Gold continues to make new highs. Soft commodities and materials climb a wall of worry and foreign equities rise from the dead. It is all part of a market mindset that a tariff war is right around the corner.

 

As April draws near, President Trump continues to reiterate that he is planning to levy tariffs on America's trading partners. Investors are worried. Given Trump's predilection toward hyperbole, the markets are unsure whether to take his statements at face value. He has used threats to get what he wants on so many occasions that April could come and go without any tariffs at all. What to do?

 

The move higher in some commodities is largely a tariff hedge that the president isn't bluffing this time. Tariffs would make the price of materials, food, and other goods rise here and abroad. Many companies during this week's earnings results warned that tariffs, if levied, would hurt profit growth. The mega-retailer, Walmart, although announcing strong corporate sales and profits on Thursday, sounded the same word of caution. They gave a downbeat outlook for the remainder of 2025 if tariffs are levied.

 

More than ever, investors are rushing into precious metals as a haven. Gold and silver have been rising for months as individuals, institutions, and central banks buy every pullback. Back in September 2024, I advised readers to buy any dips in precious metals ("Precious metals normally fall in September"). Over the last 14 months, gold prices are up 50 percent with gold's market cap now at $20 trillion.

 

This week, geopolitical tensions have risen (not fallen) as American envoys met with Russian representatives in the first of a series of peace talks. The three-year war of attrition was upended this week when the president seemingly switched sides in the ongoing conflict. 

 

Investors fear that any peace treaty would be short-lived if America abandons support for Ukraine. The possibility of a wider future war in Europe with nuclear implications, absent any U.S. influence, has markets on edge. After all, radioactive fallout knows no boundaries.  However, many American voters and much of the media they follow have been cheered by Trump's initiative and willingness to end the conflict quickly regardless of future consequences.

 

While this has created shockwaves among some, especially among our European allies, it is no surprise to me given what I know of populist movements throughout U.S. history. Authoritarian leaders are springing up throughout the world. Those same trends are rising to the surface in political elections throughout Europe In the case of the European Union,  it remains to be seen how this conflicted group of nations will respond to the administration's overtures to Russia.

 

In the meantime, switching gears to the world's second-largest economy, China, the news is better than good. On May 7, 2024, I wrote, "The Chinese Market is on a tear," pointing out that Chinese equities were cheap. Monetary and fiscal stimulus by the government was and is ongoing. Despite American investor's "uninvestible" attitude, I liked what I saw. I even posited the notion that Trump, if elected, was the ideal person to make nice with the Chinese. After all, it was his first term's tariff war that started the Chinese bashing in the first place.

 

In January of this year, in "Trump and the China Trade" I advised readers that China could be the ultimate Trump Trade. Fast forward to today and what have we discovered? On Thursday, a Bloomberg headline stated that "Trump says new China trade deal is possible despite tensions."

 

This week, the  'uninvestible' crowd — Morgan Stanley, Goldman Sachs, JPMorgan Chase & Co., and UBS Group AG — turned bullish on China and its stock market. Of course, the stock market is up 20 percent from my January column but better late than never, I guess.

 

Over the past 10 days, the S&P 500 Index has seen multiple intra-day pullbacks in which traders bought the dip seven times. At the end of the week, the S&P 500 gave way to the uncertainty that seems to be around every corner. I have seen this playbook before. Don't fall victim to the "what ifs." Continue to buy the dips.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.