1 00:00:00,740 --> 00:00:03,447 Speaker 1: Hi, I'm Stacey Hyde and I'm back for another episode 2 00:00:03,447 --> 00:00:07,581 of Better Financial Health in 15 minutes or less, and today 3 00:00:07,660 --> 00:00:12,890 I'd like to talk a little bit about tariffs and about why they 4 00:00:12,890 --> 00:00:17,582 are causing so much mayhem in the markets, causing prices to 5 00:00:17,661 --> 00:00:23,149 rise, and how the stock market has reacted. 6 00:00:23,149 --> 00:00:26,934 You know, negatively, positively, and what's going on, 7 00:00:26,934 --> 00:00:33,512 and, as anything that might be said about future performance in 8 00:00:33,512 --> 00:00:36,786 the market, I'm going to make some statements. 9 00:00:36,786 --> 00:00:39,999 But I don't know, and, quite frankly, none of the talking 10 00:00:40,039 --> 00:00:45,231 heads on TV or the radio or any podcast, instagram, tiktok, 11 00:00:45,531 --> 00:00:46,575 nobody really knows. 12 00:00:46,575 --> 00:00:52,466 It's all an educated guess, but what we've seen this week and 13 00:00:52,807 --> 00:00:57,261 by this week I mean the week of April 21st through the 25th 14 00:00:57,360 --> 00:00:58,601 we're sitting right in the middle of it. 15 00:00:58,601 --> 00:01:05,792 As I record this, markets were down a lot on Monday and the big 16 00:01:05,792 --> 00:01:10,141 sort of impetus for that was President Trump saying that he 17 00:01:10,203 --> 00:01:13,652 was going to fire the Fed chairman, jerome Powell. 18 00:01:13,652 --> 00:01:19,424 And the reason the markets reacted so negatively is the Fed 19 00:01:19,424 --> 00:01:23,549 has always kind of operated independent of politics. 20 00:01:23,950 --> 00:01:27,742 Yes, the Fed chairman is an appointed position, but then 21 00:01:27,921 --> 00:01:32,171 they're really sort of insulated and they make policy decisions 22 00:01:32,292 --> 00:01:37,353 based on a couple of things One, they're trying to maintain full 23 00:01:37,353 --> 00:01:41,203 employment, and then they also are trying to prevent inflation 24 00:01:41,524 --> 00:01:46,371 Because, as we are all very well aware right now, inflation 25 00:01:46,451 --> 00:01:50,664 causes the cost of goods and services to cost more and your 26 00:01:50,743 --> 00:01:53,147 savings to be worth less. 27 00:01:53,147 --> 00:02:00,483 So inflation is generally bad when it comes to the cost of 28 00:02:00,543 --> 00:02:04,929 goods, and so that's a dual mandate that the Fed has. 29 00:02:04,929 --> 00:02:12,205 Prior to last year 2022, the Fed really focused on the full 30 00:02:12,245 --> 00:02:15,901 employment mandate, especially coming out of COVID, and 31 00:02:16,742 --> 00:02:20,554 inflation really got out of hand , quite frankly, and so the Fed 32 00:02:20,593 --> 00:02:22,620 has been very disciplined. 33 00:02:22,620 --> 00:02:25,669 Once they decided that it was a problem it wasn't just 34 00:02:25,699 --> 00:02:28,888 temporary they got very aggressive about raising rates 35 00:02:29,911 --> 00:02:36,508 and the Fed has continued, with inflation really picking up, has 36 00:02:36,508 --> 00:02:39,657 really focused on that more, and that has angered the 37 00:02:39,698 --> 00:02:46,631 administration because, with the tariffs, one of the concerns is 38 00:02:46,631 --> 00:02:50,544 it's going to raise prices to consumers, because a lot of the 39 00:02:50,623 --> 00:02:55,717 reason that things are imported from other countries or 40 00:02:55,817 --> 00:02:59,705 manufactured in other countries is because they can be done less 41 00:02:59,705 --> 00:03:03,993 expensively, even after factoring in shipping costs, 42 00:03:04,442 --> 00:03:06,991 than if they were manufactured here in the US. 43 00:03:06,991 --> 00:03:13,525 Or in some cases, they can't be manufactured here Think