Money Life with Chuck Jaffe

Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Co. [https://northwesternmutual.com/market-commentary/], says that "Asset classes don't die, they just go to sleep for awhile," and they wake up when there are changes to the macroeconomic backdrop. He says that domestic strategies about trade, tariffs and global defense represent that background change, which is why he's recommending diversification, and considering commodities, international stocks and more. Schutte says he's expecting rate cuts late in the year and thinks the economy can avoid recession, but not a slowdown.  David Trainer, founder and president at New Constructs, finishes the firm's three-week look at troubling dividend trends, this week focusing on "dividend traps," companies where the current price is so high that a big decline would mean that the dividend isn't worth sticking around for. Previously, New Constructs [https://newconstructs.com] featured "fake dividend stocks" and "false dividend stocks" in The Danger Zone. Plus economist Brian Lewandowski of the University of Colorado Boulder looks at the June 2025 Outlook Survey [https://nabe.com] from the National Association for Business Economics, out today, which showed that economists expect sluggish economic growth and persistent, higher inflation into 2026; on average,  the economists felt those conditions were not likely to create a recession.

Adam Turnquist, chief technical strategist at LPL Financial [https://lplfinancial.com] says he expects the market has enough momentum to break through to new record highs, and soon. Led by tech stocks, Turnquist expects the move off the April lows to continue, though he acknowledges that the macro backdrop "is extremely messy." If the market can overcome trade uncertainties, Turnquist says that when new highs are achieved three months apart, it is typically a good sign that a volatile market can continue overcome bad news and continue upward trends. The NAVigator segment features an interviewed taped in New York at the Active Investment Company Alliance BDC Forum with Tonnie Wybensinger, head of government relations for the Small Business Investors Association [https://sbia.org], an industry advocacy group who discusses current legislation that would give BDC investors a tax break and how legislation on esoteric subjects like business-development companies gets passed. Natalie Iannello, discusses a Howdy.com [https://howdy.com] survey which showed that the average American now believes they need $105,000 a year to live comfortably [https://howdy.com/blog/cost-of-living-statistics-trends], which is a problem when you consider that other research shows the average American salary at about $66,000. Plus, it's Chuck birthday, and he shares a birthday wish for his financial situation, and yours.

Mitchel Penn, managing director at Oppenheimer & Co. [https://oppenheimer.com] — interviewed at the Active Investment Company Alliance BDC Forum in New York on Wednesday — says that credit losses for business development companies during the first quarter of 2025 were more than double the level they have been at for the last few years. He says some of that increase could be attributed to the market's reaction to government policies, but that it also could be that interest rates have stayed higher for so long now that they are starting to create credit-quality issues. He said BDCs can still deliver returns in the range of 9% moving forward, though he warned that an increasing number of business-development companies may struggle to earn their dividends, making it important for investors to be avoid simply chasing a high yield. Also from the BDC Forum, Bob Marcotte, president at Gladstone Capital Corp. [https://gladstonecapital.com], discussed how government policies are encouraging business investment and capital expenditures which should create outstanding conditions for private credit, and therefore BDCs, to shine. Plus, Todd Rosenbluth, head of research at VettaFi [https://vettafi.com], checks in with a short-duration Treasury fund that uses options to goose its yield as his ETF of the Week, and Chuck discusses the growing threat to investors and the economy from breakdowns and cuts impacting the way the country's economic statistics are tracked and maintained.

Joe Quinlan, head of CIO market strategy for Merrill [https://merrill.com] and Bank of America Private Bank [https://privatebank.bankofamerica.com], says the market "got wrong-footed coming into January," expecting a pro-business administration but stumbling instead due to the tariffs, but he says that as the economy starts to get to the other side and have some clarity, he still sees the Standard & Poor's 500 hitting the same goals his team set for it at the beginning of the year at 6,600. While he would like to see the market make and hold new highs to prove that the rebound from April lows can hold, he says that there will not be a recession this year or next without some man-made event like the Federal Reserve making a mistake by moving rates too much or too soon. While Quinlan is confident that there won't be a recession, most Americans disagree; Emily Fanous discusses a survey done for Howdy.com which showed that more than half of Americans think a recession is in the offing [https://howdy.com/blog/recession-preparation-statistics] — within the next year — and that many are starting to change financial habits to prepare for that downturn now. Plus, veteran international fund manager Bernie Horn of Polaris Global Value [https://polarisfunds.com] talks stocks in the Market Call.

Charles Rotblut, vice president for the American Association of Individual Investors [https://aaii.com] — the keeper of the group's sentiment and asset-allocation surveys — discusses how investors are becoming increasingly neutral in their sentiment [https://aaii.com/sentimentsurvey] but increasingly aggressive in their investment plans. Neutral sentiment — the expectation that the market will remain flat over the next six months — has been on the rise, as Americans feel better about the market without necessarily being optimistic; meanwhile, their asset allocations are taking on more stocks. Mostly, however, Rotblut notes that most investors should keep their emotions in check and let the headlines play out, mostly riding out the storm with a long-term investment plan in place. Veteran investment adviser Stephen Akin, founder of Akin Investments [https://akininvestment.com], mixes technical analysis with fundamental stock details in the Money Life Market Call, and Chuck answers a listener's question about retirement-savings basics, which tax-advantaged accounts to use and  how to prioritize your savings.