. Ross, it is always good to see you on the show. So, we know trade tariffs, Ross, you know, they’ve been front and center for investors. Now, we have President Trump announcing this limited trade deal with the UK. Markets are rallying. Ross, um, as a strategist, you saw those headlines, you read those reports. What do you make of them?
00:46 Ross Mayfield
Yeah, I mean, it’s obviously a positive. I think the bigger news than the UK deal, although as you mentioned, that setting kind of a framework for what investors should look for in these other deals, but the big thing was President Trump commenting on China in a positive way at all. The idea that there could be an off-ramp from these, you know, punitive tariffs and reciprocal tariffs with one of the, you know, the other biggest economies in the world is the story, right? And so, that, um, that we have negotiations coming up, that President Trump is talking even somewhat positively about, uh, China at this point, I think is a huge relief for investors. Obviously, we know things can be volatile, but I think that’s the big takeaway. The UK deal is nice to have, a lot of these other countries are going to be nice to have, but having some level of certainty on China is going to be the big thing, uh, for the next couple years.
02:08 Speaker A
So Ross, I guess my question would be, you know, we obviously were pricing in a lot of bad news at the lows in terms of how this trade war might play out. What are we pricing in now, right? And what does that imply for where we could go from here?
02:44 Ross Mayfield
I think the market right now is pricing in that basically this 10% baseline tariff is fine, or the market is saying it’s fine because if it weren’t okay with that, then there there might have been a negative reaction to what was left in place with the UK today. So you’ve got that as a baseline, but other than that, I think the market is expecting pretty widespread resolution, um, from the the reciprocal tariffs that were announced on April 2nd. Because we are functionally back at the pre-liberation day levels. Um, the S&P equal weight is is flattish on the year. So we’re pricing in that this trade war is basically going to amount to not all that much in terms of punitive tariffs. And so I think that the, uh, the market right now, uh, is pricing that in and won’t hesitate to, um, you know, kind of push back or arm wrestle the administration if they start to go back to where they were pre April 2nd. So I wouldn’t say that, uh, retesting the lows is out of the question by any means, but only if the administration gives some evidence that they’re going to lean back into that more restrictive trade environment.
04:35 Speaker A
Ross, I’m curious, what are your expectations for for corporate profit growth this year, and how confident are you in that forecast given all the uncertainty we’re talking about here?
04:55 Ross Mayfield
Well, I can’t be any more confident than all of the companies who are are trying to grow their businesses are, and they’re all pulling guidance. So I I can’t give you a a great answer here. I would expect at this point, you know, we’re about 90% of the way through first quarter earnings. We’ve seen strong growth, you know, broad growth across sectors outside the energy sector. And so that to me says that companies were on solid ground entering the year. They had some momentum. What the impact of this tariff uncertainty will do, um, I think is up in the air. I think you you can still expect growth. You know, if we’re just doing binary growth or contraction, I would still be on the growth side of the spectrum. Um, but I think it could be more in the single digits, you know, coming into the year, we expected something like 12, 13, 15%. I think single digit growth would be a nice outcome this year. Obviously, valuations are expensive, so that would end up, you know, maybe not the best year for the S&P 500, but coming off of such a strong 23 and 24, um, maybe to be expected anyway.
06:37 Speaker A
So Ross, what do we do in terms of strategy going from here, given, you know, given the tariff uncertainty that still is lingering around?
07:00 Ross Mayfield
Yeah, it’s the it’s the million dollar question. I think what you do here is try to solve the tariff problem, it is borderline impossible in my opinion, because you have to get into the psychology of the administration and and know what they’re going to do next. Because this is being levied, uh, from the executive, uh, the executive branch, you know, it doesn’t run through checks and balances as much. So getting into their heads is very, very difficult. So what do you do instead? I think you focus on secular growth themes, structural themes that are going to be here regardless of how the tariffs play out over the next 6 or 12 months, right? Things like AI, things like deglobalization, things like the need for more power. I think you pick some structural themes, you look for the high quality companies with good management teams, and you lean into those. And if there’s a, you know, a big risk on rally and you lag the kind of junkier stuff, I think you have to be okay with that because you’ve you’ve reached for quality in a time of deep uncertainty.
08:24 Speaker A
Ross, thanks. Good to see you.
08:30 Ross Mayfield
Thanks. Thanks for having me.