Weekly Market Update

Although last week offered a bit of a reprieve, there is no sugarcoating this one, it has been one of the ugliest periods for markets in recent memory. The much-anticipated tariff announcement from the White House caught investors off guard, with the size and scope grander than most feared. However, every cloud has its silver lining and we will get into some of the potential positives for the markets ahead. For now, uncertainty remains highly elevated, as countries and companies race to work with the administration to reduce the punitive taxes they could face in the coming weeks and months. The on- again off-again tariffs are whipsawing markets, and as negotiations are set to take place, investors are left wondering where things may settle.

However this plays out, the coming months will likely see the focus shift to the budget and taxes, and here we are hopeful of some good news. We believe that the administration has chosen to tackle trade first, as it conceivably sets the stage for the later legs of their policy plans. While tariffs may not be the ideal way to bring about change, and markets have certainly reflected that, there are two key points worth remembering as this chapter unfolds.
 

1. The belief is that with President Trump everything is a negotiation—he spent time working in New York real estate, where there is much speculation around cutthroat negotiations and the mind games played to get the upper hand in deals. This might not work as well in the political domain, but in our view, recent developments certainly add credence to this idea. We would focus on the 10% tariff baseline rate as a potential landing point for many countries and goods. We suggest waiting to see how all of this plays out before jumping to any conclusions.
   
   
2. The tariff news should not be viewed in a vacuum—we believe that all along the plan has been to create a more balanced trade system and create some revenue from tariffs. This revenue can then potentially be used to reduce the deficit and offset some of the proposed changes in tax legislation. Tariffs are just one piece to a larger puzzle and we are likely going to see the other pieces played in the months ahead.

Index Descriptions:The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the USA.
The Russell 2000 Index is a stock market index that tracks roughly 2000 US small companies, and is considered a key benchmark for US small cap stocks.
The MSCI EAFE Index is a stock market index that measures the performance of large- and mid-cap companies across 21 Developed Markets countries around the world. Canada and the USA are not included. EAFE is an acronym that stands for Europe, Australasia, and the Far East.
The MSCI Emerging Markets Index captures large and mid-cap representation across 24 Emerging Markets (EM) countries.
The Bloomberg US Aggregate Bond Index, or the Agg, is a broad based, market capitalization-weighted bond market index represent- ing intermediate term investment grade bonds traded in the USA.
Accounts managed by StraightLine follow materially different investment strategies from the composition and performance of indices referenced herein and are not managed to mirror a specific index. Unless indicated otherwise, indices are unmanaged, cannot be invested into directly, are inclusive of reinvested dividends, and do not include the deduction of transaction, custodial or investment management fees that would further reduce actual performance if included. Indices are the property of their respective owners, all rights reserved. Periods greater than one year are annualized.
 
Disclosures:Information presented is for informational purposes only. StraightLine Group, LLC (“StraightLine”) is a registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Past performance is not indicative of future results. Investing involves risk, including the possibility of loss of principal. The ideas and opinions expressed herein do not constitute legal, tax, or investment advice or a recommendation of any particular security or strategy. Before making any investment decision, you should seek expert, professional advice and obtain information regarding the legal, fiscal, regulatory and foreign currency require- ments for any investment according to the laws of your home country and place of residence. Any forward-looking statements or fore- casts are based on assumptions and actual results may vary. Information presented from third parties is believed to be reliable, but no warranty is provided. StraightLine is not required to update information presented, unless otherwise required by applicable law. For more information about StraightLine, including our Form ADV Part 2A Brochure, please visit https://adviserinfo.sec.gov/firm/ summary/127401 or contact us at 248-269-8366.