Risk Aversion Has Been 'Increasing Dramatically', Schwab's Aguilar Says

• Client risk aversion has increased dramatically over the last few weeks due to war risks, gas prices, and inflation.
• Aguilar recommends clients be well-diversified and risk-controlled, avoiding extreme positions due to wide potential outcomes.
• The fixed income market is aggressively pricing in inflation, unlike 2022 when the economy was weaker, and markets disagree with the Fed's dot plots on rate cuts.

Schwab Asset Management's Omar Aguilar notes a dramatic increase in client risk aversion due to lingering war risks, inflation, and potential economic deceleration. He advises clients to be well-diversified and risk-controlled, highlighting the market's aggressive pricing of inflation and divergence from the Fed's rate cut expectations.