By Lauren R. Rublin

President Donald Trump's "Liberation Day" tariff announcement has sent stock and bond markets reeling, liberating investors from trillions of dollars of wealth. Although the administration paused most reciprocal tariffs on April 9 for 90 days, a global trade war threatens to curtail economic growth and reorient capital flows around the world, largely to the detriment of the U.S. Policymakers and market participants are also alert to the possibility of a financial "accident," related to unusual gyrations in the U.S. Treasury market. Stocks rose on Friday, allaying some of Wall Street's concerns, but it is far too soon to sound the "all clear."

How should investors think about recent policy swings and market upheaval? How are some of Wall Street's best-known investors in stocks, bonds, and other assets calculating the risks and opportunities ahead? We put these questions to seven market pros, and present their views below.

Chris Davis

Chairman and portfolio manager Davis Advisors

President Donald Trump's tariff announcement on April 2 was the spark that set off an unstable mix of market forces already poised to ignite, Davis says.

He says that investors have been facing three massive transitions. First, the U.S. has been coming out of a 15-year period of near-zero interest rates; second, globalization has been giving way to nationalism and protectionism; and third, artificial intelligence has promised to reshape the economy.

Through most of last year, investors seemed unfazed by all of this gut-wrenching change, with the market growing ever more concentrated and richly valued, he notes. "You have uncertainty on one side and unbelievably rosy assumptions on the other -- what's going to give?"

With the market jolted out of its complacency, investors should be on the hunt for buying opportunities.

Davis sees value in financials, which sold off hard as recession odds spiked following Trump's tariff announcement. Davis says that investors who were stung during the financial crisis tend to see banks as fragile, despite solid capital ratios and credit profiles. He points to Capital One, whose price/earnings ratio yo-yoed over the past several years. Today, the stock trades at just nine times estimated earnings for 2025.

"Banks are in very, very good shape," he says. "So, the fact that they went down more than the recent market swoon, that looks like opportunity to me."

Davis is also eying tech, given that investors seem to be indiscriminately fleeing the sector. "You should run our Geiger counter over that debris," he says.

He likes chip-making equipment firm Applied Materials, which is down 20% this year despite its potential to benefit from tech reshoring. Another favorite is Amazon.com, whose shares have tumbled 22%, far more than rival retailers Walmart and Costco Wholesale.

--Ian Salisbury

Cathie Wood

Chief executive officer ARK Investment Management

"Tariffs are a tax, there's no way around it, and taxes are negative for GDP growth," says Wood, who hopes that President Trump's ultimate goal is to get freer trade all around the world.

Wood thinks a Mar-a-Lago Accord -- much like the Reagan administration's Plaza Accord -- is needed, where all countries agree to cut tariffs and get rid of nontariff trade barriers. "That's the best case, and that would be a massive tax cut for everyone," she says .

"China is a very practical country," she adds. "I think they're going to end up negotiating something rational."

Still, says Wood, "the president has been saying that this is going to be great for the economy, the markets, and profits, and fewer and fewer people are believing him. The administration has used up some chips with the market in terms of credibility. It needs to deliver."

A tariff war is likely to drive the economy into a recession, she believes. Investors should think now about the recovery. "When businesses and consumers are scared, they'll change the way they do things, and that's usually good for the companies that are helping others do things better, cheaper, faster, more creatively, and more productively," she says.

She likes Palantir Technologies as a beneficiary of artificial-intelligence, and she still believes in Tesla, praising its new, lower-cost model expected this quarter and its robo-taxi program. Does she see Elon Musk's involvement with the administration as a long-term problem? Not really. "News cycles pass quickly nowadays, and the best cars are going to win."

--Evie Liu

Bill Campbell

Portfolio manager DoubleLine

In a recent essay, Bill Campbell, a portfolio manager at DoubleLine, offered President Trump some unsolicited advice: Delay the implementation of tariffs and start negotiating with other nations. Whether or not the president read his words, the White House paused most reciprocal tariffs on April 9, igniting a ferocious stock market rally. Then, stocks fell again.