or not 44 00:03:13,564 --> 00:03:16,372 currently and it would take many years to build the factories to 45 00:03:16,372 --> 00:03:16,712 do it. 46 00:03:16,712 --> 00:03:23,430 Think semiconductor chips, making clothing, that sort of 47 00:03:23,490 --> 00:03:27,094 thing would be very difficult for those to be made in the US. 48 00:03:27,881 --> 00:03:33,954 You also have sort of a friend I was talking to. 49 00:03:33,954 --> 00:03:38,561 She imports food goods and she was saying that you know they 50 00:03:38,640 --> 00:03:45,393 need a lot of little tangerines for school lunches and that sort 51 00:03:45,393 --> 00:03:45,674 of thing. 52 00:03:45,674 --> 00:03:49,604 She's like we can't grow enough of them here in the US and so 53 00:03:50,824 --> 00:03:51,746 there's things like that. 54 00:03:51,746 --> 00:03:55,311 Sometimes it's climate, sometimes it's just not enough 55 00:03:55,390 --> 00:04:01,282 people to work the fields or enough real estate to plant as 56 00:04:01,361 --> 00:04:06,330 many different crops as we need to grow the things we need to 57 00:04:06,411 --> 00:04:08,394 consume and to have healthy diets. 58 00:04:08,394 --> 00:04:11,419 So that factors into it as well . 59 00:04:11,419 --> 00:04:15,030 So there's a lot of reasons that we don't get everything 60 00:04:15,150 --> 00:04:16,843 from the US. 61 00:04:17,625 --> 00:04:20,531 Do I think that it would be better if we did make more stuff 62 00:04:20,531 --> 00:04:20,732 here? 63 00:04:20,732 --> 00:04:21,653 Absolutely. 64 00:04:21,653 --> 00:04:27,930 But if you look at the auto industry for one, many cars are 65 00:04:27,990 --> 00:04:30,581 manufactured here, you know, put together. 66 00:04:30,581 --> 00:04:34,567 We were just last week we were down in Mississippi and there's 67 00:04:34,607 --> 00:04:38,992 a huge Nissan plant and they assemble a ton of Nissan cars, 68 00:04:39,052 --> 00:04:43,064 which is a Japanese company but they're putting it together in 69 00:04:43,084 --> 00:04:43,644 the US. 70 00:04:43,644 --> 00:04:48,380 But pieces of that car, you know, components of the engine, 71 00:04:48,841 --> 00:04:52,846 components of the seats, some of those are coming from Mexico, 72 00:04:52,966 --> 00:04:56,850 some of them are coming from Canada and then they all come 73 00:04:56,891 --> 00:05:00,839 together to make a finished product in the US, and so I 74 00:05:00,899 --> 00:05:05,428 think that's where people have gotten understandably nervous 75 00:05:05,509 --> 00:05:11,132 about we can't make all of these parts, and it made more sense 76 00:05:11,271 --> 00:05:14,937 to sort of spread out our supply chain where we could do it the 77 00:05:14,976 --> 00:05:17,524 lowest cost, because that, quite frankly, kept the cost to 78 00:05:17,564 --> 00:05:18,447 consumers lower. 79 00:05:18,507 --> 00:05:23,620 So that's really, I think, got the markets worried about 80 00:05:23,680 --> 00:05:26,146 inflation and the Fed worried about inflation. 81 00:05:26,146 --> 00:05:31,504 The administration wanted rates to be lower, because then that 82 00:05:32,165 --> 00:05:34,048 keeps the perception of cost. 83 00:05:34,048 --> 00:05:37,942 So the houses, like they were several years ago, the houses 84 00:05:38,084 --> 00:05:41,980 might cost more, but because interest rates were lower, the 85 00:05:42,019 --> 00:05:44,845 cost of financing it was lower. 86 00:05:44,845 --> 00:05:49,834 So if costs go up and rates stay the same, payments continue 87 00:05:49,834 --> 00:05:53,704 to go up and people are feeling the pinch, like most people are 88 00:05:53,704 --> 00:05:54,144 right now. 89 00:05:54,144 --> 00:05:58,581 So there's you've really had the administration at 90 00:05:58,622 --> 00:06:02,329 loggerheads with the stock markets, which are, you know, 91 00:06:02,415 --> 00:06:06,079 making reasonable guesses about what they expect to happen, and 92 00:06:06,321 --> 00:06:11,327 also the Fed kind of looking out for all of us, trying to make 93 00:06:11,367 --> 00:06:14,901 the best decisions they can, with imperfect information as 94 00:06:14,963 --> 00:06:18,985 well, and so that angered the administration. 