Davis Executive Wealth Management: Weekly Update: Dissecting the Market’s Headwinds
Timothy Davis, CFP®
Founder of Davis Executive Wealth Management • Helping Successful Executives & Business Owners manage, maximize, and protect their wealth so they can spend more time on what matters.
Markets staged an impressive recovery last week, largely fueled by more positive developments out of the White House regarding trade negotiations. Earlier in the week, concerns briefly surfaced that the administration was considering firing the Chairman of the Federal Reserve, but those rumors were quickly dismissed by the White House Press Secretary. If we continue to see a more measured tone on the trade front, combined with stable economic data, we can expect the current relief rally to continue.
That said, today’s markets are still contending with a number of well-publicized challenges: tariffs, political division, slowing growth, and recession concerns are all dominating headlines. It’s understandable that investor sentiment remains cautious.
When we look beyond the headlines and examine the data more closely, the situation isn’t as dire as it may seem.
For example, while tariffs have been a major source of concern, their actual impact on the U.S. economy is relatively modest. Although tariff rates can sound extreme on paper, the effective rates are much lower — closer to 10% — and nearly half of imports from China, Mexico, and Canada are exempt due to granted exceptions. Once these costs are distributed across manufacturers, shippers, distributors, and consumers, the overall effect on economic growth is significantly muted compared to what headlines might imply.
The greater threat to markets right now is not the tariffs themselves, but how trade policy is being conducted. The administration’s sporadic messaging, negotiation by social media, and overall unpredictability have created elevated risk aversion among businesses and consumers. This hesitation is what could ultimately slow growth and possibly push the economy closer to recession territory if clarity isn’t restored soon.
The key takeaway is this: while the fundamental impact of tariffs appears manageable, uncertainty itself has become the biggest market headwind. Until we see more consistent and transparent policy execution, we should expect continued market volatility. But it's important to remember — and something I learned personally early in my career — volatility is not the same as risk. While the two are often intertwined, they are fundamentally different, and it’s critical to distinguish between them.
That said, we have strategies in place to address both volatility and the potential risks in the market, ensuring portfolios are positioned to weather near-term uncertainty while remaining focused on long-term goals.
As always, we are closely monitoring these developments and will keep you updated. Please feel free to reach out if you’d like to discuss your portfolio or the broader market environment in more
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Timothy Davis, CFP®
Executive Managing Director – Wealth Manager
Partner
Davis Executive Wealth Management Group at Steward Partners
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Sources for this report are from The 7’s Report, FS Insight, FactSet, Bloomberg, and views of Tim Davis of Davis Executive Wealth Management Group at Steward Partners.
The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
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