April 8, 2025 • 17 mins
Brian Thomas is joined by Brian James to talk about the current state of the economy with Trump's new tariffs.
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Episode Transcript
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Speaker 1 (00:02):
Eight o four, come up in eighth five a fifty
five karrosite talk station. A very happy Monday tea always
made extra happy because we get to talk to Brian
James and it's a financial Planner is with all words
financial Brian, welcome back to the program. Timing is everything.
It's good to have you on this morning.
Speaker 2 (00:18):
Good morning, good morning, and hey let's talk about those reds.
Let's start with happy news and how that doesn't work either.
Speaker 1 (00:24):
Yeah, that does. I know that doesn't work either. I
hope you live on high ground. I ad my Facebook
are kind open and just everybody's posting pictures of how
these rivers are just busting at the seams. And somebody
emailed me post saying like Route fifty is underwater and
it's just insane and the mt of rain that's gone
out out there.
Speaker 2 (00:43):
Oh yes. We have some friends and family who were
visiting Ohio University for it was mom's weekend, and there
were texts and messages flying around over exactly how you
could get out of Athens and get back here to Cincinnati.
So lots of lots of that going on, and unfortunately
we seem to be the toilet of our neighborhood. All
of the water runs down on hill to us, so
we're okay, but my sump is going to run for
(01:03):
a month straight.
Speaker 1 (01:04):
Oh jeez, I'm sorry to hear that. Fortunately, we happen
to be on high ground on top of the hill
in Simms Township as opposed to the bottom of the
hill where the Little Miami River is in Loveland is
also flowing over the bank. So God Blood prayers to
everybody out there who's having a cope with that. Hopefully
it'll dry out real soon. Anyhow, we got to get
to it. Bad news in the market. How many trillions
of dollars were wiped out last week in the market?
Speaker 2 (01:25):
Brian James, Well, just more than a couple. So we've
seen obviously a lot of volatility. And if you haven't
looked at your four ohin k goes ahead and don't don't.
There's no need. If you were, we will be fairly
predictable on this. But if you were properly diversified in
the first place, then this is just eating your vegetables.
(01:46):
It's no fun. Nobody wants to do it. But yes,
of course, when the markets are getting hammered across the board,
your investments are going to come down to. So what happened,
of course, was we had we've got some tariffs now
that we haven't dealt with the big news from last week.
And what really triggered is after President Trump unveiled his
sweeping plan across all of our US partners. This was
(02:06):
a ten percent minimum tear up on all imports in
Canada and Mexico are exempt from that because they're stuck
with twenty five percent, right, But the big thing that
happened was China came back and said this is kind
of the first response. China came back and just said, okay,
we're going to put thirty four percent on products coming
from the United States into China. So basically it's a
(02:27):
bit of a tennis match now as as we fire shots,
you know, kind of back and forth. But I think
the market may have been sort of hoping, and I'm
sure President Trump was definitely hoping that we're going to
levy these big, scary tariffs. But we're going to swing
such a big stick that everybody's just going to buckle
and it'll all go away over the weekend. Maybe a
little naive that's definitely not happening, But China's response is
(02:47):
what triggered the massive selloff on Friday, and it's going
to continue today. So prepare for a bumpy ride.
Speaker 1 (02:53):
Yeah, indeed, And I guess given the trade imbalance with China, know,
Trump keeps talking about that they don't buy nearly as
much stuff from US as we buy from them.
Speaker 2 (03:05):
Correct, there's a massive imbalance there. That the twenty twenty
fourth deficit with China was almost three hundred billion, and
our imported goods were about four hundred and thirty eight billion.
So and ironically that's how the tariff calculation was. They're
simply taking half of that deficit and applying it against
against the import numbers, and so basically every country gets
(03:27):
kind of a different calculation there. But the whole point
is just to reduce the deficit. We want to make
it more profitable for the United States to be in
these situations in the first place, to be trading, and
we have given up a lot. Of course, as President
Trump says, that's very true. What has driven the stock
market a lot, even American companies, is the idea that
(03:48):
other countries are willing to trade with our country, but
over decades we've allowed them to grab a little more here,
grab a little more there. By levying tariffs against US,
Trump wants to tear the band aid off, set us
back to you know, a little more level playing field.
No way to get there without somebody taking a significant hit. Obviously,
these countries don't want to take that hit, so they're
(04:09):
going to swing back, and it's just going to be
a couple of rounds of haymakers back and forth until
everybody settles down.
