This Market Drama Is Your Opportunity

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Normally, on Tax Day, we’d be talking about taxes and the related seasonal noise, but this year, that's not where the conversation is this year. Markets are up a touch today, but the action is choppy and defined not by fundamentals or tax deadlines but by tariffs and the administration's schizophrenia around them.

Friday brought a reprieve of sorts. The Trump administration said that technology tariffs would be delayed. Temporarily, at least. That sparked a rally, but the bloom didn’t last long. Over the weekend, the President promised another round of tariffs, this time aimed at semiconductors. So tech gave up gains, and while the broader market still looks like it’s trying to rally, you can feel the nervous twitch just under the surface.

None of it matters right now except for tariffs, tariff statements, and what they do to the bond market. Bonds are up today, but over the past couple weeks, they’ve been obliterated. We’ve talked about this. The real story isn’t just rate expectations. It’s capital flight. Foreign buyers—particularly in Europe and Asia—have historically been big holders of U.S. Treasuries. But when you start a trade war with those same countries, and signal you're no longer the global economic adult in the room, they take their money and go home. We’re seeing that now. U.S. bonds and equities are being sold to fund domestic investments back in Europe and Asia.

Christopher Waller, a Fed governor, gave what might be the most useful speech we’ve heard yet this year. He was in St. Louis, speaking to the CFA Society, and he laid out two potential tariff scenarios.

In the first, tariffs remain at 25% through at least 2027. That’s the long game. This assumes we’re trying to turn the U.S. economy from a services model to a manufacturing one. Waller says that would mean 5% inflation pretty quickly, rising unemployment, and a Fed struggling to contain it all. The transition would be long and painful.

The second scenario assumes a 10% tariff baseline, used more as leverage in future trade deals. Less dramatic, more manageable. Maybe inflation settles around 3% annually, and the economic impact is moderate.

Either way, uncertainty is sky high. Nobody knows what the next six to twelve months will look like—not business owners, not consumers, not policymakers. You can’t model a business, price a deal, or project input costs when the ground keeps shifting. That’s freezing activity across the board.

Consumer sentiment is dropping fast. Across income levels, people are worried. The University of Michigan survey shows over 60% expect business conditions to worsen. Inflation expectations have jumped to levels we haven’t seen since before the data began in 1990. Confidence is evaporating, and with it goes spending. Nobody spends when they’re scared—not households, not boards of directors.

M&A? Forget it. There is no deal modeling in this environment.

Before we move on, a quick note: many of you may know me best for my long-running service tracking small-cap community bank stocks. It’s by far the best investment strategy I know, it’s worked incredibly well for decades, and will continue do so.

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Now, let’s talk earnings. The big banks crushed estimates. Goldman, JPMorgan, Wells—all solid. But every single CEO waved the same red flag: tariffs. Dimon made it plain. He doesn’t care about the next two quarters. What he cares about is that the Western world stays together economically and militarily. That’s what keeps the world safe and free. That’s the endgame.

Charlie Scharf at Wells said client conversations are heating up, but conditions haven’t turned yet. Still, they expect slower growth in 2025, pending the impact and timing of policy changes.

On Capitol Hill, Michelle Bowman is back in front of the Senate Banking Committee. This is a woman who has real banking experience—the only Fed official who’s been on the ground in a community bank. And still, she’s getting raked over the coals by Elizabeth Warren, who accused her of bringing gasoline to a fire she was supposed to put out. Same playbook, different day.

Now, in the face of all this, the market went mostly sideways last week. Some stocks up, some down, dividends collected. But here's what matters: Robotti & Co., a shop that still remembers Ben Graham, said it best last week. Mr. Market has manic-depressive episodes. This is one of them. And in every one of those episodes—COVID, the GFC, S&L crisis—investors who bought strong businesses during the panic got rich.

The sell off in REITs is creating opportunities for fairly rapid wealth building.

In 2025, Class A office properties are emerging as a bright spot in the real estate investment trust (REIT) landscape. Despite broader challenges in the office sector, high-quality assets in prime locations are attracting investor interest, with REITs like Cousins Properties $CUZ ( ▲ 0.37% ) and Douglas Emmett Inc. $DEI ( ▲ 1.67% ) leading the way.

While the office sector has faced headwinds due to hybrid work models and shifting tenant preferences, Class A properties—characterized by their premium locations, modern amenities, and strong tenant profiles—are demonstrating resilience. These top-tier assets continue to command demand, particularly in markets where businesses prioritize quality work environments to attract and retain talent.​

According to JLL, office REITs have been among the top-performing sectors in 2024, benefiting from consistently strong fundamentals despite negative headlines. This performance underscores the enduring appeal of high-quality office spaces.

Open-air shopping center REITs focused on densely populated, high-income markets are quietly emerging as one of the more attractive corners of the retail real estate sector in 2025.

These REITs—like Kimco Realty, Federal Realty, and Phillips Edison—are built around necessity-based retail anchored by grocery stores, pharmacies, and discount chains, but increasingly they also feature high-end restaurants and experiential tenants that draw foot traffic. What separates them from the broader retail pack is location: they own centers in affluent suburbs and dense urban nodes where zoning restrictions and high land values make new competition nearly impossible.

This premium positioning translates to pricing power, stable occupancy, and minimal rent concessions, even in choppy macro environments.

Many of these REITs are seeing re-leasing spreads in the high single digits and collections back near 100%. Cap rates for high-quality centers in top-tier markets remain firm, and leasing demand is being driven by both national tenants and digitally native brands that now need physical presence.

 With dividend yields hovering around 4% and forward growth driven by both rent bumps and strategic redevelopment, open-air centers in rich ZIP codes look like a rare combination of durable income and low-risk upside.

High quality REITs are undervalued right now and throwing off huge cash flows.

This is how you make money. This is where wealth is built.

No one knows how the trade war ends. Anyone who claims to is either lying or deluded. But we know how markets behave. And we know what quality looks like when it's on sale.

So this is your moment. Stop worrying. Start hunting. It’s going to be ugly.

But the ugly always brings the opportunity.

Charlie Munger once noted that "When everybody goes insane, staying sane is your competitive advantage."

There is a lot of noise and more than a whiff of fear.

Stay sane.