In this Quarterly episode, Crista Caughlin, lead portfolio manager for Canadian bonds, and Jeff Mo, lead portfolio manager for U.S. midcaps, discuss market performance through Q1 2025 and the significant volatility that followed in early Q2—particularly after "Liberation Day" when the Trump administration imposed sweeping tariffs, followed by retaliation from other countries, and then a partial pause. The discussion explores how these trade tensions have created uncertainty affecting business confidence, consumer spending, and investment decisions. Crista explains that the growth outlook has worsened due to this uncertainty, regardless of whether tariffs ultimately reach 10%, 25% or are delayed. Both emphasize the team’s investment approach during this volatility relies on maintaining a disciplined process, avoiding "hero trades," and carefully modeling potential impacts on individual companies. Key points from this episode:

• The Trump administration initiated significant trade tensions in early Q2 2025 with "Liberation Day" and the imposition of sweeping tariffs, followed by retaliatory actions from other countries, causing major market volatility before some tariffs were paused on April 9th (except those on China, which remain at 125%).
• Even before the full implementation of tariffs, business confidence and consumer spending were negatively impacted by uncertainty, with examples of furloughed workers, delayed investments, and cautious spending behaviors from both the private sector and government employees.
• Central banks are in a difficult "wait and see" position regarding interest rates as they cannot fully overcome the effects of a trade war but will try to help economies adjust while monitoring whether tariff-induced inflation becomes structurally embedded.
• The asset mix committee has maintained a neutral position in equities throughout the volatility, with a slight shift from U.S. equities toward international markets (particularly Europe) to benefit from potential structural tailwinds.
• The investment team emphasizes maintaining adherence to a disciplined process during market turbulence.

Host: Kevin Minas, CFA, MBA, CAIA, Institutional Portfolio Manager Guests: 

Crista Caughlin, CFA, Portfolio Manager

Jeff Mo, CFA, Portfolio Manager

 

This episode is available for download anywhere you get your podcasts.

 

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

Visit Mawer at https://www.mawer.com.

 

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