Speaker 1 (04:15):
Well, I guess what would the landscape look like if
it was an equal playing field. If there let's say
that they eradicated tariffs and nobody charged anybody for stuff
coming in or going out? Would that be economically devastating
to countries? Are they reliant upon these tariffs to keep
their u uh, to to keep the process going, to
keep their governments open, to keep them from a financial collapse?
(04:35):
I mean that is that the point of this?
Speaker 2 (04:38):
Yeah? I think that in the short run, in the
very short run, if everybody just agreed, you know what,
we're going to take all the tariffs off the table completely,
then countries that were relying on that, obviously are going
to see a reduction in the income that they're getting
because the United States never objected. We were We were
cool with it for for decades, and so that would
effectively be like a price reduction in the amount of
(04:59):
revenue that they're bringing in, and therefore that's going to
be a hit to their economies. They can't afford to
simply let it all go away. You know, no country
is going to be able to simply reduce the revenue
they've got coming in and still get all of their
bills paid. So that's why they're trying to fight back
and just make sure that they retained some level of
(05:20):
that income they had coming in because they just can't
afford it. Well, I guess you know.
Speaker 1 (05:24):
Their component of this is it would allow their people
to at least afford American products. As presently, with some
of the terriffs as high as they are, they're just
not buying them. I mean, there's a reason we have
a trade imbalance because they cannot afford to purchase American products.
Speaker 2 (05:40):
Yes, yeah, that has a lot to do with it.
And then we doubled down on that by making it
political too, so now it's a statement to not buy
American products. I saw a picture online of a Canadian
supermarket where Canadian strawberries were listed at six dollars a
little box of them, and those were pretty much sold out.
The American ones right next door to them were four
(06:00):
bucks a box and plenty to go around. So there's
there's more than just the economics happening at this point.
Speaker 1 (06:07):
Yeah, and I you know, they can make their own
choices along those lines. You choose not to buy something,
you choose not to buy something. That's why nobody buys
bud light beer anymore. And whether or not that'll ever
come back is I suppose it depends upon whether we
iron out our differences and get this away from politics
and just start talking about, you know, plain simple economic realities.
Speaker 2 (06:27):
Yeah, that's true. This isn't unprecedented, though. We've had tariffs before.
Remember when the Holly Smooth Act was nothing more than
a funny line from Ferris Bueller Dale. Oh yeah, talking
about all of a sudden it shows up all the time,
because this is the that was the last time we
saw tariffs raised in to this extent. Matter of fact,
(06:48):
we're a little we're a little past that now. This
is historic and scope didn't work during the Great Depression.
So the goal then, though, was a little bit different.
The goal was to hopefully prop up the US market
from the US economy from a very very very extremely
weak position. It was dead on the table. This is
a little bit different where this is a negotiating tactic.
(07:09):
I don't think President Trump would would mind at all
if all these tariffs went away pretty quickly, if he
got what he wanted in terms of, you know, of
the concessions from our customers. Basically that's the goal. I
think this is a negotiation tactic. The man is a
he wrote The Art of the Deal was his big
book back in the eighties. That's what he's all about.
So this is simply a way to say, hey, this
(07:30):
is what what America is willing to do and what
it is no longer willing to do. Some of it
is going to be a little bit of a sleight
of hand, smoking mirrors, because I don't think anybody believes
we're truly going to maintain fifty percent tariffs on some
of these countries forever and ever, because they'll simply never
buy from US again. That makes it a negotiating tactic.
Speaker 1 (07:48):
Well, and I know we learned from COVID that we
and I know it's a broad statement, maybe too large
a brush. We don't make anything anymore here, but you know,
it is a fact that China does manufacture the vast
majority of the complete in parts of going to pharmaceuticals,
if not manufacture them, generally speaking, that's a dangerous position
to be in considering, you know, we could end up
in some sort of shooting war with China and we
(08:10):
can't get pharmaceuticals. So this may bring back some of
those some of those manufacturing facilities here in the United States,
which would provide some measure of security. I think that'd
be a positive benefit from.
Speaker 2 (08:22):
It, absolutely, and if that actually happens. Now. The one
scary thing that I can't quite get my head around
is we had the same situation with semiconductors. We were
buying so much of them, virtually all of them from Asia,
a lot of them from Taiwan, with whom we have
a good relationship. But it does seem like any day
now that could become China. So the answer to that
was to build a couple plants a little southeast of Columbus.