95 00:06:18,985 --> 00:06:24,927 There was a threat, a perceived threat, by Trump to fire Mr 96 00:06:24,966 --> 00:06:29,696 Powell and over the last couple of days he has walked that back 97 00:06:29,755 --> 00:06:31,259 and said he's not going to do that. 98 00:06:31,259 --> 00:06:35,156 The markets have reacted very favorably to that and they've 99 00:06:35,175 --> 00:06:39,365 really kind of picked up if not almost all of their losses from 100 00:06:39,406 --> 00:06:39,906 this week. 101 00:06:39,906 --> 00:06:44,463 But we continue to be significantly down certain 102 00:06:44,502 --> 00:06:51,422 sectors more than others this month, and understandably that's 103 00:06:51,422 --> 00:06:52,384 got people worried. 104 00:06:52,875 --> 00:06:55,903 Do we know how this is all going to play out ultimately? 105 00:06:55,903 --> 00:07:00,305 No, some people guess that it's all a negotiating tactic. 106 00:07:00,305 --> 00:07:03,564 Some people say that you know they're committed to it. 107 00:07:03,564 --> 00:07:08,666 But what I personally hope happens is that it does spur 108 00:07:08,706 --> 00:07:11,720 some companies to start doing more here. 109 00:07:11,720 --> 00:07:20,059 But and maybe we have some very low tariff and we maybe exclude 110 00:07:20,059 --> 00:07:24,545 our friends you know, like mexico and canada, that we share 111 00:07:24,545 --> 00:07:28,836 a border with and where we have all benefited from some free 112 00:07:28,877 --> 00:07:34,064 trade there and maybe add in some small tariffs on countries 113 00:07:34,185 --> 00:07:41,244 that also charge tariffs to us and that could potentially be 114 00:07:41,303 --> 00:07:43,348 seen as taking advantage of the US. 115 00:07:43,435 --> 00:07:48,353 But I don't think these draconian, dramatic tariffs are 116 00:07:48,613 --> 00:07:50,798 ultimately going to be good for the economy. 117 00:07:50,798 --> 00:07:54,668 There's all kinds of different opinions out there about what 118 00:07:54,754 --> 00:07:59,303 the negative consequences are going to be of that, but in all 119 00:07:59,363 --> 00:08:03,858 cases, a tariff is another form of tax and ultimately, I believe 120 00:08:03,858 --> 00:08:06,906 , it'll be paid by consumers consumers and so that is going 121 00:08:06,946 --> 00:08:11,444 to raise the cost if they're not mitigated and mitigated soon, 122 00:08:11,526 --> 00:08:15,175 because markets don't like uncertainty any more than you or 123 00:08:15,175 --> 00:08:16,500 I do. 124 00:08:16,500 --> 00:08:20,490 So I don't know that I've answered any of your questions, 125 00:08:20,750 --> 00:08:23,658 other than just trying to lay out what's out there and why the 126 00:08:23,658 --> 00:08:28,788 markets have reacted so crazily over the last few days and why 127 00:08:28,954 --> 00:08:34,203 things tend to jump one way and then the other Markets are just 128 00:08:35,385 --> 00:08:37,809 reacting or overreacting to news . 129 00:08:37,809 --> 00:08:40,038 So try to stay calm. 130 00:08:40,038 --> 00:08:43,606 Do not get caught up in the noise of the day-to-day, because 131 00:08:43,606 --> 00:08:47,544 the way it's going right now it's likely to change tomorrow. 132 00:08:47,544 --> 00:08:54,200 So, um, the old stickers used to say stay calm and carry on. 133 00:08:54,200 --> 00:08:58,803 This has been another episode of better financial health in 15 134 00:08:58,803 --> 00:08:59,407 minutes or less.