What explains the durability of the post-liberation day equity rally? How will the Moody’s Ratings downgrade of U.S. debt affect bond markets? And will balanced portfolios offer global investors adequate diversification going forward?
In this episode, Northern Trust Wealth Management CIO Katie Nixon and Northern Trust Asset Management Head of Tactical Asset Allocation Peter Wilke take the pulse of global markets following the furious rebound in risk assets from their early April lows.
Katie and Peter discuss the state of tariff negotiations and the varying impacts they will have on U.S. corporate earnings. They outline the reasons for outperformance of non-U.S. equities—particularly for dollar-based investors—including improving governance trends in emerging markets. They then turn to the outlook, including which U.S. sectors may be more resilient, how U.S. fiscal strategy may impact bond markets, and how investors can pursue portfolio diversification and battle inflation in the balance
of 2025.
(1:38) What factors drove the 90-day pause in elevated tariffs, and what is your base case for where tariff rates will end up?
(5:51) Will tariffs have a greater impact on S&P 500 earnings than they will on the broader U.S. economy?
(7:13) - What has driven the outperformance of non-U.S. equities this year?
(12:18) - How has the weaker dollar affected returns for U.S. based investors?
(14:05) - What is the case for investing in emerging markets today?
(17:49) - What is the outlook for U.S. equity markets, and what segments are most attractive?
(20:50) - What are the biggest risks to U.S. equity markets?
(23:02) - How will U.S. fiscal strategy and a weakening growth environment affect the outlook for bonds?
(29:01) - Will bonds be a good portfolio diversifier in the future, and what is the role of TIPS?
Should the U.S. seek balanced trade? What would a potential “decoupling” with China look like? And what’s driving the current divergence between the “soft” and “hard” economic data?
In this episode of Market Currents, Northern Trust Wealth Management CIO Katie Nixon sits down with BCA Research Chief Strategist Peter Berezin for a deep dive on the state of tariff negotiations between the U.S. and its trading partners, and the many implications for the economy and capital markets.
In the discussion, Katie and Peter explore the premise of seeking balanced trade, a potential decoupling of the most important bilateral trade relationship— the U.S. and China — and outline the complications of resetting trade between the U.S., Canada and Mexico. They also discuss the current contrast between the soft and hard economic data, the direction of inflation and growth, and Peter’s outlook for a 4,450 finish for the S&P 500.
(1:34) - Should the U.S. seek to have balanced trade with each of its trading partners?
(5:13) - Will the U.S. face retaliation from countries that import U.S. services?
(7:56) - Will a trade war accelerate the economic decoupling between the U.S. and China?
(9:59) - How might Canada and Mexico react to trade negotiations with the U.S.?
12:06) - Why is there divergence between the weak soft survey data on business and consumer confidence and the more resilient hard economic data?
(13:35) - What is the likely Fed response if the economy weakens later this year and inflation picks up?
(16:33) - What is the probability of recession in the U.S.?
(18:26) - If we had a recession, how deep would it be and how long would it last?
(20:48) - How will the Trump administration balance the need for tariff revenues with the need to avoid a weakening economy?
(22:59) - What is the rationale for a 4,450 price target on the S&P 500 Index for 2025, and what might change this forecast?
The views and opinions expressed by Peter Berezin are solely his and do not necessarily reflect the views or opinions of Northern Trust Corporation or its affiliates. Northern Trust takes no position with respect to such views and opinions in distributing this publication.
In this installment of Market Currents, Katie Nixon, Chief Investment Officer for Wealth Management at Northern Trust, demystifies the world of market volatility with Northern Trust Asset Management’s Deputy CIO and CIO of Global Equities Michael Hunstad.
Katie and Michael level set the discussion with a review of changes to the market’s structure since the Global Financial Crisis that have shaped its current volatility profile. They discuss the declining role of institutions in price discovery and the rise of retail investors, algorithmic trading, and the use of options leverage to explain how markets are more sensitive and reactive to new information. They also describe how market concentration among MAG7 and tech-adjacent stocks has, perhaps counterintuitively, muted market volatility in recent years.
Recent spikes in market volatility have demonstrated the role that quality has played — and can in the future play — in portfolio protection and expected alpha generation. In conjunction with quality, value stocks are poised to play a significant role in overall portfolio diversification, with value priced attractively relative to its own history and to higher growth segments of equity markets. Katie and Michael close with their thoughts on volatility during election cycles, and how emphasis on quality, value and low-volatility names can benefit investors post-election.
(0:52) – What is the VIX index, and what is its recent history?
(2:38) – What structural factors have driven recent market volatility and will likely impact the market going forward?
(7:09) – Is the market less efficient than in the past?