"A 90-day delay is just a delay," Campbell says. "And the continued aggressive pressure on China challenges the global growth outlook."

Also, Trump's tariff objectives are unclear. "The uncertainty makes it very difficult for multinationals to engage in capital planning," he says.

DoubleLine has been cautious about long-duration Treasuries for a while, Campbell says, due to concerns about the U.S.'s growing budget deficit and spending-cut challenges, which will only increase if the economy heads south. Policy uncertainty has now added another worry: that foreign investors, who have invested trillions of dollars in U.S. real estate, corporate holdings, and financial assets, will pull their money out to seek better opportunities elsewhere.

The case for international investing was cheap valuations, notwithstanding weak earnings growth. "Now you can make the argument that the U.S. outlook is worsening, while non-U.S. earnings have the potential to move up over the medium term," Campbell says.

Foreign outflows could weaken the dollar, another implication of U.S. policy ambiguity, he says.

Where does a global bond investor turn under current conditions? DoubleLine favors short-term Japanese debt because of the yen's "flight to safety properties," Campbell says. The firm has also slightly overweighted its exposure to Europe and upgraded the quality of its portfolio, favoring "core" markets such as Germany, which is stimulating its economy. And, it is investing in the debt of "higher quality" Eastern European countries such as the Czech Republic, which provides labor to Germany. Likewise, Eastern Europe could benefit if there is a durable cease-fire in Ukraine, he says.

Among emerging markets, Trump's tariff policy has targeted Latin America less than Asia, at least so far. "Maybe the idea of nearshoring due to political and security concerns will come back," Campbell says. "Plus, we're offered a decent yield."

--Lauren R. Rublin

Mario J. Gabelli

Chairman and chief executive Gabelli Funds

"Since I started at Loeb, Rhoades as a sell-side analyst in 1967, we've had 11 or 12 recessions," says Mario J. Gabelli, chairman and CEO of Gabelli Funds. "Since I started my own firm [in 1976], we've had seven or eight."

His point? This, too -- the political, economic, and market turmoil created by the chaotic rollout [and partial rollback] of President Trump's tariff regime -- eventually will pass.

Gabelli, a longstanding member of the Barron's Roundtable, supports the need to rein in America's debt and deficit, which he spoke about at this year's Roundtable gathering in early January. "We have about $4 trillion in gross imports and $3 trillion in gross exports," he says. "We're sending about a trillion dollars a year out of the country, and we have to do something about it."

Putting tariffs on imports "has some logic," he says, but "the methodology of implementation created enormous confusion. Confidence has been shattered."

Confidence in stocks has all but disappeared since Trump's April 2 tariff announcement, which fanned fears of an impending recession. The S&P 500 index has fallen more than 6% since that date, sliding again on Thursday after a rally on Wednesday's tariff-postponement announcement. Gabelli says he had been "nibbling" on newly attractive issues: "You've got Company XYZ that was trading for $39 a share a week ago, with good management and good opportunities. Now, the stock is $30, and the fundamentals are unchanged. That's what we want to buy more of."

He expects companies to start buying more of their own shares, too.

Gabelli predicted at the Roundtable that the stock market could have a "pretty strong drop sometime this year" and then recover to end the year relatively flat.

Tariff turmoil isn't the only problem he sees. "Trump is putting Iran on notice that it can't have nuclear weapons," he says, suggesting that efforts to enforce that edict could cause "a little more of a shimmer" in the market.

L.R.R.

Saira Malik

Head of equities and fixed income and chief investment officer Nuveen

Any sign of trade negotiations would be positive for the market, and U.S. Treasury Secretary Scott Bessent saying that he would be the lead negotiator is a big plus, Malik says.

Still, she sees market volatility continuing at multiyear highs. "Given what we are doing with tariffs, chances are high for a recession and stagflationary environment. The issue is about how long it lasts."