(08:45):
Intel was building plants to produce these things on shore.
I don't understand why that has come in the crosshairs,
but for some reason there is there are concerns that
that's not going to be happen anymore. So some of
these puzzle pieces don't quite fit.
Speaker 1 (09:00):
Okay, and real quick here before we take a break
and come back, Brian James. When the Smooth Holly terror
fact went in, and obviously it was a disaster for US.
It exacerbated the Great Depression, and it has always gone
down in history. It is a really terrible policy position
by Hoover. But what were the what was the teriff
situation like relative to American exports?
Speaker 2 (09:19):
Was it the same?
Speaker 1 (09:20):
Were there did other countries tariff American imports or or
or was the landscape different? I mean, in other words,
is it a comparable comparison?
Speaker 2 (09:31):
It is so. Yeah, So a lot of countries did
respond with their own tariffs, and that just reduced the
overall trade activity with the United States. Became very protective
and isolationist, and other countries responded in kind, and that
led to a sixty five percent decrease in international trade
between nineteen twenty nine and nineteen thirty four. So that's
why ben Stein says they did not work, and the
United States sank further into the Great Depression.
Speaker 1 (09:53):
Yeah, boy, the Wall Street journals really got its hire
up against the Trump administration for this. Normally they're you know,
kind of sied with conservative leaning at least to a certain degree.
I know, they're rather politically neutral, but leaning towards you know,
pro business, pro capitalism. Man, you can't find a positive
word to be said in the Wall Street Journal of
(10:14):
late not a lot.
Speaker 2 (10:15):
Yeah, Automotive CEOs Jim Farley, Ford, Mary Barrow General Motors
are expressing really strong concerns. The technology industry has never
been a huge fan of Trump, other than magically showing
up on the dais this inauguration overnight, but they've been
absolutely crushed. Steel is one of the places where that
actually possibly could benefit from all of this. So some
(10:36):
of those CEOs have been a little more supportive than
the rest, but in general, generally speaking, things that slam
on the brakes in the economy are generally not good
for any publicly traded company, and CEOs are starting to
pipe up about it.
Speaker 1 (10:49):
All right, We'll bring Brian James back to talk more
about these and other topics at take fifteen Right now.
If you have care city detoxication one place I know autation.
Brian Thomas The Money Monday's Brian James. Yes, but I
tried to put a positive spin on this disaster disaster
several days, and looks like it's going to drop again today,
I guess futures. When I got up this morning, we're
about three and a half four percent down, but they
(11:11):
backed off a little bit to about two percent. But
we're dealing with do we call this a bear market?
I mean, at what point is there a declaration like, hey,
we're in a bear market. I mean, there's a thing
called a correction and we've been hearing about that coming
for a long time. Is this perhaps related to a
market correction that was expected? Is this the beginning of
(11:31):
the recession that you really joked about last week, Brian?
That's been coming now what for three and a half
four years? Oh my god. Recessions right around the corner.
Recessions right around the corner. So put this in perspective
and maybe try to spend this positively, because as you know,
and I know, and you and I both lived through
a lot of these market downward trajectories, they always end
up popping back up and ended up ended up making
(11:52):
more money over the long haul.
Speaker 2 (11:54):
So what's the story. Yeah, they absolutely so, yeah, we're
we in a bear market. Yeah, it's look that way.
Depends on your definition of bear market. But let's just
say we're not in a good one. So still, as
you hinted that, though stocks are cyclical, we've had twelve
bull markets and twelve bear markets since nineteen forty nine,
and that might think that might make you go, well,
we got a one out of two chance, right, it's
(12:15):
either good or it's bad. The difference is that bull
markets are much longer and they rise much further than
bear markets, so bear markets relatively short. The average length
of a bear market is one point one year, at
one point one years, and it averages about a thirty
five percent decline, so that that's basically on average, we
take that hit and we lose about a third and
(12:36):
then we move on. A bull market, on the other hand,
last five years and the average return over that time
period TU relatively is two hundred and seventy percent, so
we grow a lot further. We go. Think think of
the long term chart of a market. They go up,
not down, and a lot of people get panicked when
we are at a when we're out of market peak,
(12:56):
which we were in mid February, the market was an
all time highest. Recent is mid February. News came out,
headlines came out, the market didn't like, and it's taken
back some of that value. But people get worried when
they hear we're at an all time high. Well, the
next step is down, right, it has to be down.
