April 4, 2025 • 33 mins
Chris Boyd, Jeff Perry, and Russ Ball
discuss the breaking news of the new tariffs known as “Liberation Day” imposed by
President Trump. With the increased market volatility created by the Trump tariff
announcement, Chris, Jeff, and Russ discuss whether it is time to reduce exposure in the
stock market or is it time to add funds while the market is in correction territory. Chris
highlights that investors might wish to review their asset allocation. Jeff reviews that the
bond market has performed well in recent months and how this is a reminder that
investors can benefit from diversification among asset classes.
For more information or to reach TEAM AMR, click the following link:
https://www.wealthenhancement.com/s/advisor-teams/amr
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to Something More with Chris Boyd.
Chris Boyd is a Certified Financial Planner Practitioner
and Senior Vice President and Financial Advisor at
Wealth Enhancement Group, one of the nation's largest
registered investment advisors.
We call it Something More because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay Christopher Boyd.
Welcome to the program, Something More with Chris
Boyd.
I'm Chris Boyd here with Jeff Perry and
Russ Ball, part of our team here at
the AMR team of Wealth Enhancement Group.
(00:44):
And we're glad to have you listening and
hope you'll join us each week as we
discuss all kinds of things relevant to your
personal finance, your financial planning and portfolio management.
Today, got to talk about tariffs.
Yesterday, the president had a Rose Garden press
(01:05):
conference release of his long awaited tariff plan.
Liberation Day.
Liberation Day, as it was dubbed.
And the idea of trying to look at
where we're being tariffed on our imports and
have an effort to get a more fair
(01:26):
reflection, I think is the way they would
certainly classify that.
So we're going to talk about that and
we're all going to have things to say
about it.
Tariffs have the virtue of trying to level
the playing field for the domestic country's companies.
(01:46):
Yeah.
But at the same time, it is something
that is levied against the consumer or the
buyer of goods, whether it's the manufacturer buying,
importing supplies for the product they look to
make or finished goods that come into the
United States, the consumer would be paying that
(02:07):
tax, the tariff.
Indirectly.
Directly, right?
I mean, it's charged to the company, the
importer, but someone's got to pay that and
it's going to end up going to the
consumer.
Indirectly, I suppose.
But it's ultimately...
Well, the manufacturer could reduce the price to
(02:28):
be more competitive.
The retailer could reduce the price to be
more competitive.
But yeah, it's an increased cost of the
product.
How much gets passed along to the consumer?
Most.
Most, usually.
But that's why I use the word indirect.
So ultimately, an increase in the tax that
(02:51):
is essentially going to, in that effort to
try to make a domestic product more competitive.
Historically, I think that's been the view that
this is not an ideal way to do
things because it doesn't always make the domestic
product better or more competitive.
That being said, there are inequities, government subsidies
(03:13):
in other countries.
There's all kinds of considerations that go into
this.
We certainly have a deficit each year on
our budget.
I get the clear impression that the president
thinks this is part of the answer.
Managing that annual deficit by having more come
(03:33):
into the government by way of these tariffs.
Additionally, I think there's a sense of fairness
that this administration is pointing to saying, hey,
look at all these.
There's a great chart that they shared yesterday
that really depicts the discrepancy and the inequity
(03:56):
of tariff treatments on goods going into other
countries from what we're charging from those countries.
I think some of that has been historically,
in part, for some of these smaller economies
that we're willing to give them more flexibility
in their development of their economy.
(04:19):
That's what's under review.
That's going to change.
It sounds like there's been some multiple aspects
of this.
I heard former Secretary Gutierrez on one of
the financial shows yesterday broke it down in
some good ways.
He talked about the 10% tariff base
(04:41):
as something that's probably just always expected to
stay.
He put China in its own category.
Let's talk about that separately.
I think that is probably- I think
that's right.
I forget all of the things he said,
but largely the rest of it sounded like,
well, and then there's things that are negotiable
that if countries are working with the administration,
(05:05):
there may be more flexibility on how much
of this tariff will apply.
I don't know.
I think there's a lot of questions about
industry carve-outs and all this.
Unfortunately, that is harder policy becomes a little
less predictable and a little bit more of
(05:26):
an unknown for planning.
But that's what this ultimately comes down to
for, I think, the economic and market considerations.
Just as an aside, while we're recording this
show, it is April 3rd, the day after
the president's comments and markets are down today.
(05:48):
Everyone's tariff concerns are on everyone's imagination of
what does this mean?
How's it going to play out?
What's the good?
What's the bad?
It's the uncertainty word again, popping up.
I think the challenge of this becomes for
corporations to know, they don't just suddenly start
building plants and it's productive next week.
(06:10):
It's, do I want to invest?
How many years will this take?
How much benefit?
How long will it take to recover that
cost?
This is something that takes time to measure,
evaluate, and derive consequential change.
Jeff, I can tell you have some things
(06:31):
to say.
Go for it.
There's so much to say.
I think the most enlightening part of yesterday's
speech were these charts.
They're all over the news right now about
how much a given country charges us and
how much we charge them now and before.
(06:51):
You look for patterns.
I always look for patterns, try to get
the rationale.
There aren't any.
Europe, European Union, obviously a developed area, a
developed continent.
Australia, a developed continent.
The amount of tariffs that they charge us
(07:14):
aren't the same.
They're not even close to the same.
Australia does 10%.
European, it's much higher.
Then you mentioned third world developing countries.
You and I spoke offline this morning about
Vietnam.
Vietnam charges, I think, 90 some odd percent
tariff.
(07:35):
We talked about, well, that's because they need
the revenue.
