There’s been a lot of commentary around tariff announcements and those that may be coming soon, especially with the August 1st deadline just days away. President Trump has said he is considering imposing tariffs of 15% to 20% on nations that have yet to strike a trade deal. What’s your sense of where the trade deal negotiations are headed? Are we likely to see more trade deal announcements? And how do you think the markets will react? For now, US markets seem to be climbing the wall of worry — would you agree?
Matt Orton: I’ve been constructive on the outlook for markets, particularly US equities. The trade deals that are being signed and the narrowing of the tariff bands are all marginal positives — not just for the US economy, but for the global economy more broadly.
If you think back to April 2nd, on Liberation Day, we were penciling in tariff rates of over 50% for many countries globally. So the fact that we’re now settling into a 15%–20% range is generally manageable. The company management teams I speak to — both in the US and globally — feel this is a range they can work within. It doesn’t mean there won’t be challenges, particularly for certain industries, but overall, we at least have some clarity. This removes the worst-case scenarios from the table and allows us as investors to focus on what truly matters: company-specific fundamentals and earnings trajectories.
What we’re seeing in the US right now — and why it’s outperforming other global markets — is strong Q2 earnings. Companies are not only reporting solid top-line growth, but also strong margins, indicating that the tariffs implemented so far haven’t significantly impacted their bottom lines. That’s why there’s a sense of optimism. I remain optimistic and continue to advise clients to use any downside as an opportunity to ensure their portfolios are well-balanced and positioned toward durable secular growth themes.
A bigger concern for India is the recent 2% uptick in oil prices. Trump’s shorter deadline for Russia doesn’t seem to be working out, and that’s weighing on oil. Where do you think oil markets will stabilize?
Matt Orton: Right now, oil markets are largely range-bound, barring any major geopolitical escalation. We saw a glimpse of potential volatility during the brief standoff with Iran, but since then, oil prices have settled into a range aligned with supply-demand fundamentals.
I don’t expect sustained prices above $75–$78 per barrel unless there’s significant geopolitical conflict. That’s generally good news for emerging markets. As you rightly pointed out, the current range is manageable for an economy like India.
The key question is how India proceeds with trade negotiations with the US. There’s potential for India to leverage a trade deal to increase purchases of US oil, potentially replacing Russian supply. That’s one of the scenarios still in play.
There are several key cues to watch on Wall Street — A) the earnings trajectory, B) the tariff landscape, and C) the upcoming FOMC meeting and the interest rate decision. Most expect rates to be held steady, but what’s your view? Could this be the next trigger for the markets?
Matt Orton: I also expect rates to be held steady — that’s pretty much the consensus view at this point. As you mentioned, what really matters is how hawkish Powell sounds during his commentary.
I suspect he’ll try hard to avoid saying anything new and steer clear of speculative questions — like whether he plans to step down or whether Trump might replace him. That’s just noise. Ultimately, the Fed is governed by a committee of voting members. At most, we may see two dissenting votes in this meeting.
I don’t expect any rate cuts before September. The US economy is still holding up well, inflation is relatively stable, and we’re not yet sure how tariffs will fully pass through. There’s no compelling reason to preemptively cut rates.
My base case is that we’ll see one or two cuts later this year — but not until at least September, and more likely in November or December.
What’s your view on the dollar index? We’ve seen a jump from around 96 to 98.4. That typically doesn’t bode well for emerging markets. Do you see this strength continuing, or will it remain range-bound?
Matt Orton: The long-term trajectory for the dollar is still downward. The recent uptick is more technical in nature — driven by some profit-taking following the dollar’s poor performance in the first half of the year.
I believe the downtrend will resume, which is one reason I remain optimistic about emerging markets. They offer strong diversification, especially for portfolios that are currently overweight on US equities.
I would use market weakness to buy into high-quality companies across emerging markets. India is definitely one of the most promising countries in this space. The recent FII selling appears shortsighted, likely influenced by developments in China.
India’s long-term outlook remains strong. I particularly like companies in the banking sector, some automakers, and firms integrating AI into their businesses. Their earnings results so far have been very strong. So I’m using the current market conditions to build positions in specific names in anticipation of a return to favor for emerging markets — with India leading the charge.
