The stock and bond markets have been giving me 2008 vibes recently. The volatility has been almost off the charts as the trade war escalates. The S&P 500 index is back to levels last seen in May of 2024 after making all-time highs this past February.
The good news is that this crash is much different than the one in 2008, the tech wreck of 2000, and even the Covid crash in 2020, and here’s why. Those took time and a lot of pain (bankruptcies, foreclosures, job losses, etc.) to recover from. The main reason that it is different this time is that this crash is self-inflicted, meaning we inserted the catalyst, tariffs, across all imported goods from both friend and foe (and penguins!). The good news is that it is easily fixable and quickly reversible by simply pausing the tariffs and negotiating new trading terms with our trading partners.
Today, we saw that this will actually work when a rumor hit the wires that The White House was considering a 90-day pause on tariffs to allow for negotiations. Stocks immediately spiked and added about $2.5 trillion to the S&P 500 market cap. Of course, once the word got out that this was a rumor, stocks sold off and gave it all back. But it did show that there’s a way to accomplish some of Trump’s objectives without plunging our economy into a recession.
Please comment or send an email if you have any questions. Thanks!
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
