Q&A: Stocks drop amid recession concerns

Stocks took a major hit Monday amid growing concerns over a possible U.S. recession. Steve Wyett from BOK Financial discussed what's behind the market plunge and what investors can expect moving forward.

Q: The DOW closed 890 down. What's the immediate takeaway?

A: Wyett: "The immediate takeaway is, look, we're having a bit of a growth scare. You ran a story earlier about some downgrading of growth expectations from some of the big investment banks. It's not just tariffs. That's what's right in front of us. Tariff policy is coming in a little more aggressive than we thought it might. We're starting to see some reciprocal agreements or actions on the part of our trading partners. That's raising the risks of what tariffs might mean from an inflation standpoint going forward.

"But this is also about spending, both at the national level with the Department of Governmental Efficiency, and you ran a story earlier on the Oklahoma State Department of Governmental Efficiency. So as the federal government spends money, that does add to growth. But, Dave, if we're borrowing that money to spend it, which is what we've been doing, that's less sustainable longer term.

"So we're going through this process where we need to reprioritize what our spending is, get on a more sustainable level. And so eventually we think that will be a good thing, but in the meantime, it does slow growth. And it's not just that. Think of all the other policies that we're dealing with—tax policy, energy policy, regulation—which is just raising the level of uncertainty in the markets to a very high level. And I learned very early in my career, markets hate uncertainty, and that's what we're dealing with at the present time."

Q: The word 'recession' is being thrown around. Are we headed toward a recession?

A: Wyett: "That's not really our take at this point. Look, unemployment [is at] 4.1%. It could go up a little bit. There are job cuts that are being announced at the federal level, but if we get 200,000 job cuts at the federal level, the size of our labor force is 170 million. So it's not that, in and of itself, is not big enough.

"Is there a risk of maybe some interconnectivity, where unemployment could go a little higher? I think that's an outside risk, but it's not our base case. So again, even as we're downgrading our outlook for growth for this year—we're going from 2.5% to 1.7%—[it's] still positive. The first quarter could be a little touchy because we have some trade issues that we're dealing with, but overall, no, we're not expecting a recession at this point."

Q: What is your message to investors, particularly those 45 and under?

A: Wyett: "Ultimately, even for all investors, this is not a time to make a major change to your plan. If you don't have a plan, we need to get one. But particularly if you're 45 or younger, you've got the biggest asset that you can have when it comes to investing, and that's time.

"For those of us who are a little older, like me, just make sure you have the right amount of risk in your portfolio, but don't change the overall plan."