Paramount Wealth Perspectives

Navigating Tariffs, Tech Trends, and Global Markets: Expert Insights from Paramount Wealth Perspectives - 3/10/25

• Christopher Coyle

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In this episode of Paramount Wealth Perspectives, host Chris Coyle is joined by Scott Tremlett, CEO and Chief Investment Strategist at Paramount Associates Wealth Management, to answer pressing questions from the community.

Tune in as they break down key economic concerns, including the impact of tariffs on the economy and investment strategies, insights on AI’s role in the tech sector, and Scott’s perspective on international stocks as undervalued opportunities. They also discuss the strength of the U.S. dollar and its implications for global investments.

Gain valuable insights on navigating uncertain markets and learn how strategic investing can help you stay ahead. Don't miss this informative episode filled with actionable advice for investors of all levels.

Chris Coyle:

Intro song

Speaker 9:

Hello, everyone. Welcome to Paramount Wealth Perspectives, your go to podcast for the latest updates on global markets and current economic events. This is your host, Chris Coyle. I am the Marketing Director and Financial Advisor here at Paramount Associates Wealth Management. And today I am joined by Scott Tremlett, Chief Executive Officer and Chief Investment Strategist at Paramount Associates Wealth Management. Today we're doing it a little bit differently. We've been listening to input from our community and we are striving to make this as educational to them as possible, including our clients who are the pillar of our community. With that being said, we reached out to them, ask them to send us questions, which we're going to be going over today with Scott. First question, that was. Inputted to us was from a person who wanted to know, obviously about kind of the elephant in the room, tariffs how has that impacted the economy? How is it going to impact the economy? How has it impacted, if any, your investment strategy? Thanks,

Speaker 10:

Chris. Well, game on. Let's tackle that elephant here right away. Well. So, generally speaking, as of now, there has not been an effect on the economy, but the perception of what's going to happen in the future is really what's driving the markets down here right now. In general, markets don't like uncertainty. And these tariffs and the reciprocal tariffs coming back at the United States are certainly a level of uncertainty that makes the markets uncomfortable. Now, let's remember when it comes to tariffs and inflation to us as the consumer, this is a one time event. Things will reprice. So if XYZ product was 5 before with the tariff, maybe it's 6 and we can make the determination whether we're going to purchase that or not. As of right now, we aren't seeing retail sales slowing and this was going into this year. I have seen revenues in the predictions for revenues over the year for corporate America start to decline. And so if tariffs start to eat into those margins a little bit further than even what we're seeing and what was projected going into this year, then at that point we could see a deterioration of earnings, stock market, and everything else to follow.

Speaker 9:

And Scott, in light of that and kind of continuing that line of thought, what would you, if any, have sort of a prediction for? Year end for the market. Well,

Speaker 10:

going into this year, and I don't think I've really changed my tune on this. I really expected the S& P 500 to end the year up maybe 4, 5, 6%. And that's really just looking at what we've gone through the last two years. The last two years, we've had robust growth. We've had robust earnings. We've had robust growth in terms of the stock market. And that's all fine and dandy, but when it comes down to it, Valuations in the United States are pretty high. So when I'm doing my rankings around the globe, first I start with the growth factor, two sides of that current, and then there's momentum. But secondly, I start to weight that versus what areas of the world are undervalued based or unearnings and what areas of the world is a monetary policy helping out those economies instead of trying

Speaker 9:

to slow the economy. I got you. And I think, as you mentioned, a lot of there was a lot of growth 2022 2023 driven by tech industry. Certainly a lot of industries. One of our clients had a question asking about AI. And I guess the tech industry in general, what long term risks do you see? What opportunities do you see? How has it changed this year? And how is it, you know, shaping overall in your investment strategy?

