Market Update 4.4.25
Our Investment PerspectiveYou are probably seeing many headlines today on the topic of tariffs. On April 2nd, President Trump unveiled sweeping tariffs against dozens of nations, many of them more severe than markets had expected. Global markets went into risk-off mode, and sectors with stretched valuations sold off the most. Investors bought fixed income to hedge growth slowdown risks, and yields across the Treasury curve declined. The dollar weakened on growth concerns.
This morning, China announced that it will impose a retaliatory 34% tariff on all U.S. imports starting April 10th. Governments around the world have pledged counter measures, although many details are still unclear. It is possible some of these tariffs will be negotiated to lower numbers, either politically or legally. They will also likely face legal challenges. The initial reaction of trade negotiation experts is that the reciprocal tariff figures announced on April 2nd is an opening negotiation move by President Trump, but there is no consensus on what the final numbers will be.
Our team here – along with market participants around the world – are still assessing the impact of the tariffs on client portfolios. We understand that watching financial markets during these volatile times can bring high emotions and anxiety. As your financial advisor, we want to stress the importance of having a long-term financial plan and a diversified portfolio that can withstand market cycles and align with your goals. We are also looking for opportunities to buy quality stocks that we believe will have the fundamental strength to withstand short-term volatility.
The chart below from J.P. Morgan Asset Management highlights that stock market drawdowns happen every year and most of the time the market still generates gains, so it pays to be invested. Market volatility is a normal feature of investing. We’ve had growth shocks before, and the U.S. stock market has proven to be remarkably resilient over time. Ultimately, sticking to your strategic asset allocation with equities for capital appreciation and fixed income for downside growth resilience is a strategy that has proven itself over time.
As always, please feel free to call or email anytime if you’d like to discuss further.