We understand they were developing.
Since COVID, a lot has happened to Vietnam
with on-shoring in Vietnam, a lot of
manufacturing.
Still, that tariff sticks, even though they have
their own economic development and economic progress.
(07:57):
Seeing these numbers of around the world and
what they charge us, I was aware of
the ones that make the news most of
the time, China, and certainly a lot in
the news lately about Canada and Mexico.
But seeing how the United States is treated
in trade across the world, I can understand
the president's motivations of wanting to reset that
(08:20):
and make it a more level playing field
for our companies, our US companies who manufacture
things.
Obviously, the drive to want to bring manufacturing
back, I think, is valid.
We saw that even under the Biden administration
with the CHIPS Act.
There's a recognition for our economic security and
our military security and our everything security that
(08:42):
some things need to be made, at least
in part, in the United States.
CHIPS, in that case, I think one of
the big news items this morning, which I
didn't realize, I feel like I'm less educated
than I maybe thought I was, but that
most of our pharmaceuticals are actually manufactured overseas.
I guess I hadn't seen that before.
(09:04):
There's merit in that, too.
I think the shock to the system, the
uncertainty is, one, how we have been treated
by other countries, and two, is doing it
all at once rather than trying to do
it piecemeal with one-on-one private talks
and try to renegotiate things is causing this
(09:27):
uncertainty in the market.
I think the goal is a laudable, whether
or not it's a prudent decision to do
it all at once with a heavy hand
and throw this uncertainty into the business climate,
and the financial markets will be told over
the weeks and months and perhaps years to
come.
I think some of the concern that markets
(09:51):
have relates to this big change, and then,
of course, the question of how much this
is permanent policy, how much is positioning for
negotiations, which I think prior to this week,
markets largely had discounted the tariff reality on
(10:16):
the basis that they thought there'd be some
haggling, this is part of a broader negotiation
or something.
That still may be the case in terms
of positioning.
Well, we have until April 9th for a
lot of these tariffs.
Yeah.
(10:36):
If they wanted to do it right away,
why not do it right away?
I feel like having a buffer before those
tariffs kick in could be an invitation to...
Even this morning, the Commerce Secretary was on
CNBC on Bloomberg saying, our phone lines are
open.
(10:58):
Call us now.
Number nine caller, you're on.
Call us before April 9th.
Right, right.
Before April 10th to April 9th.
And then I saw a post from Eric
Trump saying, I wouldn't want to be one
of the last people that call...
One of the last countries that call Donald
(11:20):
Trump, I guess, or implying that they're expecting
deals to be made and who knows what
will actually happen.
But I did find it interesting that they
were pushing out the start date for these.
It could have just been, all right, we're
announcing them and they're going into effect today
or tomorrow, but that remains to be seen.
(11:41):
So I think the concern that investors have
is the question of, okay, will this create
a higher inflationary environment?
Will this drive prices higher still?
People have been concerned about inflation as an
issue.
I've seen some semantics discussion around, well, is
(12:05):
it really inflation if it's one time?
That's an increased cost, but it's not necessarily
a higher rate of inflation.
President used the word in his press conference
yesterday that it was kind of a discredited
word in inflation, but transitory.
Yeah.
And I think there's an argument to be
(12:27):
made for that, that it's not necessarily expected
to be ever increasing at a higher rate,
but that is the assumption of, will there
be reciprocal retaliatory response or will people respond
(12:47):
in such a way as to reduce their
tariff on US?
That's an unknown at this point.
And I think that's one of the things
that drives anxiety in the market.
But if there is inflation, how does that
become addressed?
Similarly, we've already seen concerns about employment as
(13:15):
it relates to what's happening in Washington DC
with the Doge efforts to trim, we'll say
in nice terms, to trim government and try
to scale back some of the costs of
government.
That has also some ripple effect in terms
of grants for research that has ripple effect
(13:42):
on nonprofits, how they get funded, some of
these that work with government agencies and so
on, that there's likely to be some escalation
of unemployment from that.
But then if people have, consumer sentiment, I
think, has gotten a little bit skittish, does
that translate to spending?
(14:02):
If costs are higher, do I have less
money to spend?
Does that turn into an economic drag?
Do we worry about recession?
These are all things that you hear this
evolution of thinking.
And if there is a recession, what does
(14:22):
the Fed do?
Does it reduce interest rates to stimulate or
does it raise interest rates to try to
reduce the inflationary effects of tariff impact?
Seems like the consensus is more leans towards
stimulus, but that's one of these unknowns, right?
(14:43):
And how does that lead an investor to
position themselves in expectations of what will happen?
And we don't have a similar model here
to look back at history with all the
changes that are being made at the same
time in the reset of the federal bureaucracy.
(15:05):
The anxiety that people have is, what was
it, Smoot-Hawley?
Hawley-Smoot, what's the right name for that
tariff?
We can refer to Ferris Buehler again.
We could.
We could have that prepared.
We're only 16 minutes in before the first
mention of Ferris Buehler.
Yeah.
(15:26):
Well, in any case, anyone, Buehler, that lecture,
he was talking about tariffs and the idea
that it was at the outset of the
Great Depression.
It was not a standalone issue, I grant
you, which I think is where some of
(15:48):
the thought is, but it was one of
the things that led to an economic slowdown.
I don't think that's in question.
You don't think the imposition of the income
tax was a greater influence in the survival?
What year did that happen, Jeff?
(16:08):
Well, it didn't create the Great Depression, but
- It happened in the 1900, 1919 or
something like that, 1912, the income tax.
The tariffs were closer to the 1920s, and
that's the period closer to the...