We're at an all time high. The market is usually
at an all time high. That's what it does. It
goes up, not down. Therefore, we're almost always at a
(13:18):
long time high. So the thing to share about this
And I actually just got an email a little bit
from a little bit ago from a client saying, am
I looking at this right? Am I only down seven percent?
When I know the market's down fifteen or twenty percent
based on whatever index you're looking at? And answers, yeah,
all work is good at what we do. But this
is the whole point of diversification. For this gentleman, he's
got a diversified portfolio. He's also got international stocks, he's
(13:40):
got fixed income in there. These are two things that
nobody has cared about for a couple of decades, but
those are propping up the market. If you have a
diversified portfolio, then that's kind of holding you up. You
might actually be making money in some of those positions,
believe it or not. And again, that is the point
of a diversified portfolio. That's why we don't go all
in on the S and P five hundred just because
it seems like you don't need to own anything else.
Speaker 1 (14:01):
Yeah, and you've made that point many times, and it's
just it is sound, sound advice, and it's one of
the reasons why you have a financial planner. Now in
terms of the FED and interest rates, what impact might
this downward trending market have on that?
Speaker 2 (14:15):
Yeah, So these tariffs are going to act like a
pretty good tax increase on imported goods. So that's going
to slow the economy, there's no doubt about it. The
debate is what will degree be. So what we're thinking
right now, and this kind of echoes a lot of
what you hear from other economists. If all these announced
tariff stick GDP growth is going to be cut by
a couple percentage points over the next year or two,
So that will take us from what we did have
(14:38):
a modest growth outlook and could push it toward recession.
Not going to be overnight recessions never are. We're not
going to wake up one day and say that, hey,
we just started a recession this morning, it's going to
be yeah, the recession started a few months ago. If
this happens, and the same way on the way out
as we exit a recession. And we've been through this before.
Don't forget we had a recession. We had a COVID
related recession that was over and done with pretty quickly.
(15:00):
But it won't be announced that. Everybody back in the pool,
you know, this morning, everything's wonderful, It'll be okay. A
couple months ago things turned positive and we've confirmed that
the numbers are and we're now out of a recessionary environment.
This one is self inflicted. We chose to put in
the catalysts that are causing it. That is, I sort
of compare that to COVID a little bit, because COVID
(15:21):
had nothing to do with the overall economy and how
it was progressing on its own. It was something that
came out of left field, of course, and it was
how we reacted to it. Underneath it all the economy
before that was acting okay, was in pretty good shape.
That's the same situation we have right now. We chose
to put these tariffs in place. Countries chose to react
the way they have, and the market is reacting accordingly.
(15:44):
Versus a two thousand and eight where the underlying structures
were at risk.
Speaker 1 (15:49):
Okay, well, and like you said, the market would have
continued and percolated along fine until we decided to shut
everything down and lock everything down and stop the economy
from moving forward.
Speaker 2 (16:00):
Correct. We pushed a button. This is not just the
weather turning bad. We pushed a button to make it happen.
All right, Well, don't panic, is what you're saying. The
financial planner in here, which is more of a counselor,
it's talking people off the ledge and just let it
ride out. We too will come out the other side
at some juncture. Just got to have to wait and
see approach to it. So it is, we'll learn your history.
(16:22):
We've been through these things before. We'll go through them again.
Go back in time and see what the market has done.
There have been five years that are attention getters where
we're down more than twenty percent. That's including your great depression,
the seventies, the tech bubble bursting nine to eleven, two
thousand and eight, and so forth. Each and every one
of those five years Brian Thomas was followed by a
year that had a huge upswing. The pendulum swings back and.
Speaker 1 (16:43):
Forth, it does, Brian James. Appreciate your sound advice and
little dose of optimism there toward the end, with obviously
a concern for expressed by a lot of people where
the markets are going. Brian, we'll talk again next month.
I have you have a wonderful week and good luck
talking people off the ledge this.
Speaker 2 (16:57):
Week, right, I appreciate it. You have a good week
day drive.
