Updated Monday, April 7, 2025

Making Sense of the Headlines Without Losing Sight of the Plan

Monday, April 7, 2025

A Note to Start

There’s no question: this market has been emotionally and financially draining. The daily swings, the headlines, the losses on paper: it’s exhausting. For many, these moves feel deeply personal, not just financial. That’s understandable. But it’s also exactly why discipline matters most in moments like this.

We’ve seen this before. And while the storylines are new, the market’s pattern of resilience is not. Our job is to help you filter signal from noise and stay grounded in strategies that have worked through far worse.

Let’s unpack what we’re seeing, and how we’re responding to help keep your plan on track.

The “Once-in-a-Lifetime” Decade

Let’s just call it what it is: the last five years have delivered more “once-in-a-lifetime” market events than any other stretch in modern investing.

• 2020: COVID-19 crashes the market by 34%
• 2021: U.S. Capitol riots, GME/AMC mania, and brokers literally removing the buy button
• 2022: Ukraine-Russia war, global inflation spike, FTX collapse
• 2023: SVB, Signature, First Republic all implode; Israel-Hamas conflict re-ignites
• 2024: Chinese markets fall 26%, Tokyo drops 12.4% in a single day, Yen carry trade unwind sparks third-highest VIX spike ever
• 2025: Trump’s tariff escalation sparks the worst DOW drop ever, Nasdaq down 11%, and the S&P 500 sits -17% YTD

The key point? Markets have taken the punches and kept marching forward. The discipline of staying invested has repeatedly won.

“If your portfolio survived the last five years, it’s built for anything.”
Source: Bloomberg

Tariffs Are a Loud Tool, But Also a Negotiation Strategy

Since the announcement of the new tariffs, the administration has launched a full-scale media blitz to control the narrative and lay out their economic rationale. From national TV interviews to op-eds, key figures like Lutnick and Bessent have been highly visible, defending the move as a strategic realignment, not a reckless trade war.

National Economic Council Director Kevin Hassett, a key architect of U.S. economic policy under both the Trump and Bush administrations, confirmed that over 50 countries have reached out to the U.S. to begin negotiating new tariff terms. This isn’t isolationism; it’s leverage to the U.S. to start negotiating new tariff deals.

• Taiwan and Vietnam have offered 0% tariffs to preserve trade relationships.
• Howard Lutnick, the current United States Secretary of Commerce and former Chairman and CEO of Cantor Fitzgerald, a leading voice in capital markets, said it plainly:Rather than panicking about deglobalization, we may be witnessing the next iteration of global trade realignment, with the U.S. holding more cards than headlines suggest.

“This isn’t global decoupling—it’s a reshuffling.”
Source: White House, Bloomberg

Credit Spreads and Volatility:
Elevated but Not Extreme

Two critical indicators to watch:

• High-yield spreads widened by 103 bps – the biggest 2-day spike since March 2020 – but remain well below crisis levels. Recessions typically show spreads north of 1,000 bps. Today we’re at 445 bps.
• The VIX rose 109% in one week, the 3rd largest spike in history.

Historically, these spikes are followed by strong forward returns:

• +11.3% average 1-year return
• +95.6% average 5-year return

In short: the market is rattled, but not broken.

“Fear rises faster than fundamentals break.”
Source: Bloomberg, FactSet

Inflation is Quietly Collapsing, and Rate Cuts Are Back in Play

Truflation’s real-time inflation reading has fallen to 1.2%, the lowest since late 2020. That’s a sharp reversal from 2022’s inflationary peak.

• The bond market is already ahead of the Fed:
• Just 3 months ago, markets priced in 1 rate cut.

Today, they’re pricing in 4 cuts in 2025.

Fed Funds Futures now project rates dropping from 4.32% in April to 3.32% by December.
Meanwhile, 10-year Treasury yields have plunged, which plays a massive role in refinancing U.S. debt:

“Every 1 basis point drop in the 10-year saves the U.S. government $1 billion annually,”
notes policy analyst Tanvi Ratna.
Source: Bloomberg

With $6.5 trillion of U.S. debt maturing by June and $9.2 trillion total in 2025,
these lower rates aren’t just good for borrowing.
Source: Bloomberg, Fact Set

Scott Bessent, the current United States Secretary of the Treasury and former CIO of Soros Fund Management, known for his macroeconomic forecasting expertise, recently offered this perspective: “There doesn’t have to be a recession – the underlying fundamentals are more resilient than people think.”

