Diversification the Best Way to Capitalize On Market Uncertainty: Northwestern Mutual CIO

Rising trade tensions, weakening jobs data, and shifting Federal Reserve expectations rattled markets on Friday, but Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, says the answer for investors remains unchanged: stay diversified.

“Uncertainty remains high—and the way to manage it has not changed,” Schutte wrote in a recent note. “We do not believe the unpredictability in the economy and the markets calls for dramatic changes to your investment plan.”

U.S. stocks fell last week, and bond yields declined as disappointing employment numbers and higher-than-expected tariffs on U.S. trading partners, including Canada, revived concerns about a slowdown. 

The July jobs report showed just 73,000 jobs added, well below expectations, with prior months revised sharply downward.

“The evidence of tariffs hitting hard economic measures, coupled with the Trump administration’s unveiling of new and higher-than-expected duties on goods from countries that failed to reach a deal with the U.S. before the administration's August 1 deadline, forced many investors to reconsider their views,” Schutte said. 

He noted that tariffs had previously shown up only in consumer and business sentiment surveys.

Looking ahead, all eyes are on the Federal Reserve. Market expectations for a rate cut at the September FOMC meeting jumped from below 40% to 87% after the jobs data, according to the note. 

However, Schutte cautioned that predictions around Fed timing are “notoriously fickle.”

Despite the economic crosscurrents, Northwestern Mutual sees opportunity in the long term. 

“The current environment serves as a valuable reminder that an unpredictable future will lead to unpredictable opportunities,” Schutte said. “Diversification is the best way to capitalize on these unforeseen opportunities.”