Capitalizing on Volatility: Resilient Sectors and Leadership-Driven Blue Chips in a Turbulent Market

The U.S.-China trade truce announced last week offers a brief reprieve from escalating tariffs, but the $1.2 trillion trade deficit and unresolved issues like non-tariff barriers and fentanyl tariffs ensure near-term uncertainty. Meanwhile, Berkshire Hathaway’s transition to CEO Greg Abel signals a pivotal moment for one of the world’s most iconic conglomerates. Investors seeking stability in this environment should focus on resilient sectors shielded from trade wars and blue-chip companies with proven leadership continuity. Here’s how to position portfolios for long-term gains while navigating short-term volatility.

The U.S.-China Truce: A Pause, Not a Resolution

The May 14 agreement slashed tariffs from 125% to 10% for 90 days, sparking a 3.7% surge in Nasdaq futures and a 2.7% jump in S&P 500 futures. Oil prices rose 2.7%, and the Stoxx 600 climbed 1%, as investors welcomed the delay in further escalation. But the deal’s fragility is clear: the 20% fentanyl tariff remains, China’s retaliatory tariffs on U.S. coal and poultry stay in place, and talks over the trade deficit—a declared “national emergency” by the U.S.—are unresolved.

The risk? If negotiations falter after 90 days, tariffs could reset to 125%, reigniting volatility. Investors must prioritize companies unexposed to tariff cycles and with leadership teams capable of weathering geopolitical storms.

Berkshire Hathaway’s Transition: A Test of Abel’s Acumen

Warren Buffett’s handover of the CEO role to Greg Abel marks a historic shift. With $348 billion in cash reserves—the highest in Berkshire’s history—Abel’s ability to deploy capital will define the conglomerate’s next chapter.

Abel’s strengths lie in operational rigor: he managed Berkshire Hathaway Energy, BNSF Railway, and a $60 billion stake in Japanese conglomerates. His focus on utilities, railroads, and insurance—sectors with predictable cash flows—aligns with Buffett’s value-investing ethos. The test? Can Abel invest Berkshire’s cash in a high-valuation world? His track record suggests yes.

Sectors to Bet On: Utilities and Healthcare

The trade war’s collateral damage has been uneven. Sectors like utilities and healthcare, which rely on domestic demand and infrastructure, have remained largely insulated.

Utilities: A Hedge Against Tariff Chaos

Air Products (APD), a leader in industrial gases and clean energy, exemplifies this. Its CEO succession plan—announcing a new leader by March 31, 2025—was set well before activist investors pressured the board. The company’s $44 billion in shareholder value since 2014 and 11% Adjusted EPS CAGR underscore its stability.

Johnson Controls (JCI), a pioneer in smart building technologies, is another standout. Its CEO transition process, led by independent director Patrick Decker (a former Xylem CEO), ensures continuity in its $12.1 billion business. The company’s OpenBlue platform, which integrates energy efficiency and IoT, positions it to capitalize on the global push for sustainable infrastructure.

Healthcare: A Growth Engine in Disguise

The healthcare sector’s resilience is unmatched. UnitedHealth Group (UNH), which reinstated CEO Stephen Hemsley after Andrew Witty’s abrupt departure, is a prime example. Hemsley’s return leverages his 11-year tenure steering UNH to a 13–16% long-term growth target.

CVS Health (CVS) is also primed for growth under its new leadership. CFO designate Brian Newman (ex-UPS/PepsiCo) and CMO Amy Compton-Phillips (a clinical expert) are retooling CVS’s strategy to integrate healthcare delivery and technology. Their focus on its 185 million members could unlock synergies in pharmacy benefits and data analytics.

The Contrarian Play: Buy the Dip in Leadership-Driven Blue Chips

The market’s near-term volatility is creating buying opportunities in companies with strong succession plans and low trade exposure.

• Air Products (APD): Its clean energy projects and March 2025 CEO announcement signal confidence. Current yield: 1.5%, but its cash flow stability is a rare commodity.
• Johnson Controls (JCI): Its smart-building tech and board-led succession process make it a play on global infrastructure spending.
• UnitedHealth (UNH): Hemsley’s return to a 13–16% growth target offers a margin of safety amid Medicare Advantage headwinds.

Final Call: Time to Diversify Defensively

The U.S.-China truce is a tactical pause, not a lasting solution. Investors should use the next 90 days to allocate to utilities and healthcare leaders with proven succession plans. These companies offer:
- Stable cash flows in volatile markets.
- Leadership continuity to navigate Fed policy shifts and trade negotiations.
- Undervalued entry points as short-term uncertainty drags down prices.

The lesson? In a world of geopolitical noise, bet on companies that control their destiny—whether through infrastructure, healthcare dominance, or Berkshire’s cash-rich conglomerate model.

The window to act is now. As Buffett once said: “Be fearful when others are greedy, and greedy when others are fearful.” With trade tensions lingering and leadership transitions underway, the time to capitalize on this volatility is here.