Am I wrong?
You might be- I don't have my
(16:29):
historical calendar in front of me here.
Yeah, me neither.
But- That was my earlier point.
We don't have a modern reference to a
change in the way tariffs have been handled
all at once.
Either the imposition of the United States at
one point where the federal government was relying
on them, this is the date we're struggling
(16:50):
with, and then the change to an income
tax.
We don't have a modern period of time
or change of policy that's in this modern
economy for us to really review and say,
well, in 2008, during that financial crisis, this
is what happened, or during the pandemic of
(17:11):
2020, this is what happened.
Other people are going back to 100 years
ago to say, well, what caused what?
And that's not really the...
You can't make that analysis.
So much is different in our economy.
The lesson of that, Smoot-Hawley, was that
(17:32):
tariffs went up significantly, it slowed the economy,
and that was one of several things that
led into the Great Depression.
And I looked it up, it was 1930
for that act.
We'll look up when the income tax started
(17:53):
as well, so we have that if we
want to.
But anyways, I think probably the bigger question
for everybody is, I mean, I've heard people
concerned like, oh, this is going to lead
to product shortages and things of that sort
if this really were to escalate as a,
I hate to use the word trade war,
(18:13):
but if it escalates in its trade challenges.
We'll see, right?
I think the bigger issue is how should
a consumer, an investor think about their portfolio?
What are the things they should do?
I mean, I think just fundamentally, all of
this, what we're talking about, markets back to
(18:35):
this idea that there's going to be uncertainty.
And that's just a matter of fact right
now.
There hasn't been, we haven't increased tariffs as
much since the 1930s as we've just talked
about.
So there's just a lot of unknowns.
So with unknowns in the market come volatility.
So I think that's, I see that again
and again, but just an expectation of volatility
(18:57):
in the mid to near term, I think
is probably a fair bet.
Yeah.
I think that that's a great start.
Look, expect volatility.
We're in this period of uncertainty.
There's how the economic impact will play out,
how the market, we're just, as we're talking
about just amongst us, what's this mean for
(19:19):
revenue?
Well, who's going to absorb what?
How's the consumer going to react?
How's this going to affect spending and what's
going to happen with prices?
What countries will respond what way versus another?
There's all this that remains yet to be
determined, right?
So in the near term, there's increased volatility
(19:41):
and that's likely to be the case as
we have until this shakes out, until there's
a little more clarity around it.
Now, markets historically, we know that it's not
uncommon at all for markets to go down
10%, 20% from their highs.
(20:03):
This is normal market behavior.
We are looking at, we looked at the
S&P 500.
We're a little lower than 10% off
the highs, which were in mid-February.
We're somewhere around 11% or 12%
off that.
But your date, that's not where we are
because we went up before we went down.
Somewhere around 7% when we're recording this.
(20:26):
It'll change by the time you listen.
Who knows what it'll be.
But you follow my point.
This is normal to start with.
This is normal behavior, range of movement, not
in itself something to get overly anxious about.
That being said, as investors, we think about
the what-ifs.
(20:46):
How might this impact things?
Stocks move over time by expectations of earnings
over a prolonged period of time.
It's a current willingness to pay for future
earnings.
This naturally comes into how do we envision
(21:06):
the change in valuation if there is some?
We don't know the answer to that yet.
I think we have to be ready to
tolerate volatility until we have better clarity around
that and be willing to decide what action
comes out of that.
(21:27):
We've been talking about other considerations for a
while.
The start of the year, we talked about
extended valuations.
That was a good reason to scale back
on your equity allocation.
We've, in our strategies, made adjustments previously in
(21:47):
anticipation.
There are times we make changes responsibly to
what's going on.
So as an investor, I think that's reasonable
as long as it's measured.
We want to think about what's my tolerance
as an investor?
What's my willingness to endure volatility?
What's the expectation for performance I have?
(22:09):
And design the portfolio around that.
Now, sometimes we say, I still feel like
I'm a conservative investor, and I want to
be invested in keeping with that or a
moderate investor or whatever it might be.
I want to remain in keeping with that.
But gosh, I sense that maybe I'm not
positioned in the best place right now.
(22:30):
I want to have a little more of
this and a little less of that.
That's a reasonable adjustment, right?
Or maybe you'd say, I want to have
a little more cash for the unexpected.
Oh, this seems like this could create some
disruptions in availability of goods or something.
Oh, well, maybe it's a good idea to
(22:51):
have some reserve.
We talk about that always with clients about
having some liquidity reserve.
But these are the times when you say,
oh, this may be one of those reasons
why, right?
So one, is it too late to think
about any kind of an adjustment in your
portfolio?
(23:11):
I would argue no.
If you said, gee, I think I've been
taking too much risk.
I've had a great return, but maybe I'd
like to scale it back.
But is it too late because the market
started to decline?
When you think about the fact that you're
in an asset allocation, even if the market's
down 6%, 7% at a given point
in time, that's not from the year to
(23:33):
date, 10 or whatever from the high.
That's not outrageous when you think about, we
just went up like 45% in two
years or whatever it is.
So sure, maybe give up a little bit.
But if you need to scale back the
risk, it's not unreasonable to do that today.
(23:54):
It's starting to get to the point where
you might be better off to not think.
It might be better off to wait to
get to the other side because we don't
know how long this will take and all
that.
But I would still say incremental adjustments is
not unreasonable.
But what we don't want to do is
sell low and buy high.
(24:18):
We don't want to be in a position
where we've behaviorally done the wrong thing.
So if we're talking about something measured in
incremental, that can have merit.