Speaker 1 (17:01):
Thanks man, you too, take twenty five fifty five Caro
sleeve talk station. Feel free to call uh Sean can
open up the phone lines. We got a little time
before we get to Todd Sledge from since Nava maybe
got a
Eight o four, come up in eighth five a fifty
five karrosite talk station. A very happy Monday tea always
made extra happy because we get to talk to Brian
James and it's a financial Planner is with all words
financial Brian, welcome back to the program. Timing is everything.
It's good to have you on this morning.
Speaker 2 (00:18):
Good morning, good morning, and hey let's talk about those reds.
Let's start with happy news and how that doesn't work either.
Speaker 1 (00:24):
Yeah, that does. I know that doesn't work either. I
hope you live on high ground. I ad my Facebook
are kind open and just everybody's posting pictures of how
these rivers are just busting at the seams. And somebody
emailed me post saying like Route fifty is underwater and
it's just insane and the mt of rain that's gone
out out there.
Speaker 2 (00:43):
Oh yes. We have some friends and family who were
visiting Ohio University for it was mom's weekend, and there
were texts and messages flying around over exactly how you
could get out of Athens and get back here to Cincinnati.
So lots of lots of that going on, and unfortunately
we seem to be the toilet of our neighborhood. All
of the water runs down on hill to us, so
we're okay, but my sump is going to run for
(01:03):
a month straight.
Speaker 1 (01:04):
Oh jeez, I'm sorry to hear that. Fortunately, we happen
to be on high ground on top of the hill
in Simms Township as opposed to the bottom of the
hill where the Little Miami River is in Loveland is
also flowing over the bank. So God Blood prayers to
everybody out there who's having a cope with that. Hopefully
it'll dry out real soon. Anyhow, we got to get
to it. Bad news in the market. How many trillions
of dollars were wiped out last week in the market?
Speaker 2 (01:25):
Brian James, Well, just more than a couple. So we've
seen obviously a lot of volatility. And if you haven't
looked at your four ohin k goes ahead and don't don't.
There's no need. If you were, we will be fairly
predictable on this. But if you were properly diversified in
the first place, then this is just eating your vegetables.
(01:46):
It's no fun. Nobody wants to do it. But yes,
of course, when the markets are getting hammered across the board,
your investments are going to come down to. So what happened,
of course, was we had we've got some tariffs now
that we haven't dealt with the big news from last week.
And what really triggered is after President Trump unveiled his
sweeping plan across all of our US partners. This was
(02:06):
a ten percent minimum tear up on all imports in
Canada and Mexico are exempt from that because they're stuck
with twenty five percent, right, But the big thing that
happened was China came back and said this is kind
of the first response. China came back and just said, okay,
we're going to put thirty four percent on products coming
from the United States into China. So basically it's a
(02:27):
bit of a tennis match now as as we fire shots,
you know, kind of back and forth. But I think
the market may have been sort of hoping, and I'm
sure President Trump was definitely hoping that we're going to
levy these big, scary tariffs. But we're going to swing
such a big stick that everybody's just going to buckle
and it'll all go away over the weekend. Maybe a
little naive that's definitely not happening, But China's response is
(02:47):
what triggered the massive selloff on Friday, and it's going
to continue today. So prepare for a bumpy ride.
Speaker 1 (02:53):
Yeah, indeed, And I guess given the trade imbalance with China, know,
Trump keeps talking about that they don't buy nearly as
much stuff from US as we buy from them.
Speaker 2 (03:05):
Correct, there's a massive imbalance there. That the twenty twenty
fourth deficit with China was almost three hundred billion, and
our imported goods were about four hundred and thirty eight billion.
So and ironically that's how the tariff calculation was. They're
simply taking half of that deficit and applying it against
against the import numbers, and so basically every country gets
(03:27):
kind of a different calculation there. But the whole point
is just to reduce the deficit. We want to make
it more profitable for the United States to be in
these situations in the first place, to be trading, and
we have given up a lot. Of course, as President
Trump says, that's very true. What has driven the stock
market a lot, even American companies, is the idea that
(03:48):
other countries are willing to trade with our country, but
over decades we've allowed them to grab a little more here,
grab a little more there. By levying tariffs against US,
Trump wants to tear the band aid off, set us
back to you know, a little more level playing field.
No way to get there without somebody taking a significant hit. Obviously,
these countries don't want to take that hit, so they're
(04:09):
going to swing back, and it's just going to be
a couple of rounds of haymakers back and forth until
everybody settles down.