(8:13) – Is the rise of the “Meme Stocks” evidence of the growing importance of retail investors in price discovery?
(9:55) – How has high market concentration affected market volatility?
(13:25) – How did different market segments perform amid recent spikes in overall market volatility?
(16:28) – How have bonds affected portfolio-level diversification?
(18:01) – Is value another area that can offer diversification?
(19:45) – Do relative valuations between value and growth suggest a shift into value stocks may be warranted?
(20:51) – What happens to volatility around presidential election periods?
(22:57) – Should investors be afraid of what’s to come — or be taking advantage?
In this episode, Katie Nixon, Chief Investment Officer for Wealth Management at Northern Trust, is joined by Northern Trust Asset Management’s Head of Global Macro for Fixed Income, Antulio Bomfim, to discuss the causes, historical context and future implications of the Fed’s 50-basis-point start to the rate-cutting cycle. Antulio brings more than 30 years of combined experience as a buy-side portfolio manager, researcher, author and senior advisor to the Board of Governors of the U.S. Federal Reserve System.
Katie and Antulio discuss the unusual size of the initial rate cut, which reflects a shift in the balance of risks between expected inflation and labor market conditions. Specifically, the Fed’s intentional use of the term “recalibration” of rate policy signals confidence that inflation is trending toward its target and that further deterioration in labor markets should be preempted.
They go on to define the concept of a neutral interest rate, the factors that influence its level, how the approximate 3% neutral rate fits into the context of history, and what this means for fair value in Treasury markets. Finally, they discuss the factors that influence the term premium in Treasury markets as well as the roles that communications and managing the balance sheet play in the Fed’s monetary policy toolbox.
Join Katie Nixon, Chief Investment Officer for Wealth Management at Northern Trust, as she delves into the transformative world of artificial intelligence (AI) with Deb Koch, Northern Trust's Senior Equity Research Analyst. In this episode of Market Currents, they explore AI's burgeoning influence on the tech sector and its potential to reshape industries.
Katie and Deb discuss how AI is not only boosting productivity but also driving stock performance across tech and tech-adjacent companies. With insights on recent market trends, the role of key players like NVIDIA, and the implications of AI advancements, this episode provides a comprehensive overview of AI's market dynamics.
They also address the broader economic impact of AI, including its role in creating new market opportunities along with the challenges it poses. From regulatory scrutiny to the adoption rates among enterprises, Katie and Deb analyze the multifaceted landscape of AI integration and what it means for the future of technology.
Highlights:
Links:
Feedback: If you have questions about the show or suggestions for topics you'd like discussed in future episodes, please email our producer at contactnorthern@ntrs.com.
Katie Nixon, chief investment officer at Northern Trust Wealth Management, navigates the intricate web of labor market data, unpacking the divergent signals that have emerged since the beginning of 2024. Katie explores the relationship between unemployment and inflation, and the role they play in shaping economic trajectories.
Looking to the Monthly Nonfarm Payroll Report and the Job Openings and Turnover Survey, known as JOLTS, Katie highlights the complexities of interpreting these data sets and explains why taking a multidimensional approach is the best way to construct a nuanced understanding of this market’s dynamics.
Join Katie as she details why just one survey isn’t enough and why there are advantages to a data-driven approach to navigate the complexities of the labor market.
Highlights:
Links:
Feedback:
If you have questions about the show or topics you'd like discussed in future episodes, email our producer (contactnorthern@ntrs.com).
Having liquidity to invest when markets are up may sound like a good problem to have — but that doesn’t make it any less worrisome to contemplate buying securities just to watch their value drop should there be a downturn. Investors in this situation are left to decide which investment strategy is best for their needs: hanging on to cash, piling it all into investments, or splitting the difference with dollar cost averaging.
To help make sense of the pros and cons of these strategies, Katie is joined once more by Pete Mladina, executive director of portfolio research for Northern Trust Wealth Management, to discuss how investors can craft effective strategies to help achieve their goals even in the face of inevitable volatility and market drawdowns.
They’ll discuss the importance of aligning decisions with lifetime objectives and highlight why investors may want to prioritize goal-relative risk over asset volatility. Plus, they’ll compare dollar cost averaging to lump sum investments and challenge misconceptions about cash as a risk-free asset.
Highlights:
Links:
Feedback:
If you have questions about the show or topics you'd like discussed in future episodes, email our producer (contactnorthern@ntrs.com).
Taxes are a consideration for every investor, but they can be very complicated. It’s not always clear where they are assessed or how much they impact your portfolio. So, while some tax is necessary, your strategy may have you paying more than you have to.
