Market Outlook: Keeping Calm Amid Tariff Uncertainty

Hello, Reader.

In 1939, the British government aimed to uplift public spirits before World War II erupted. They created a series of motivational posters that featured straightforward phrases.

Although the posters were never officially released, one design gained immense popularity when it was rediscovered in a bookshop nearly 60 years later.

You might have seen it…

This bright red poster became a global sensation. An official “Keep Calm and Carry On” web store now sells various merchandise including T-shirts, mugs, and phone cases featuring the iconic phrase.

The message is simple yet powerful: We must remain composed during tough times, pushing through the challenges we face.

This sentiment is particularly relevant as we approach President Donald Trump’s upcoming “Liberation Day” announcements.

Trump is set to reveal a significant tariff plan after the markets close today. Thus far, details about the plan remain unclear, and even the administration’s focus appears uncertain this morning.

Indeed, it can be challenging to “Keep Calm and Carry On” amid so many unknowns.

However, here is what I do know: the best way to “tariff-proof” your portfolio is to avoid companies in the immediate path of the trade war.

Here’s where to look instead…

Emphasizing Calmness

I suggest focusing on undervalued and seemingly “unpopular” stocks.

For instance, consider Bristol-Myers Squibb Co. (BMY), one of the largest biopharmaceutical companies globally, and a prime example of resilience in the healthcare sector.

As I noted in yesterday’s weekly update for my paid Fry’s Investment report:

Shares of the firm had previously sold off due to fears related to a three-step patent cliff encompassing cancer drugs Revlimid and Opdivo, as well as heart drug Eliquis. A technical write-off related to its 2024 Karuna acquisition contributed to this decline.

However, these lower prices have created an excellent buying opportunity that persists today. BMY still trades at single-digit price-to-earnings ratios despite possessing one of the best oncology pipelines in the industry. Additionally, its acquisition of Cobenfy last year enhances its potential in treating disorders such as schizophrenia and Alzheimer’s disease. In fact, BMY’s share price has increased this week.

Many pharmaceutical stocks in my Fry’s Investment report portfolio are up this week, showcasing resilience amid market uncertainty.

Weeks prior to the anticipation of Trump’s tariffs, I indicated that undervalued pharmaceutical stocks would likely outperform those within the more expensive S&P 500 index. Early this year, I explained:

The pharmaceutical sector is emerging as a center for AI-driven innovation. As AI expands its influence in drug discovery, this industry could see significant profitability growth. Currently, the NYSE Arca Pharmaceutical Index is trading at approximately 14 times estimated 2025 earnings, which is roughly 40% less than the tech-focused Nasdaq-100 index. I expect this valuation gap to considerably narrow in 2025 as pharmaceutical stocks outperform many tech companies.

So far, this forecast is holding true.

In a generally tough Stock market environment, the pharma sector has significantly outperformed the Nasdaq-100 Index. The NYSE Arca Pharmaceutical Index has risen 7% year-to-date, while the Nasdaq-100 has faced a 7% decline.

The performance is mirrored in European markets…

Continuing to Carry On

Although shares of European stocks are down this week, they have, for the most part, been outperforming U.S. markets in 2025.

This advantage is largely due to their relatively low valuations.

Additionally, Europe does not have direct conflicts with other countries. Therefore, even if U.S. tariffs restrict access to American markets, European businesses can still operate in South America, Canada, or Asia.

If foreign markets retaliate against the U.S., European companies could step in as “swing” suppliers to those regions.

Consequently, both prior to and following today’s Liberation Day announcements, I will maintain a “Keep Calm and Carry On” approach.

My focus will remain on identifying undervalued sectors and stocks for my subscribers.

It may benefit you to adopt a similar strategy, perhaps by joining us at Fry’s Investment report.

Click here to discover membership options today.

Best regards,

Eric Fry

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