But let's not overreact.
Let's not sell everything.
Let's not run for the hills.
Again, we're talking in generalities, your specifics, talk
(24:40):
to your advisor.
If you don't have an advisor, call us.
We'll be happy to talk to you, see
what your circumstances are, see how it fits
into your financial plan, how it all fits
together.
Very well said, Chris.
Asset allocation is a really, as we talk
about all the time, such a key component
to part of what we do.
And what gets in our brains and what
(25:00):
we think about is what's in front of
us, in this case, tariffs and the news.
And it can be very emotional.
We haven't had many people calling about how
well the bond market has been doing.
Yeah, good point.
Right.
So having some diversity in your asset allocation
for times like this can really add a
(25:21):
benefit.
And so if you're all in on stocks,
this is a rough period of time for
you.
If you're all in on bonds, you've been
having a good time for a few months
now.
But the answer is probably somewhere in the
middle for most clients where adding a diversified
portfolio can not only give you some peace
(25:43):
of mind, but if you do need to
withdraw some money, if you do have a
liquidity need beyond what you have in reserve,
you have the option of taking from maybe
parts of your portfolio that have not suffered
any downfall, if you will, from tariffs in
this case.
And I think your point is a good
(26:03):
one.
And I think oftentimes we dwell on things
for good or for bad based on what
we consume.
So maybe turn off the TV, turn off
the news, change the channel, get some multiple
perspectives.
(26:24):
So some people are talking about all the
great opportunities this might generate.
And that might be something you get more
enthusiastic around.
Other people might be focusing on some of
the risks.
When markets go down, we hear more of
the risks that people are anxious about.
So that's maybe why I'm speaking more to
(26:45):
that, I think.
But there's two sides to every coin, I
guess.
And including in this tariff debate, there are
U.S. companies right now that are thrilled
about what President Trump is doing.
And there's going to be additional investments and
employment because of what the tariff policy means
(27:05):
to those individual companies.
So I think the market movement is more
about, as Russ said earlier, about volatility and
uncertainty than it is about earnings.
We're too early in this discussion to really
understand what these tariffs are going to do
to the S&P 500.
(27:25):
You have to really look at it.
If Brian was on, he'd be talking about
this, our senior portfolio manager.
You have to look at this company by
company, industry by industry.
And some of them will definitely benefit from
having a more isolationist point of view of
bringing manufacturing back or making trade more fairer.
(27:47):
Yeah.
And there are companies that are less impacted
by the type of issues that tariffs create.
They're not necessarily importing product or service in
the creation of their services or their own
(28:08):
products.
I'm thinking in terms of companies that are
more like this area of technology in some
spaces.
Some have lots of production that's done overseas,
but some are doing different kind of content
that doesn't necessarily require that tariff consequence.
(28:32):
And so will that create opportunity?
Will that create maybe some buying?
I think it will.
I think it will.
And maybe some markets will open up to
U.S. companies that were previously limited by
super high tariffs in this.
Hopefully, what we have is a negotiation and
(28:54):
there's calmer minds than the news people.
There's calmer individuals in the state department and
so forth, commerce department who are going to
make better deals for America.
So what's the opportunity for the individual?
I was thinking, what should we be thinking
about as investors?
One is make sure your allocation is positioned
(29:16):
well.
Number two, make sure you have the liquidity
reserves that is a good...
And again, we can offer guidance.
Your advisor can offer guidance as to how
to think about either one of those subjects.
And then maybe opportunistically, there may be investment
opportunities, but there may be tax planning opportunities.
Maybe there's some capital loss harvesting to take
(29:41):
advantage of, be able to sell something that's
been at a game that you couldn't really
right size without a big tax burden.
Maybe now you can with a little bit
of offsetting.
Maybe there's some Roth conversion opportunities that you
might want to think about.
There can be a variety of things.
You look like you had something in mind
(30:01):
you were going to add in Russ as
opportunities.
No, I mean, I guess as I'm looking
at my Roth IRA and thinking, wow, this
is great.
I haven't seen...
Time to make an annual contribution, right?
Right, exactly.
So it's all, I think it depends on
where you're at in life, but big picture,
(30:23):
it's so easy to get caught in that.
We've talked about it before in this day
-to-day mindset, like, oh my gosh, what's
going on today?
Do we sell out?
Do we go to cash?
But when you take a big picture view,
it could be a good time to buy
at lower prices than it has been recently.
So not saying that that's a general recommendation
(30:44):
for everyone, but when I'm looking at my
Roth IRA, I'm like, wow, this is a
great chance to put some cash in.
So we encourage you to think that way.
And if you have concerns as you think
about your portfolio, might be time for a
portfolio review, get a real fresh set of
(31:04):
eyes on what's happening.
How should I be positioned given what's happening
in the world around us today?
Where do I have risks?
Where do I have opportunities?
What are some things I might want to
adjust?
Am I overstated in some space or not?
These are things that we help people with.
We often like to do it though, in
(31:26):
the context of a financial plan so that
we see, how does this forecast over time?
That's something we've been talking about with clients
a lot lately is, yeah, what if the
market goes down from here?
How does that affect stress test your plan?
What happens then?
And then oftentimes people are like, oh, that's
(31:47):
great to know.
You know, that does put it in perspective,
right?
And how that can, what should I expect?
And is it really something that will be
disruptive to my future?
That kind of thing.
So if you need help with any of
those things, don't hesitate to reach out.
We can be reached locally at 508-771
(32:08):
-8900, toll-free 866-771-8901.
And you can always send us an email
with your questions about show content or to
reach out to connect with you at amr
-info at wealthenhancement.com.
