April market review & Q2 positioning

US stocks have rebounded from the global market sell-off that was triggered by the 'liberation day' tariff proposals in early April. Despite this recovery, concerns persist regarding the impact of the ongoing trade war on the real economy. Rashaad Tayob, Portfolio Manager at Foord Asset Management, discussed these issues in an interview with CNBC Africa. The turbulent events in April left many investors reeling, as the market experienced significant outflows amid tariff announcements. The shock reverberated through the market, prompting a swift downturn in equities and bond markets. Despite efforts to mitigate the situation, the trade war between the US and China remains unresolved, leaving the global economy grappling with a higher level of tariffs compared to previous years. The implications of this shift in trade policy are looming large over the horizon, with potential consequences for economic growth and consumer prices. As investors await more data on the US economy, the debate between soft and hard data intensifies. The effects of trade tariffs and immigration policies are expected to constrain supply, fuel inflation, and ultimately slow down the economy. Tayob warns of underestimating the risks of a recession and emphasizes the need for cautious investment strategies. Foord Asset Management has taken a conservative approach towards US markets, with a focus on offshore assets and inflation protection. They anticipate selective opportunities emerging as market volatility persists. The Federal Reserve faces a challenging environment amidst fluctuating policies and conflicting economic indicators. In light of a growing budget deficit and escalating pressures from the Trump administration for rate cuts, the Fed's independence and conservative stance are under scrutiny. The bond market signals potential risks, underscoring the need for a credible Fed to stabilize interest rates. The outlook for the year remains cautious, with the Fed likely to adopt a conservative approach in response to economic uncertainty. Amidst these complexities, investors are advised to tread carefully and consider the evolving market dynamics for strategic portfolio allocation.