Arvest Wealth investment strategist eyeing ‘hard data’ to determine tariffs’ impact

It’s a tricky time to be navigating financial markets; it’s an even trickier time to navigate them for clients.

Clay Nickel, chief investment strategist at Arvest Wealth Management, provided insight into how he’s approaching a volatile financial environment for his team and their clients. Leading the charge for uncertainty is the on-again, off-again nature of tariffs deployed by President Donald Trump to alter trade relationships globally. The tariff strategy has resulted in a deep plunge in financial markets since they were announced.

The S&P 500, Dow Jones and NASDAQ have all seen dramatic downturns in their values in recent weeks. Nickel said a lack of clarity in the goals of the tariffs is partially driving the declines.

“The idea behind tariffs is not always well spelled out,” said Nickel. “Initially, some of the tariffs were based on certain policy or security actions. For instance, fentanyl coming across U.S. borders was one of the initial stated goals. There are also some goals about raising revenue, which is a very different goal. And then of course, there’s what tends to be and what we think is the overriding goal, which would be a rebalance of international trade. So those different purposes tend to morph a little bit, which makes it a little more difficult for us to analyze and nail down what exactly is the goal here and how likely are these tariffs to be rolled back.”

Nickel said his clients are curious if the tariffs will lead to inflation, which was increasingly being tamed over the last two years of the Biden administration. Nickel said it remains to be seen.

“First of all, just in terms of the broad economy, the big question that we tend to get from our clients and from others as we do our forecasting is, number one, are tariffs inflationary, do they cause a persistent inflation?” he said. “If we’re just talking about the tariffs that have been announced thus far, we would anticipate an initial price increase, but not a persistent inflation. And the main reason for that is tariffs are a tax, and like most taxes, they reduce economic activity. What we would actually anticipate is after the initial price reset higher for the most part, then we would anticipate that slower growth is actually a disinflationary, possibly even a deflationary force.”

Economists and investment officials have increasingly worried that tariffs could lead to a possible recession, which was also predicted to occur over the past few years, but never did. Nickel said the prospects for a recession do remain, but he’s watching the hard data to determine when, or if, it will occur.

“What we’re seeing now is a situation where there’s concerns about a recession. There are a number of firms that have elevated their recession probability,” he said.

He contends earnings reports, which are starting to roll out for the first quarter, will be a key barometer to watch. However, he is skeptical that negative consumer sentiment surveys may be an indicator of a recession because they predicted a recession during the Biden years and it never materialized.

“Even though these leading indicators, these [consumer] sentiment surveys, are flashing all kinds of significant warning signs, some of them have never been this negative or only been this negative during times of either recession or pre-recession. But even though they’re flashing all these warning signs, we don’t have the same signal from those that we used to,” said Nickel.

You can watch his full interview in the video below.