Hope you'll share this content with others.
(32:29):
Give us a rating and a like, really
helps others find the show.
With that being said, thanks everybody.
Until next time, keep striving for something more.
(33:03):
Send us your questions to amr-info at
wealthenhancement.com.
(33:33):
or conduct their own due diligence before making
any financial decisions.
Welcome to Something More with Chris Boyd.
Chris Boyd is a Certified Financial Planner Practitioner
and Senior Vice President and Financial Advisor at
Wealth Enhancement Group, one of the nation's largest
registered investment advisors.
We call it Something More because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay Christopher Boyd.
Welcome to the program, Something More with Chris
Boyd.
I'm Chris Boyd here with Jeff Perry and
Russ Ball, part of our team here at
the AMR team of Wealth Enhancement Group.
(00:44):
And we're glad to have you listening and
hope you'll join us each week as we
discuss all kinds of things relevant to your
personal finance, your financial planning and portfolio management.
Today, got to talk about tariffs.
Yesterday, the president had a Rose Garden press
(01:05):
conference release of his long awaited tariff plan.
Liberation Day.
Liberation Day, as it was dubbed.
And the idea of trying to look at
where we're being tariffed on our imports and
have an effort to get a more fair
(01:26):
reflection, I think is the way they would
certainly classify that.
So we're going to talk about that and
we're all going to have things to say
about it.
Tariffs have the virtue of trying to level
the playing field for the domestic country's companies.
(01:46):
Yeah.
But at the same time, it is something
that is levied against the consumer or the
buyer of goods, whether it's the manufacturer buying,
importing supplies for the product they look to
make or finished goods that come into the
United States, the consumer would be paying that
(02:07):
tax, the tariff.
Indirectly.
Directly, right?
I mean, it's charged to the company, the
importer, but someone's got to pay that and
it's going to end up going to the
consumer.
Indirectly, I suppose.
But it's ultimately...
Well, the manufacturer could reduce the price to
(02:28):
be more competitive.
The retailer could reduce the price to be
more competitive.
But yeah, it's an increased cost of the
product.
How much gets passed along to the consumer?
Most.
Most, usually.
But that's why I use the word indirect.
So ultimately, an increase in the tax that
(02:51):
is essentially going to, in that effort to
try to make a domestic product more competitive.
Historically, I think that's been the view that
this is not an ideal way to do
things because it doesn't always make the domestic
product better or more competitive.
That being said, there are inequities, government subsidies
(03:13):
in other countries.
There's all kinds of considerations that go into
this.
We certainly have a deficit each year on
our budget.
I get the clear impression that the president
thinks this is part of the answer.
Managing that annual deficit by having more come
(03:33):
into the government by way of these tariffs.
Additionally, I think there's a sense of fairness
that this administration is pointing to saying, hey,
look at all these.
There's a great chart that they shared yesterday
that really depicts the discrepancy and the inequity
(03:56):
of tariff treatments on goods going into other
countries from what we're charging from those countries.
I think some of that has been historically,
in part, for some of these smaller economies
that we're willing to give them more flexibility
in their development of their economy.
(04:19):
That's what's under review.
That's going to change.
It sounds like there's been some multiple aspects
of this.
I heard former Secretary Gutierrez on one of
the financial shows yesterday broke it down in
some good ways.
He talked about the 10% tariff base
(04:41):
as something that's probably just always expected to
stay.
He put China in its own category.
Let's talk about that separately.
I think that is probably- I think
that's right.
I forget all of the things he said,
but largely the rest of it sounded like,
well, and then there's things that are negotiable
that if countries are working with the administration,
(05:05):
there may be more flexibility on how much
of this tariff will apply.
I don't know.
I think there's a lot of questions about
industry carve-outs and all this.
Unfortunately, that is harder policy becomes a little
less predictable and a little bit more of
(05:26):
an unknown for planning.
But that's what this ultimately comes down to
for, I think, the economic and market considerations.
Just as an aside, while we're recording this
show, it is April 3rd, the day after
the president's comments and markets are down today.
(05:48):
Everyone's tariff concerns are on everyone's imagination of
what does this mean?
How's it going to play out?
What's the good?
What's the bad?
It's the uncertainty word again, popping up.
I think the challenge of this becomes for
corporations to know, they don't just suddenly start
building plants and it's productive next week.
(06:10):
It's, do I want to invest?
How many years will this take?
How much benefit?
How long will it take to recover that
cost?
This is something that takes time to measure,
evaluate, and derive consequential change.
Jeff, I can tell you have some things
(06:31):
to say.
Go for it.
There's so much to say.
I think the most enlightening part of yesterday's
speech were these charts.
They're all over the news right now about
how much a given country charges us and
how much we charge them now and before.
(06:51):
You look for patterns.
I always look for patterns, try to get
the rationale.
There aren't any.
Europe, European Union, obviously a developed area, a
developed continent.
Australia, a developed continent.
The amount of tariffs that they charge us
(07:14):
aren't the same.
They're not even close to the same.
Australia does 10%.
European, it's much higher.
Then you mentioned third world developing countries.
You and I spoke offline this morning about
Vietnam.
Vietnam charges, I think, 90 some odd percent
tariff.
(07:35):
We talked about, well, that's because they need
the revenue.
We understand they were developing.
Since COVID, a lot has happened to Vietnam
with on-shoring in Vietnam, a lot of
manufacturing.
Still, that tariff sticks, even though they have
their own economic development and economic progress.
(07:57):
Seeing these numbers of around the world and
what they charge us, I was aware of
the ones that make the news most of
the time, China, and certainly a lot in
the news lately about Canada and Mexico.