Speaker 1 (04:15):
Well, I guess what would the landscape look like if
it was an equal playing field. If there let's say
that they eradicated tariffs and nobody charged anybody for stuff
coming in or going out? Would that be economically devastating
to countries? Are they reliant upon these tariffs to keep
their u uh, to to keep the process going, to
keep their governments open, to keep them from a financial collapse?
(04:35):
I mean that is that the point of this?
Speaker 2 (04:38):
Yeah? I think that in the short run, in the
very short run, if everybody just agreed, you know what,
we're going to take all the tariffs off the table completely,
then countries that were relying on that, obviously are going
to see a reduction in the income that they're getting
because the United States never objected. We were We were
cool with it for for decades, and so that would
effectively be like a price reduction in the amount of
(04:59):
revenue that they're bringing in, and therefore that's going to
be a hit to their economies. They can't afford to
simply let it all go away. You know, no country
is going to be able to simply reduce the revenue
they've got coming in and still get all of their
bills paid. So that's why they're trying to fight back
and just make sure that they retained some level of
(05:20):
that income they had coming in because they just can't
afford it. Well, I guess you know.
Speaker 1 (05:24):
Their component of this is it would allow their people
to at least afford American products. As presently, with some
of the terriffs as high as they are, they're just
not buying them. I mean, there's a reason we have
a trade imbalance because they cannot afford to purchase American products.
Speaker 2 (05:40):
Yes, yeah, that has a lot to do with it.
And then we doubled down on that by making it
political too, so now it's a statement to not buy
American products. I saw a picture online of a Canadian
supermarket where Canadian strawberries were listed at six dollars a
little box of them, and those were pretty much sold out.
The American ones right next door to them were four
(06:00):
bucks a box and plenty to go around. So there's
there's more than just the economics happening at this point.
Speaker 1 (06:07):
Yeah, and I you know, they can make their own
choices along those lines. You choose not to buy something,
you choose not to buy something. That's why nobody buys
bud light beer anymore. And whether or not that'll ever
come back is I suppose it depends upon whether we
iron out our differences and get this away from politics
and just start talking about, you know, plain simple economic realities.
Speaker 2 (06:27):
Yeah, that's true. This isn't unprecedented, though. We've had tariffs before.
Remember when the Holly Smooth Act was nothing more than
a funny line from Ferris Bueller Dale. Oh yeah, talking
about all of a sudden it shows up all the time,
because this is the that was the last time we
saw tariffs raised in to this extent. Matter of fact,
(06:48):
we're a little we're a little past that now. This
is historic and scope didn't work during the Great Depression.
So the goal then, though, was a little bit different.
The goal was to hopefully prop up the US market
from the US economy from a very very very extremely
weak position. It was dead on the table. This is
a little bit different where this is a negotiating tactic.
(07:09):
I don't think President Trump would would mind at all
if all these tariffs went away pretty quickly, if he
got what he wanted in terms of, you know, of
the concessions from our customers. Basically that's the goal. I
think this is a negotiation tactic. The man is a
he wrote The Art of the Deal was his big
book back in the eighties. That's what he's all about.
So this is simply a way to say, hey, this
(07:30):
is what what America is willing to do and what
it is no longer willing to do. Some of it
is going to be a little bit of a sleight
of hand, smoking mirrors, because I don't think anybody believes
we're truly going to maintain fifty percent tariffs on some
of these countries forever and ever, because they'll simply never
buy from US again. That makes it a negotiating tactic.
Speaker 1 (07:48):
Well, and I know we learned from COVID that we
and I know it's a broad statement, maybe too large
a brush. We don't make anything anymore here, but you know,
it is a fact that China does manufacture the vast
majority of the complete in parts of going to pharmaceuticals,
if not manufacture them, generally speaking, that's a dangerous position
to be in considering, you know, we could end up
in some sort of shooting war with China and we
(08:10):
can't get pharmaceuticals. So this may bring back some of
those some of those manufacturing facilities here in the United States,
which would provide some measure of security. I think that'd
be a positive benefit from.
Speaker 2 (08:22):
It, absolutely, and if that actually happens. Now. The one
scary thing that I can't quite get my head around
is we had the same situation with semiconductors. We were
buying so much of them, virtually all of them from Asia,
a lot of them from Taiwan, with whom we have
a good relationship. But it does seem like any day
now that could become China. So the answer to that
was to build a couple plants a little southeast of Columbus.
