Stocks are at highs, but uncertainty around tariffs, earnings, and AI could shake things up. Here’s what investors need to know.
00:00 Intro
00:11 State of the stock market
01:24 Tariffs face uncertain future
03:35 AI valuations concerns grow
06:52 Where to put your cash
08:10 Consumer stocks
Transcript:
Caroline Woods: Art Hogan, Chief Market Strategist at B Riley Wealth Management. Art always great to have you. Thanks so much for being here.
Art Hogan: Thanks so much for having me. It’s great to see you.
Caroline Woods: So art stocks are back in negative territory after yesterday’s rebound. Do you look at this weakness as just a temporary shakeout or is this a bigger shift. What do you think?
Art Hogan: Well, a couple of things it’s important to remember. We’re coming into this week at or near all time highs with a multitude of catalysts that you could perceive as being either positive or negative. And I think markets are just trying to figure that out. So I would say this is a bit of that sort of entering the month of November, a little concerned about the fact that we have a record setting government shutdown, a little bit concerned that the Supreme Court could really tip over the apple cart on trade and tariffs, and certainly at the end of what has been a very good earnings reporting season, but one where stocks that were doing really well coming into it weren’t able to react in a positive way, even though they beat, the top and bottom line and raised guidance. So a lot of examples of that. So I think we’re just at this point now where we have to say to ourselves, can we offset the potential tailwind of the government reopening with a potential headwind of a lot of confusion that will happen when the Supreme Court likely says that the use of emergency Powers Act is not constitutional for the way the administration levied these tariffs.
Caroline Woods: OK so let’s dig into that a little bit. You think the Supreme Court will vote against President Trump in terms of those tariffs. And what would that actually mean for the market. Because I could understand that there would be some companies that would benefit if they don’t have to pay those tariffs or if they get paid back. But overall, given the fact that the market is at all time highs, despite those tariffs, what would it mean for the market’s direction?
Art Hogan: Yeah, a lot to unpack there. And I would tell you this, first and foremost, it’s going to add a lot of confusion, right. So remember, when the terrorists were first announced on April 2 And how much confusion. There was in the market when the liberation day rollout was so chaotic and the markets eventually bottomed on April 8, when everyone was given an extension of period of time to negotiate trade deals. Well, in between then and now, we really haven’t signed very many trade deals and certainly not with our top trade Partners. We don’t have a trade agreement with China, Canada, and Mexico, three of our top four trade Partners. So in and of itself, we’re still living in the land of uncertainty around trade. And now throw into that the fact that along the way, the government’s collected a couple billion in trade revenues, that they will likely have to give back. Most, if not all of. So the Treasury will have to find a couple billion and be who exactly are they going to pay back. And to the extent that there’s some obvious winners in the short term on being paid back, companies like Amazon that pay a lot of tariffs, all the furniture companies and all the, you know, sort of typical candidates that have been paying a lot of tariffs along the way. But the problem is then the administration has to quickly transition to plan B, and plan B is a couple of different options that the president could use, but neither one of those really has the kind of flexibility that the emergency Power Act. Meaning there’s limits to how much can be tariff. And the largest of that would be the 15% maximum on one of the statutes. And then there’s a time frame. They have to be temporary. So that’s going to add a lot of confusion into where we stand and what the rules of the road are in this trade war highway. So not that it’s necessarily going to be a distinct positive or a distinct negative. It’s going to add a lot of confusion trying to figure out just how this gets unwound and then wound back up. And it extends the period of time where we don’t know exactly what the average tariff is going to be on an imported good. But this is a market that’s done pretty well despite a lot of confusion and uncertainty.
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