But seeing how the United States is treated
in trade across the world, I can understand
the president's motivations of wanting to reset that
(08:20):
and make it a more level playing field
for our companies, our US companies who manufacture
things.
Obviously, the drive to want to bring manufacturing
back, I think, is valid.
We saw that even under the Biden administration
with the CHIPS Act.
There's a recognition for our economic security and
our military security and our everything security that
(08:42):
some things need to be made, at least
in part, in the United States.
CHIPS, in that case, I think one of
the big news items this morning, which I
didn't realize, I feel like I'm less educated
than I maybe thought I was, but that
most of our pharmaceuticals are actually manufactured overseas.
I guess I hadn't seen that before.
(09:04):
There's merit in that, too.
I think the shock to the system, the
uncertainty is, one, how we have been treated
by other countries, and two, is doing it
all at once rather than trying to do
it piecemeal with one-on-one private talks
and try to renegotiate things is causing this
(09:27):
uncertainty in the market.
I think the goal is a laudable, whether
or not it's a prudent decision to do
it all at once with a heavy hand
and throw this uncertainty into the business climate,
and the financial markets will be told over
the weeks and months and perhaps years to
come.
I think some of the concern that markets
(09:51):
have relates to this big change, and then,
of course, the question of how much this
is permanent policy, how much is positioning for
negotiations, which I think prior to this week,
markets largely had discounted the tariff reality on
(10:16):
the basis that they thought there'd be some
haggling, this is part of a broader negotiation
or something.
That still may be the case in terms
of positioning.
Well, we have until April 9th for a
lot of these tariffs.
Yeah.
(10:36):
If they wanted to do it right away,
why not do it right away?
I feel like having a buffer before those
tariffs kick in could be an invitation to...
Even this morning, the Commerce Secretary was on
CNBC on Bloomberg saying, our phone lines are
open.
(10:58):
Call us now.
Number nine caller, you're on.
Call us before April 9th.
Right, right.
Before April 10th to April 9th.
And then I saw a post from Eric
Trump saying, I wouldn't want to be one
of the last people that call...
One of the last countries that call Donald
(11:20):
Trump, I guess, or implying that they're expecting
deals to be made and who knows what
will actually happen.
But I did find it interesting that they
were pushing out the start date for these.
It could have just been, all right, we're
announcing them and they're going into effect today
or tomorrow, but that remains to be seen.
(11:41):
So I think the concern that investors have
is the question of, okay, will this create
a higher inflationary environment?
Will this drive prices higher still?
People have been concerned about inflation as an
issue.
I've seen some semantics discussion around, well, is
(12:05):
it really inflation if it's one time?
That's an increased cost, but it's not necessarily
a higher rate of inflation.
President used the word in his press conference
yesterday that it was kind of a discredited
word in inflation, but transitory.
Yeah.
And I think there's an argument to be
(12:27):
made for that, that it's not necessarily expected
to be ever increasing at a higher rate,
but that is the assumption of, will there
be reciprocal retaliatory response or will people respond
(12:47):
in such a way as to reduce their
tariff on US?
That's an unknown at this point.
And I think that's one of the things
that drives anxiety in the market.
But if there is inflation, how does that
become addressed?
Similarly, we've already seen concerns about employment as
(13:15):
it relates to what's happening in Washington DC
with the Doge efforts to trim, we'll say
in nice terms, to trim government and try
to scale back some of the costs of
government.
That has also some ripple effect in terms
of grants for research that has ripple effect
(13:42):
on nonprofits, how they get funded, some of
these that work with government agencies and so
on, that there's likely to be some escalation
of unemployment from that.
But then if people have, consumer sentiment, I
think, has gotten a little bit skittish, does
that translate to spending?
(14:02):
If costs are higher, do I have less
money to spend?
Does that turn into an economic drag?
Do we worry about recession?
These are all things that you hear this
evolution of thinking.
And if there is a recession, what does
(14:22):
the Fed do?
Does it reduce interest rates to stimulate or
does it raise interest rates to try to
reduce the inflationary effects of tariff impact?
Seems like the consensus is more leans towards
stimulus, but that's one of these unknowns, right?
(14:43):
And how does that lead an investor to
position themselves in expectations of what will happen?
And we don't have a similar model here
to look back at history with all the
changes that are being made at the same
time in the reset of the federal bureaucracy.
(15:05):
The anxiety that people have is, what was
it, Smoot-Hawley?
Hawley-Smoot, what's the right name for that
tariff?
We can refer to Ferris Buehler again.
We could.
We could have that prepared.
We're only 16 minutes in before the first
mention of Ferris Buehler.
Yeah.
(15:26):
Well, in any case, anyone, Buehler, that lecture,
he was talking about tariffs and the idea
that it was at the outset of the
Great Depression.
It was not a standalone issue, I grant
you, which I think is where some of
(15:48):
the thought is, but it was one of
the things that led to an economic slowdown.
I don't think that's in question.
You don't think the imposition of the income
tax was a greater influence in the survival?
What year did that happen, Jeff?
(16:08):
Well, it didn't create the Great Depression, but
- It happened in the 1900, 1919 or
something like that, 1912, the income tax.
The tariffs were closer to the 1920s, and
that's the period closer to the...
Am I wrong?
You might be- I don't have my
(16:29):
historical calendar in front of me here.
Yeah, me neither.
But- That was my earlier point.
We don't have a modern reference to a
change in the way tariffs have been handled
all at once.
Either the imposition of the United States at
one point where the federal government was relying
on them, this is the date we're struggling
(16:50):
with, and then the change to an income
tax.
