In this episode, we walk through a tumultuous April marked by heightened market volatility, significant tariff announcements, and growing concerns about inflation and recession risk.
Alex kicks off by breaking down what happened in the markets. The month began with what initially looked like a standard correction, but quickly escalated into what he describes as a crash. On April 2nd, the administration announced far more aggressive tariffs than anticipated, especially targeting Chinese imports. The shock triggered a sharp market drop—more than a thousand points lost over two days. The volatility stemmed largely from the ambiguity those tariffs introduced, making it difficult to accurately value stocks and project cash flows. As Alex explains, investor confidence suffers when assumptions about capital costs and future growth become too uncertain to model.
Despite the chaos, we emphasize the importance of staying invested. Alex reminds us of our previous discussions about how the best up days in the market often follow the worst down days—something we saw play out just days after the tariff announcement when markets rebounded sharply after a partial rollback on April 9th. That pattern is why timing the market remains a losing game.
We also touch on the importance of client communication during turbulent periods. Alex and Ed talk about the proactive steps they took to prepare clients, including emails, webinars, and consistent messaging. This transparency helped reduce panic and reinforce the value of long-term planning.
Ed then walks us through where we stand now. While the most extreme tariffs were pulled back, the new baseline is still historically high, with a 10% tariff on all imports and 145% on imports from China. These will likely impact consumer prices starting this summer, especially on goods like food or chemicals tied to supply chains in China. We’re now facing the highest average tariff rate in a century.
He also addresses the rising recession odds, now between 40–60% according to major banks—well above the post-war average, but still no guarantee. Economic forecasting, as he notes, is often no more reliable than market prediction. Finally, we explore the Fed’s precarious position: hold rates and risk slowing growth, or cut rates and risk fueling tariff-driven inflation. Either choice comes with real trade-offs.
We close by reinforcing the message we always deliver—don’t try to outsmart the market. Stick to your long-term plan, stay diversified, and prepare for storms before they hit. That’s what we’ve always done, and it’s what we’ll keep doing.