Analyst: “A bull market in uncertainty”

With stocks whipsawing on Wednesday, Scott Clemons, partner and chief investment strategist at the venerable Wall Street firm Brown Brothers Harriman, took a few minutes to chat about the wild week since President Trump has unleashed the tariffs.

Shortly after our chat, Trump appeared to announce a partial pause on tariffs for some countries, while simultaneously unleashing a still higher levy of 125% on China “effective immediately.” Stocks exploded in response, with the S&P 500 up 6% in the immediate aftermath of the announcement and shares of some Trump-related stocks like Tesla up more than 10% at moments. Other megacap tech stocks like Apple and Nvidia were also up more than 10%.

Relief rally aside, for Clemons, the key question is what lasting impact the White House’s erratic, and what some Trump supporters describe as destructive, approach to managing the economy will have.

Here are highlights, edited for clarity and concision.

Sherwood News: So, what’s the mood out there among investors?

“This is what I’m hearing from clients: right now, it’s all about the tariff tantrum. But even if that were to go away and be suspended or be lifted or whatever it is, what’s left is the crisis of competence.

What might next week bring? This week it’s tariffs; next week it’s some regulatory decision. That unpredictability and uncertainty is paralyzing business decisions.

And it’s paralyzing for consumer decisions, as well. Think about a family deciding, maybe we don’t need to take that vacation, buy the new car, renovate the kitchen. When you aggregate all of those things up, that is the recipe for a recession.

I believe we’re going to see in the second quarter a real drag on the real economy as businesses delay spending, they delay hiring, and they delay investments simply because of the uncertainty and the anxiety.”

SN: From an investment perspective, the markets have done well during economic downturns in the past. Do you think that could play out this time?

“This too shall pass, at which point markets will rebound. What I’m interested in as an economist and an investor is what is the lasting ripple effect from the uncertainty that remains behind? That, I think, could be a real break on both investing and on the economy for some time to come.”

SN: Are there any particular sectors or markets where you’re looking to see evidence of that lasting impact?

“We’re going to get a real good insight to that starting tomorrow, when we get first-quarter earnings reports. Actual first-quarter earnings are so ancient history, they’re almost irrelevant.

But how companies talk about their positioning in this uncertainty is going to be interesting. So, I’m listening for companies talking about delayed hiring plans or delayed expansion plans, or, of course, how they’re dealing with the pricing uncertainty that tariffs bring.

There’s a bull market in uncertainty, at least, if there’s not a bull market in anything else.”