(08:45):
Intel was building plants to produce these things on shore.
I don't understand why that has come in the crosshairs,
but for some reason there is there are concerns that
that's not going to be happen anymore. So some of
these puzzle pieces don't quite fit.
Speaker 1 (09:00):
Okay, and real quick here before we take a break
and come back, Brian James. When the Smooth Holly terror
fact went in, and obviously it was a disaster for US.
It exacerbated the Great Depression, and it has always gone
down in history. It is a really terrible policy position
by Hoover. But what were the what was the teriff
situation like relative to American exports?
Speaker 2 (09:19):
Was it the same?
Speaker 1 (09:20):
Were there did other countries tariff American imports or or
or was the landscape different? I mean, in other words,
is it a comparable comparison?
Speaker 2 (09:31):
It is so. Yeah, So a lot of countries did
respond with their own tariffs, and that just reduced the
overall trade activity with the United States. Became very protective
and isolationist, and other countries responded in kind, and that
led to a sixty five percent decrease in international trade
between nineteen twenty nine and nineteen thirty four. So that's
why ben Stein says they did not work, and the
United States sank further into the Great Depression.
Speaker 1 (09:53):
Yeah, boy, the Wall Street journals really got its hire
up against the Trump administration for this. Normally they're you know,
kind of sied with conservative leaning at least to a certain degree.
I know, they're rather politically neutral, but leaning towards you know,
pro business, pro capitalism. Man, you can't find a positive
word to be said in the Wall Street Journal of
(10:14):
late not a lot.
Speaker 2 (10:15):
Yeah, Automotive CEOs Jim Farley, Ford, Mary Barrow General Motors
are expressing really strong concerns. The technology industry has never
been a huge fan of Trump, other than magically showing
up on the dais this inauguration overnight, but they've been
absolutely crushed. Steel is one of the places where that
actually possibly could benefit from all of this. So some
(10:36):
of those CEOs have been a little more supportive than
the rest, but in general, generally speaking, things that slam
on the brakes in the economy are generally not good
for any publicly traded company, and CEOs are starting to
pipe up about it.
Speaker 1 (10:49):
All right, We'll bring Brian James back to talk more
about these and other topics at take fifteen Right now.
If you have care city detoxication one place I know autation.
Brian Thomas The Money Monday's Brian James. Yes, but I
tried to put a positive spin on this disaster disaster
several days, and looks like it's going to drop again today,
I guess futures. When I got up this morning, we're
about three and a half four percent down, but they
(11:11):
backed off a little bit to about two percent. But
we're dealing with do we call this a bear market?
I mean, at what point is there a declaration like, hey,
we're in a bear market. I mean, there's a thing
called a correction and we've been hearing about that coming
for a long time. Is this perhaps related to a
market correction that was expected? Is this the beginning of
(11:31):
the recession that you really joked about last week, Brian?
That's been coming now what for three and a half
four years? Oh my god. Recessions right around the corner.
Recessions right around the corner. So put this in perspective
and maybe try to spend this positively, because as you know,
and I know, and you and I both lived through
a lot of these market downward trajectories, they always end
up popping back up and ended up ended up making
(11:52):
more money over the long haul.
Speaker 2 (11:54):
So what's the story. Yeah, they absolutely so, yeah, we're
we in a bear market. Yeah, it's look that way.
Depends on your definition of bear market. But let's just
say we're not in a good one. So still, as
you hinted that, though stocks are cyclical, we've had twelve
bull markets and twelve bear markets since nineteen forty nine,
and that might think that might make you go, well,
we got a one out of two chance, right, it's
(12:15):
either good or it's bad. The difference is that bull
markets are much longer and they rise much further than
bear markets, so bear markets relatively short. The average length
of a bear market is one point one year, at
one point one years, and it averages about a thirty
five percent decline, so that that's basically on average, we
take that hit and we lose about a third and
(12:36):
then we move on. A bull market, on the other hand,
last five years and the average return over that time
period TU relatively is two hundred and seventy percent, so
we grow a lot further. We go. Think think of
the long term chart of a market. They go up,
not down, and a lot of people get panicked when
we are at a when we're out of market peak,
(12:56):
which we were in mid February, the market was an
all time highest. Recent is mid February. News came out,
headlines came out, the market didn't like, and it's taken
back some of that value. But people get worried when
they hear we're at an all time high. Well, the
next step is down, right, it has to be down.
