Above The Noise: Investing Through Ambiguity

2025-03-03 14:40:00 ET

Summary

• Indicators suggest that inflation is likely to remain at the higher end of the Federal Reserve’s perceived “comfort zone,” but that isn’t necessarily a negative sign.
• Positive economic surprises, European Central Bank rate cuts, and improving sentiment have all contributed to European equity outperformance this year.
• New tariffs are likely to lead to a more volatile investment environment, but we wouldn't expect a broad decline in risk assets or a US recession.

By Brian Levitt, Global Market Strategist

“Neurosis is the inability to tolerate ambiguity,” Sigmund Freud once remarked. This observation is fitting as investors face a myriad of uncertainties across various domains - monetary, fiscal, trade, industrial, and geopolitical. And if you thought sports were an escape, you might be disappointed to learn that championships by Philadelphia teams have often occurred during bad years for markets - 1929, 2008, and 2018, for example (as if a New York fan like me needed another reason to root against them). It seems to me that ambiguity is leading many investors to feel both anxious about losses and afraid to miss the bull market....

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