We don't have a modern period of time
or change of policy that's in this modern
economy for us to really review and say,
well, in 2008, during that financial crisis, this
is what happened, or during the pandemic of
(17:11):
2020, this is what happened.
Other people are going back to 100 years
ago to say, well, what caused what?
And that's not really the...
You can't make that analysis.
So much is different in our economy.
The lesson of that, Smoot-Hawley, was that
(17:32):
tariffs went up significantly, it slowed the economy,
and that was one of several things that
led into the Great Depression.
And I looked it up, it was 1930
for that act.
We'll look up when the income tax started
(17:53):
as well, so we have that if we
want to.
But anyways, I think probably the bigger question
for everybody is, I mean, I've heard people
concerned like, oh, this is going to lead
to product shortages and things of that sort
if this really were to escalate as a,
I hate to use the word trade war,
(18:13):
but if it escalates in its trade challenges.
We'll see, right?
I think the bigger issue is how should
a consumer, an investor think about their portfolio?
What are the things they should do?
I mean, I think just fundamentally, all of
this, what we're talking about, markets back to
(18:35):
this idea that there's going to be uncertainty.
And that's just a matter of fact right
now.
There hasn't been, we haven't increased tariffs as
much since the 1930s as we've just talked
about.
So there's just a lot of unknowns.
So with unknowns in the market come volatility.
So I think that's, I see that again
and again, but just an expectation of volatility
(18:57):
in the mid to near term, I think
is probably a fair bet.
Yeah.
I think that that's a great start.
Look, expect volatility.
We're in this period of uncertainty.
There's how the economic impact will play out,
how the market, we're just, as we're talking
about just amongst us, what's this mean for
(19:19):
revenue?
Well, who's going to absorb what?
How's the consumer going to react?
How's this going to affect spending and what's
going to happen with prices?
What countries will respond what way versus another?
There's all this that remains yet to be
determined, right?
So in the near term, there's increased volatility
(19:41):
and that's likely to be the case as
we have until this shakes out, until there's
a little more clarity around it.
Now, markets historically, we know that it's not
uncommon at all for markets to go down
10%, 20% from their highs.
(20:03):
This is normal market behavior.
We are looking at, we looked at the
S&P 500.
We're a little lower than 10% off
the highs, which were in mid-February.
We're somewhere around 11% or 12%
off that.
But your date, that's not where we are
because we went up before we went down.
Somewhere around 7% when we're recording this.
(20:26):
It'll change by the time you listen.
Who knows what it'll be.
But you follow my point.
This is normal to start with.
This is normal behavior, range of movement, not
in itself something to get overly anxious about.
That being said, as investors, we think about
the what-ifs.
(20:46):
How might this impact things?
Stocks move over time by expectations of earnings
over a prolonged period of time.
It's a current willingness to pay for future
earnings.
This naturally comes into how do we envision
(21:06):
the change in valuation if there is some?
We don't know the answer to that yet.
I think we have to be ready to
tolerate volatility until we have better clarity around
that and be willing to decide what action
comes out of that.
(21:27):
We've been talking about other considerations for a
while.
The start of the year, we talked about
extended valuations.
That was a good reason to scale back
on your equity allocation.
We've, in our strategies, made adjustments previously in
(21:47):
anticipation.
There are times we make changes responsibly to
what's going on.
So as an investor, I think that's reasonable
as long as it's measured.
We want to think about what's my tolerance
as an investor?
What's my willingness to endure volatility?
What's the expectation for performance I have?
(22:09):
And design the portfolio around that.
Now, sometimes we say, I still feel like
I'm a conservative investor, and I want to
be invested in keeping with that or a
moderate investor or whatever it might be.
I want to remain in keeping with that.
But gosh, I sense that maybe I'm not
positioned in the best place right now.
(22:30):
I want to have a little more of
this and a little less of that.
That's a reasonable adjustment, right?
Or maybe you'd say, I want to have
a little more cash for the unexpected.
Oh, this seems like this could create some
disruptions in availability of goods or something.
Oh, well, maybe it's a good idea to
(22:51):
have some reserve.
We talk about that always with clients about
having some liquidity reserve.
But these are the times when you say,
oh, this may be one of those reasons
why, right?
So one, is it too late to think
about any kind of an adjustment in your
portfolio?
(23:11):
I would argue no.
If you said, gee, I think I've been
taking too much risk.
I've had a great return, but maybe I'd
like to scale it back.
But is it too late because the market
started to decline?
When you think about the fact that you're
in an asset allocation, even if the market's
down 6%, 7% at a given point
in time, that's not from the year to
(23:33):
date, 10 or whatever from the high.
That's not outrageous when you think about, we
just went up like 45% in two
years or whatever it is.
So sure, maybe give up a little bit.
But if you need to scale back the
risk, it's not unreasonable to do that today.
(23:54):
It's starting to get to the point where
you might be better off to not think.
It might be better off to wait to
get to the other side because we don't
know how long this will take and all
that.
But I would still say incremental adjustments is
not unreasonable.
But what we don't want to do is
sell low and buy high.
(24:18):
We don't want to be in a position
where we've behaviorally done the wrong thing.
So if we're talking about something measured in
incremental, that can have merit.
But let's not overreact.
Let's not sell everything.
Let's not run for the hills.
Again, we're talking in generalities, your specifics, talk
(24:40):
to your advisor.
If you don't have an advisor, call us.
We'll be happy to talk to you, see
what your circumstances are, see how it fits
into your financial plan, how it all fits
together.
Very well said, Chris.