History Says: Big Drops Often = Big Snapbacks

In just two days, the S&P 500 dropped 10.5%, the 5th biggest 2-day drop since 1950. Here’s what happened after similar plunges:

Source: Bloomberg

In every prior case, returns were strongly positive over the next 12–60 months.
And that’s not even factoring in 3-day streaks of 4%+ drops. The average return three weeks later? +27%.

“Markets move down fast—but they tend to rebound faster than most investors expect.”

S&P 500: Long-Term Discipline Still Wins

• Since 1928, the average return of the S&P 500 = ~10% per year
• Since 1980, the return = ~12% per year
• Average intra-year drawdown: -14%, and often much worse
• Still ended positive 75%+ of the time

If you needed a visual, this one says it all: massive drawdowns, followed by consistent recoveries.

“Volatility isn’t the problem. Selling into it is.”
Source: Bloomberg

Putting It All Together

Let’s be clear: watching portfolio values drop significantly is unsettling. For many, these aren’t just numbers, they represent decades of work, future goals, and the legacy they plan to leave. But it’s also not the first time we’ve seen portfolios temporarily decline like this. And it won’t be the last.

What history tells us, without fail, is that those who stay disciplined, who adjust when appropriate but avoid emotional reactions, are the ones who come out ahead.

You don’t need to guess what’s next. You need to stick to a process that works.

If you’re wondering whether to adjust, rebalance, or make use of the volatility – we should talk.

Friday, April 5, 2025

With the U.S. government’s recent tariff announcements, the landscape is shifting, and the ripple effects are being felt across industries, from consumer goods to manufacturing. As we close out Q1 2025, these evolving trade policies are adding a new layer of complexity to the economic outlook, including potential impacts on inflation, growth, and market volatility.

What’s Changed?

Starting April 5, a 10% tariff will be applied to all imported goods, followed by additional tariffs starting April 9, specifically targeting countries with which the U.S. runs a trade deficit. These tariffs will be layered on top of existing ones, meaning import costs for businesses and consumers are likely to rise.

Some sectors, such as pharmaceuticals, autos, and semiconductors, are exempt or partially exempt from these new tariffs. These measures were enacted under a declared national economic emergency, which gives the Administration the authority to adjust these tariffs over time.

Why This Matters

If fully enacted, these tariffs would mark a significant rise in trade levies, with notable negative implications for U.S. consumers. The goal is to rebalance global trade imbalances and strengthen U.S. manufacturing, but the near-term effects could be disruptive:

• Recession Risks: There’s a possibility of slower growth ahead if tariffs significantly disrupt supply chains or dampen consumer activity.
• Inflation: We may see price increases in categories like electronics, clothing, and autos. If demand softens, these price pressures may only be temporary.
• Tight Policy: With the Federal Reserve cautious on inflation and government spending tightening, the economy faces meaningful headwinds.

Additionally, tariff rates may fluctuate depending on how other countries respond, adding another layer of uncertainty for businesses and markets.

Market Snapshot

Markets generally don’t respond well to surprises, and the recent announcement has added to the already high volatility. Investors are rotating into more defensive sectors, while high-growth areas like tech are facing pressure. Bonds and cash are seeing increased demand as investors seek safer ground.

Your Portfolio

We’ve been positioned for volatility this year, and so far, that has served our clients well. We’ve reduced exposure to areas we saw as vulnerable, such as global bonds and high-yield credit, while leaning into flexible fixed-income strategies and being selective in equity markets. Active management and diversified real asset exposure have provided key advantages.

We’re not making any immediate changes to portfolios but are closely monitoring any developments. If markets pull back meaningfully, our bias would be to lean in: not to time short-term moves but to take advantage of opportunities when pricing dislocations emerge.

As always, if you have any questions or would like to discuss how these developments impact your personal plan, please don’t hesitate to reach out to your Advisor.

Stay informed.

Watch our most recent Weekly Market Commentaries to make sure you know what’s happening in the markets each week.