We're at an all time high. The market is usually
at an all time high. That's what it does. It
goes up, not down. Therefore, we're almost always at a
(13:18):
long time high. So the thing to share about this
And I actually just got an email a little bit
from a little bit ago from a client saying, am
I looking at this right? Am I only down seven percent?
When I know the market's down fifteen or twenty percent
based on whatever index you're looking at? And answers, yeah,
all work is good at what we do. But this
is the whole point of diversification. For this gentleman, he's
got a diversified portfolio. He's also got international stocks, he's
(13:40):
got fixed income in there. These are two things that
nobody has cared about for a couple of decades, but
those are propping up the market. If you have a
diversified portfolio, then that's kind of holding you up. You
might actually be making money in some of those positions,
believe it or not. And again, that is the point
of a diversified portfolio. That's why we don't go all
in on the S and P five hundred just because
it seems like you don't need to own anything else.
Speaker 1 (14:01):
Yeah, and you've made that point many times, and it's
just it is sound, sound advice, and it's one of
the reasons why you have a financial planner. Now in
terms of the FED and interest rates, what impact might
this downward trending market have on that?
Speaker 2 (14:15):
Yeah, So these tariffs are going to act like a
pretty good tax increase on imported goods. So that's going
to slow the economy, there's no doubt about it. The
debate is what will degree be. So what we're thinking
right now, and this kind of echoes a lot of
what you hear from other economists. If all these announced
tariff stick GDP growth is going to be cut by
a couple percentage points over the next year or two,
So that will take us from what we did have
(14:38):
a modest growth outlook and could push it toward recession.
Not going to be overnight recessions never are. We're not
going to wake up one day and say that, hey,
we just started a recession this morning, it's going to
be yeah, the recession started a few months ago. If
this happens, and the same way on the way out
as we exit a recession. And we've been through this before.
Don't forget we had a recession. We had a COVID
related recession that was over and done with pretty quickly.
(15:00):
But it won't be announced that. Everybody back in the pool,
you know, this morning, everything's wonderful, It'll be okay. A
couple months ago things turned positive and we've confirmed that
the numbers are and we're now out of a recessionary environment.
This one is self inflicted. We chose to put in
the catalysts that are causing it. That is, I sort
of compare that to COVID a little bit, because COVID
(15:21):
had nothing to do with the overall economy and how
it was progressing on its own. It was something that
came out of left field, of course, and it was
how we reacted to it. Underneath it all the economy
before that was acting okay, was in pretty good shape.
That's the same situation we have right now. We chose
to put these tariffs in place. Countries chose to react
the way they have, and the market is reacting accordingly.
(15:44):
Versus a two thousand and eight where the underlying structures
were at risk.
Speaker 1 (15:49):
Okay, well, and like you said, the market would have
continued and percolated along fine until we decided to shut
everything down and lock everything down and stop the economy
from moving forward.
Speaker 2 (16:00):
Correct. We pushed a button. This is not just the
weather turning bad. We pushed a button to make it happen.
All right, Well, don't panic, is what you're saying. The
financial planner in here, which is more of a counselor,
it's talking people off the ledge and just let it
ride out. We too will come out the other side
at some juncture. Just got to have to wait and
see approach to it. So it is, we'll learn your history.
(16:22):
We've been through these things before. We'll go through them again.
Go back in time and see what the market has done.
There have been five years that are attention getters where
we're down more than twenty percent. That's including your great depression,
the seventies, the tech bubble bursting nine to eleven, two
thousand and eight, and so forth. Each and every one
of those five years Brian Thomas was followed by a
year that had a huge upswing. The pendulum swings back and.
Speaker 1 (16:43):
Forth, it does, Brian James. Appreciate your sound advice and
little dose of optimism there toward the end, with obviously
a concern for expressed by a lot of people where
the markets are going. Brian, we'll talk again next month.
I have you have a wonderful week and good luck
talking people off the ledge this.
Speaker 2 (16:57):
Week, right, I appreciate it. You have a good week
day drive.
Speaker 1 (17:01):
Thanks man, you too, take twenty five fifty five Caro
sleeve talk station. Feel free to call uh Sean can
open up the phone lines. We got a little time
before we get to Todd Sledge from since Nava maybe
got a
Brian Thomas News
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