Asset allocation is a really, as we talk
about all the time, such a key component
to part of what we do.
And what gets in our brains and what
(25:00):
we think about is what's in front of
us, in this case, tariffs and the news.
And it can be very emotional.
We haven't had many people calling about how
well the bond market has been doing.
Yeah, good point.
Right.
So having some diversity in your asset allocation
for times like this can really add a
(25:21):
benefit.
And so if you're all in on stocks,
this is a rough period of time for
you.
If you're all in on bonds, you've been
having a good time for a few months
now.
But the answer is probably somewhere in the
middle for most clients where adding a diversified
portfolio can not only give you some peace
(25:43):
of mind, but if you do need to
withdraw some money, if you do have a
liquidity need beyond what you have in reserve,
you have the option of taking from maybe
parts of your portfolio that have not suffered
any downfall, if you will, from tariffs in
this case.
And I think your point is a good
(26:03):
one.
And I think oftentimes we dwell on things
for good or for bad based on what
we consume.
So maybe turn off the TV, turn off
the news, change the channel, get some multiple
perspectives.
(26:24):
So some people are talking about all the
great opportunities this might generate.
And that might be something you get more
enthusiastic around.
Other people might be focusing on some of
the risks.
When markets go down, we hear more of
the risks that people are anxious about.
So that's maybe why I'm speaking more to
(26:45):
that, I think.
But there's two sides to every coin, I
guess.
And including in this tariff debate, there are
U.S. companies right now that are thrilled
about what President Trump is doing.
And there's going to be additional investments and
employment because of what the tariff policy means
(27:05):
to those individual companies.
So I think the market movement is more
about, as Russ said earlier, about volatility and
uncertainty than it is about earnings.
We're too early in this discussion to really
understand what these tariffs are going to do
to the S&P 500.
(27:25):
You have to really look at it.
If Brian was on, he'd be talking about
this, our senior portfolio manager.
You have to look at this company by
company, industry by industry.
And some of them will definitely benefit from
having a more isolationist point of view of
bringing manufacturing back or making trade more fairer.
(27:47):
Yeah.
And there are companies that are less impacted
by the type of issues that tariffs create.
They're not necessarily importing product or service in
the creation of their services or their own
(28:08):
products.
I'm thinking in terms of companies that are
more like this area of technology in some
spaces.
Some have lots of production that's done overseas,
but some are doing different kind of content
that doesn't necessarily require that tariff consequence.
(28:32):
And so will that create opportunity?
Will that create maybe some buying?
I think it will.
I think it will.
And maybe some markets will open up to
U.S. companies that were previously limited by
super high tariffs in this.
Hopefully, what we have is a negotiation and
(28:54):
there's calmer minds than the news people.
There's calmer individuals in the state department and
so forth, commerce department who are going to
make better deals for America.
So what's the opportunity for the individual?
I was thinking, what should we be thinking
about as investors?
One is make sure your allocation is positioned
(29:16):
well.
Number two, make sure you have the liquidity
reserves that is a good...
And again, we can offer guidance.
Your advisor can offer guidance as to how
to think about either one of those subjects.
And then maybe opportunistically, there may be investment
opportunities, but there may be tax planning opportunities.
Maybe there's some capital loss harvesting to take
(29:41):
advantage of, be able to sell something that's
been at a game that you couldn't really
right size without a big tax burden.
Maybe now you can with a little bit
of offsetting.
Maybe there's some Roth conversion opportunities that you
might want to think about.
There can be a variety of things.
You look like you had something in mind
(30:01):
you were going to add in Russ as
opportunities.
No, I mean, I guess as I'm looking
at my Roth IRA and thinking, wow, this
is great.
I haven't seen...
Time to make an annual contribution, right?
Right, exactly.
So it's all, I think it depends on
where you're at in life, but big picture,
(30:23):
it's so easy to get caught in that.
We've talked about it before in this day
-to-day mindset, like, oh my gosh, what's
going on today?
Do we sell out?
Do we go to cash?
But when you take a big picture view,
it could be a good time to buy
at lower prices than it has been recently.
So not saying that that's a general recommendation
(30:44):
for everyone, but when I'm looking at my
Roth IRA, I'm like, wow, this is a
great chance to put some cash in.
So we encourage you to think that way.
And if you have concerns as you think
about your portfolio, might be time for a
portfolio review, get a real fresh set of
(31:04):
eyes on what's happening.
How should I be positioned given what's happening
in the world around us today?
Where do I have risks?
Where do I have opportunities?
What are some things I might want to
adjust?
Am I overstated in some space or not?
These are things that we help people with.
We often like to do it though, in
(31:26):
the context of a financial plan so that
we see, how does this forecast over time?
That's something we've been talking about with clients
a lot lately is, yeah, what if the
market goes down from here?
How does that affect stress test your plan?
What happens then?
And then oftentimes people are like, oh, that's
(31:47):
great to know.
You know, that does put it in perspective,
right?
And how that can, what should I expect?
And is it really something that will be
disruptive to my future?
That kind of thing.
So if you need help with any of
those things, don't hesitate to reach out.
We can be reached locally at 508-771
(32:08):
-8900, toll-free 866-771-8901.
And you can always send us an email
with your questions about show content or to
reach out to connect with you at amr
-info at wealthenhancement.com.
Hope you'll share this content with others.
(32:29):
Give us a rating and a like, really
helps others find the show.
With that being said, thanks everybody.
Until next time, keep striving for something more.
(33:03):
Send us your questions to amr-info at
wealthenhancement.com.
(33:33):
or conduct their own due diligence before making
any financial decisions.
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