levies between the United States and China were both significantly reduced about a month after “Liberation Day” and the massive levies that were declared on that day. Later, more on that.
Sean Simonds, the strategist at UBS, has sent out a timely note stating that the questioning will now concentrate more on result uncertainty and less on policy uncertainty. “We are possibly past the peak of uncertainty as more granular detail on tariffs and other policies come into focus,” they claim. As the writers chose, “What comes after this, however, is the policy OUTCOME uncertainty,” is capitalized.
Given sector tariffs as well, the UBS team’s assumptions were likely a sensible place to start when estimating the economic ramifications. The calculations were based on 10% universal tariffs and 60% on China, the latter of which is currently double the actual duty level. They predict that by the fourth quarter, the U.S. economy will have slowed from a 2% year-over-year rate in the first quarter to 0.7%.
“A value orientation (avoidance of high valuations) is suggested by elevated yet unknown volatility and dangers. Nonetheless, the UBS team advises maintaining exposure to some cyclical growth businesses due to the possibility of sustained economic momentum into 2026.
What is the best course of action, then? UBS recommends growth at a fair cost. Granted, that hasn’t been a successful strategy lately. For example, the Invesco S&P 500 GARP ETF GARP has underperformed the S&P 500 SPX this year, during the past 52 weeks, and over the previous three years.
As valuations increased and a smaller group of companies were able to produce steady growth, growth at a reasonable price (GARP) investment became much more challenging over the past 10 years. They believe, “GaRP may find renewed interest after the recent derating and with economic transitions underway.”
They created this list of 29 stocks that they believe fit the requirements; on average, the companies trade at 30 times their projected 2025 earnings, with UBS analysts projecting a 19% return. The strategists used a valuation database dubbed HOLT, which it inherited from Credit Suisse, and claimed that all of the stocks were in the top half of the market in terms of operational excellence, in the top quarter in terms of growth, neither too costly nor a value trap, and had a market capitalization of more than $10 billion.