There is no clear precedent for the current situation; the trade war in the first Trump administration played out against lower inflation and lower interest rates, she says. "Tariffs aren't going away. We have to live with it. The more challenging thing for the Fed is where inflation is, which ties their hands a bit."

Malik sees a continued global decoupling of economies, which changes how investors should allocate money. She favors U.S. companies that are domestically oriented, that can survive recession, and have navigated supply-chain disruptions well. At risk: multinational companies and those with longer supply chains.

She favors infrastructure companies and companies with a long history of dividend growth. She sees opportunity in Europe, which she says is taking a more active approach to fiscal policy, as well as India, whose domestically focused economy offers insulation.

On the bond front, Malik favors quality senior loans and municipal bonds. She is closely monitoring strains in the bond market, and says that a move in the 10-year Treasury yield above 5% would be a red flag.

Reshma Kapadia

Rajiv Jain

Chairman and chief investment officer GQG Partners

"Seismic change" is under way, bigger than what global markets saw during Covid, Jain says. "This time, the Fed is not going to jump in, there are no fiscal bullets left, and we started with high valuations."

Companies making goods abroad or benefiting from outsourcing are at risk for margin deterioration, Jain says. Meanwhile, the support that U.S. stocks and the economy have enjoyed from zero interest rates, quantitative easing, tax cuts, Covid-era stimulus, and the Inflation Reduction Act is now in reverse. "We are in a new era, so multiples should be lower," Jain says. "That's less of a problem when you leave the U.S."

Jain, another member of the Barron's Roundtable, expects tariffs to create an economic slowdown, but he isn't as pessimistic as others about the global economy. "You can't compare everything to Smoot-Hawley. There was so much else that went into the Great Depression," Jain says of the 1930s tariff.

Jain is also less worried about sustained inflation, because higher prices will reduce demand for many goods. He believes that exporters and retailers will absorb much of the price increases, partially mitigating the hit for consumers.

With more market choppiness ahead, Jain sees opportunities abroad, outside of China. Jain likes European banks, which should benefit from regulatory changes and increased spending on infrastructure and defense. He also likes India, which was hit with lower tariffs than rival export destination Vietnam, and Brazil, which is seeing strong earnings and credit growth. Within the U.S., Jain favors energy companies like Exxon Mobil and Chevron as well as regulated utilities like NextEra and AEP.

--R.K.

Michael Cuggino

President and portfolio manager Permanent Portfolio Family of Funds

"In markets like these, nobody comes out unscathed," says Cuggino, whose Permanent Portfolio mutual fund is down less than 1% in 2025.

Cuggino has significant exposure to gold, one of the market's biggest winners in 2025. The precious metal constitutes about 21% of his fund's portfolio. While prices have retreated recently, trading about 5% below April 2's record high, gold is up 13% year to date and 27% in the past year.

A bunch of factors could push gold still higher, Cuggino says. They include U.S. political uncertainty, buying of gold by foreign central banks, the risk of U.S. inflation if the Trump administration tariffs go into effect, lower interest rates, and a weakening dollar.

"All of these things add up to a pretty strong case for gold, although it's never a smooth ride," he says.

He also sees value in energy stocks, which represent nearly 30% of his fund's portfolio, compared with less than 4% of the S&P 500. Texas Pacific Land, a company that owns real estate in the oil-rich Permian Basin, is his largest individual holding.

While energy had a strong start to the year, the sector was hit hard following the Trump administration's big tariff announcement, as oil prices tumbled amid fears that demand would slump if the economy weakens. Still, energy stocks are down only about 11% in 2025, compared with 15% for the broad market.

Cuggino agrees that energy stocks would struggle if the U.S. tips into a recession, but sees them as long-term buys. Energy stocks trade at about 14 times 2025 earnings, compared with 19 times for the S&P 500, according to FactSet. "It's naive to think we don't need energy," he says.

--I.S.

Write to Lauren R. Rublin at lauren.rublin@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 11, 2025 16:30 ET (20:30 GMT)

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