Talking Tariffs – To Tune In or Tune Out?

Well, he followed through on his promise. He being President Trump, and the promise being levying tariffs on the US’s top trading partners (China, Mexico, and Canada), with promises of more on the horizon (reciprocal tariffs with our other trading partners). Since enacting the tariffs on Tuesday, there have already been several exemptions made to the new policies, with roughly half of Mexican goods and one third of Canadian goods now exempt from the new taxes on trade.

While this is not new news (as we’ve been hearing about this for weeks, if not months), markets have been bouncing up and down all week in reaction to every headline, rumor, and whisper about anything related to tariffs (not to mention the other countless variables markets are digesting at any given moment). And that’s after markets had been reeling ahead of this week’s self-imposed deadline (that being this past Tuesday, which may feel like ancient history given all that’s happened since then), seemingly waiting to price in the inflationary risks of these new trade policies until it was certain they would come to pass.

And now they’re here, and yet they’re also being adjusted almost in real-time as Trump continues to use his tariff policies as negotiation tools, most recently granting exceptions to Mexico and then using that as leverage to try to push Canada around.

This afternoon, Fed Chairman Powell gave an encouraging report on the economy’s health, broadening the scope of items the Fed is considering as it plans its next move on interest rates to not only include trade policy, but also immigration, regulation, and fiscal policy shifts. The combination of effects from all of these changes will be considered as the Fed determines what it will do with interest rates. And the most reassuring thing he mentioned is that the Fed is in no hurry to make any moves, especially given the fact that the US economy has generated an average of 191,000 new jobs per month over the past six months. All in all, we read this as an endorsement of the economy’s health at present.

Markets reacted favorably, with the major indices trending to end the week on a positive note as of this print. And projections for economic growth continue to be positive despite all the recent headlines, with GDP projections for the year currently sitting around 1.5-2%. Slow growth? Yes. But growth nonetheless.

So what does all this tariff-talk, and the ongoing worries about the health of the economy, mean for you?

We wanted to check in today to offer a bit of perspective. Exactly five years ago from this coming Monday, the Covid crash’s most dramatic week began in earnest with Black Monday (markets dropped by ~7% that day), Black Thursday (~10% drop), and Black Monday II (~13% drop). If you had invested $100 on Black Monday, it would have been decimated to $73 in one short, horrifying week.

Comparatively, if we use Inauguration Day (Monday, January 20^th) as a point of reference, the Yeske Buie portfolio of stocks is down by…0%. So if you’d invested $100 on Inauguration Day, you’d still have $100 today. And year-to-date, our portfolio of stocks is up by nearly 2% (through today’s close).

We persevered through the Covid crash in 2020 (and the subsequent inflation scare in 2022), with stocks in your portfolio averaging annual returns of more than 14% since March 9th, 2020 (again, that’s inclusive of the worst market days in the spring of that year and the nastiness served up by the first three quarters of 2022 as we navigated the worst of the inflation crunch).

We are not predicting another crash, and we are also not dismissing the significance of what you’re experiencing today. We just wanted to note that, despite what the news might be telling you to do, you don’t need to panic. Your portfolio has been through worse and come out the other end. You are resilient, and this too shall pass.

You do, however, get to decide if you want to continue to tune in and keep up with the daily noise (or not). Rest assured we’ll be watching.

We’ll close with something that may become a fixture in notes like this as we move forward: your sources of resiliency. We’d love your thoughts and engagement with the segment below. And we hope you and yours enjoy a peaceful and restful weekend.

The Yeske Buie Team

• Your financial plan addresses all of the other aspects of your financial life, and there’s so much more to it than investments. Living your plan, regardless of what the market may be doing, is a way to exert control over what you can control. Let us deal with the rest – it’s what we’re here for!

• Aside from your investments, your emergency fund is one of your biggest sources of resiliency, as you can tap into that readily available cash if you need funds in a pinch. If you need more than what’s available in that reservoir of cash, we’ll make a plan to get you what you need.

• If you’re living off your portfolio and your plan is guided by our Safe-Spending Policies, recall that we keep 5-7 years’ worth of your spending needs in bonds and cash (this is your Stable Reserve, designed to act as a bridge across low points the markets may serve up). We specifically designed the Stable Reserve to give the stocks in your portfolio enough time to recover from whatever may be happening in markets at any given moment. And note that the bonds in your portfolio are up by nearly 1% year-to-date.

• Whether your portfolio is acting as your paycheck or not, know that we are reviewing your accounts every two weeks for opportunities to rebalance and best position your investments for growth. And that those investments are spread across more than 10,000 stocks around the world, mitigating risk through broad diversification.

• Finally, we’ll invite you to revisit our list of ways to Live Big in trying times – we’d love to hear from you if you have items we can add!

Please click here for disclosures related to performance reporting and benchmarks.