This episode explores the U.S. stock market's recovery to pre-"Liberation Day" levels, despite ongoing tariff uncertainties, questioning whether the market's optimism is justified. David Kostin explains the market's initial shock from tariff announcements, followed by a rally driven by expectations of an "off-ramp" from high tariffs, further supported by surprisingly strong first-quarter earnings. However, he cautions that these earnings are backward-looking, and the debate centers on who will bear the burden of increased tariffs, with potential risks to second-quarter revenues and margins. Padi Raphael notes that clients are engaged but uncertain, seeking solutions to capitalize on market movements, including volatility. The discussion pivots to whether U.S. exceptionalism is waning, with European investors showing interest in repatriating capital amid a weakening dollar, while Asian investors still view the U.S. favorably. Kostin suggests that global opportunities may be more attractive than the U.S. right now, and Raphael highlights growing interest in private markets, emphasizing the importance of diversification to retail investors, given the risks associated with concentrated stock positions.
