The market is reacting on a whim, expert says

• Market reacting to geopolitical headlines, leading to two-way volatility in indices and the VIX.
• Higher oil and diesel prices are a significant inflationary shock, potentially leading to Fed rate hikes and impacting consumer spending.
• Recommendation to overweight commodities, natural resources, and real assets as a hedge, and to reduce exposure to developed markets ex-U.S., favoring defensive sectors like consumer staples and utilities.

Joseph Tanious, Chief Investment Strategist at Northern Trust Asset Management, discusses market volatility driven by geopolitical headlines and inflation. He notes Wall Street firms are raising recession outlook odds but maintains a base case of US economic expansion. Tanious recommends overweighting commodities and real assets as a hedge against inflation and geopolitical risks, while reducing exposure to developed markets ex-U.S. and favoring defensive sectors like consumer staples and utilities.