Speaker 10:

Well, I mean, going into this year, you know, certainly AI is going to be with us going forward. And there's going to be a lot of money spent on AI. Now, there's a couple different ways to play that. One would be the chip makers themselves, NVIDIA's, Qualcomm's. Broadcoms, things of that nature, but then also you can look at how, how is the infrastructure going to be built to house those chips, keep them cool, things of that nature. So I was going into this year. I looked at utilities as an area where you could get some growth characteristics, and there's two sides to utilities in my mind. One is that cheap, defensive. Pay a dividend, don't move very much, kind of move just based on rates. And then there's the other side, which is the more aggressive, more growthy style of utility, like a talent energy or something of that nature, which they're expected to benefit from this AI world. I think that the biggest risk is that everything is priced in already. And that everybody's in on the same stuff and what happens when that happens and everybody starts selling is what we have days like today.

Speaker 20:

Yes, today definitely hurt for quite a bit of investors. And is a good example of how a mass exodus can occur. When everyone is invested in the same stocks. Moving on to another question from a client.

Speaker 9:

What, given the current Climate that we have at home and abroad. What have you been doing for investment strategy? I know you mentioned in your, one of your latest updates on our website that you believe that international stocks are undervalued. Can you please explain a little bit more about that?

Speaker 12:

Yes, Chris, going into this year, U. S. stocks were definitely undervalued. Normally, U. S. stocks trade at about a 20 to 40 percent valuation premium over non U. S. stocks. However, the valuation going into this year was closer to 70 percent. So that's a couple standard deviations further in terms of valuation premium than normal. Really, it's driven by strong corporate earnings, momentum in global markets, more aggressive than expected Chinese stimulus, and global economic boost driven by central bank easing. You know, when I look at my ranking, when I look at the globe, some of the things that I'm looking at is growth. Yes, that's one factor. I take in consideration retail sales, all sorts of different things, manufacturing services, leading economic indicators. But then on top of that. I really tilted the number in terms of the ranking either way. One would be a reason would be valuations. Are things cheap there? And secondly would be more monetary policy. Is the central bank helping the country or is it trying to slow the country? And really that was a big change in this first quarter for me is moving away from More emerging market, India. I love India. Don't get me wrong. It's still the strongest economy in the world. Still number one in my ranking, but there are times where there's big headwinds and things just aren't investable. So I think that they're kind of guilty by association with China right now. And really the glowing star so far this year has been Europe. Believe it or not is very rare in the last 25 years that I've talked about Europe as a great investment opportunity, but it certainly is this year. And I've, I've Picked up European stocks. I picked up that exposure and I've taken a break on India and certainly I'll come back to that.

Speaker 13:

And one last question for you, Scott, is I know you've mentioned the dollar strength and how that has been something that's been quite strong in the United States. Is that something that you see going forward? How would the tariffs affect that? Just wanted to hear your thoughts on that.

Speaker 15:

Yes, Chris, in many ways, the U. S. dollar has remained overvalued for some time, but economic growth differentials between the U. S. and other major economies continue to support the dollar. And really, typically, when a central bank raises interest rates, It then attracts foreign capital, strengthening its currency. However, when the central bank cuts rates, investment returns become less attractive and the money leaves those type of currencies. And this is an interesting place as an asset allocator right now when determining, A, I'm going to go buy Europe. Okay, do I do it in dollar terms? Or I do it in Euro and what I'm going to be looking for is which of those currencies is going to appreciate versus the other. Because one, yes, you'll get the performance of the basket of stocks, but on top of that, you get the movements in currency and that can be advantageous or disadvantageous depending upon what side you are on. You know, I can go on and on and on on these type of things, Chris, but I think we'll leave it here. So we have something to talk about next week.

Speaker 16:

Well, yeah, thank you, Scott. I know I appreciate your insight. I know our community appreciates it. And I just wanted to take the time now to Send a thank you to our community for sending in these questions. We are eager to answer and continue to educate our community as much as possible. So please continue to send in those questions. You can send them to general at paramount a s s o c dot com. Thank you all for listening and tuning in this week. We will be back next week and look forward to answering your questions. Thank you all.