To help us break down this complex subject, we reached out to Peter Mladina, executive director of portfolio research for Northern Trust Wealth Management. Together, we’ll discuss how taxes compare to fees, how to assess your tax burden, and when it’s prudent to incur taxes. Pete lays out which investment strategies are tax-efficient—and which ones aren’t. Plus, we’ll explore why taking on additional tax can sometimes be beneficial.
With careful planning, you can minimize the impact that taxes have on your portfolio, and maximize the benefits they receive from those taxes. So join us, as we ensure that your investments are serving your goals!
Highlights:
Links:
Feedback:
If you have questions about the show or topics you'd like discussed in future episodes, email our producer (contactnorthern@ntrs.com).
The topic of inflation is hard to miss — in the news, in your purchases and in your investments. And while its effects might be the most noticeable at the store or the gas pump, the biggest impact can be in your portfolio where it is constantly eroding the purchasing power of your returns. Fortunately, you can prepare for inflation — whether it is high or low — with proven tactics for mitigating the bite it can take out of your investments.
To help us understand the history of inflation and its impact on portfolios, we talk with Pete Mladina, executive director of portfolio research for Northern Trust Wealth Management. In this episode, Pete shares advisory insights on the tools and methods investors can incorporate to safeguard their portfolios effectively. He highlights the importance of diversifying portfolios to balance assets and mitigate risks stemming from inflation. Pete, who also teaches financial economics at UCLA, will guide us through key considerations for selecting inflation-resistant assets and the strategies to adapt their portfolios in response to changing inflationary conditions.
Join us as we learn how to skillfully manage the market volatility and economic uncertainties caused by inflation.
Highlights:
· How to be inflation-sensitive when investing (2:21)
· Valuable tools for managing and mitigating inflation (6:55)
· How to diversify a portfolio with risk control assets (10:56)
· How to combine the power of natural resource equities and commodities (16:11)
· Understanding the outlook of inflation (18:10)
Links:
Feedback:
If you have questions about the show or topics you'd like discussed in future episodes, email our producer (contactnorthern@ntrs.com).
Virtual reality isn’t science fiction anymore. The biggest companies on the planet have invested heavily in digital worlds, also known as “the metaverse.” And it’s not just the tech and entertainment industries–the metaverse has applications across the economy. Knowing what the metaverse is and how to implement it can drive significant value today and put you ahead of the curve tomorrow; but only if you use it right.
To help you navigate this emerging technology, we spoke with Julie Sweet, Chair and CEO of Accenture, the world’s biggest professional services company. Under her leadership, Accenture has been at the forefront of metaverse research, advisement, and adoption. In this episode, Julie shares the three distinct categories of metaverse application, and how companies are implementing the technology today. Together, we explore the power and potential of the enterprise metaverse, and what still needs to be solved before it goes mainstream. Plus, how investors can evaluate these digital worlds.
Join us as we merge the digital and physical worlds and prepare for the not-so-distant future.
Highlights:
Links:
Feedback:
If you have questions about the show or topics you'd like discussed in future episodes, email our producer (contactnorthern@ntrs.com).
Wages are rising and unemployment hit a 50-year low. But while that’s good for job seekers, it’s potentially challenging for policymakers fighting inflation. At the heart of this dynamic is a tight labor market–one where the demand for workers is greater than the supply of jobs. In this episode, we ask: where did the workers go?
To answer that, we talked to John Challenger, CEO of Challenger, Gray and Christmas, the nation’s first executive outplacement firm. John’s firm helps companies support workers transitioning careers or finding new jobs, giving him a unique and broad view of the labor market. And the story is more complicated than just more jobs and fewer workers. In recent months, John has seen differing trends develop across industries like tech, manufacturing, and distribution while changes to remote work and hybrid productivity have added new nuances for workers and employers alike. Together, we unpack who has left the labor force, why, and what industries were hit hardest. Plus, what to make of recent layoffs at some of the nation’s biggest companies.
Join us as we explore what this means for companies, the marketplace, and you.
Highlights:
Links:
Feedback:
If you have questions about the show or topics you'd like discussed in future episodes, email our producer (contactnorthern@ntrs.com).
Katie Nixon, chief investment officer at Northern Trust Wealth Management, breaks down 2023’s first University of Michigan Consumer Sentiment Survey. The survey — which tracks how respondents feel about the economy — offers a valuable window into consumer behavior, making it key for policymakers and investors.
While January’s survey reflected plenty of optimism, with inflation expectations receding for the fourth month in a row, it wasn’t all good news. Two-thirds of consumers expected an economic downturn in the next year. How will that affect future inflation? And what does it mean for the trajectory of Federal Reserve policy?
Join Katie as she interprets the survey’s findings, from concern about a wage-price spiral to the Fed’s silver lining — and why it should matter to you.
Highlights:
Links:
Feedback:
If you have questions about the show or topics you'd like discussed in future episodes, email our producer.