Good afternoon,

 

Things south of the border are seemingly changing everyday, with respect to tariffs. As of now, the Trump administration is proceeding with a plan to tariff every other country in the world in varying amounts. Flying in the face of reason (though likely as a negotiation tactic), the administration came up with a formula that had nothing to do with reciprocating amounts according to an individual country’s current tariff levels on the United States. Instead, they based their formula on the trade deficit that the US had with each country. If a country had no deficit, then they were still faced with a minimum 10% tariff on all goods. There are other tariffs of varying degrees as well (steel, autos, etc).

As I’ve mentioned to many clients over the last few days/weeks, this is different from a financial crisis or a pandemic – those were unprecedented and caused a panic among both equity and credit markets. Nobody knew how the world would unfold during those events and so markets reacted violently. This time, we are indeed dealing with a financial event but one caused by the decisions of a government; decisions that can be changed at any time. Many commentators are correct to predict a recession, should the current tariff environment persist. But the risk of moving money to the sidelines is that the current environment could change overnight, and equity markets could begin outsized gains on such good news.

As an investor… there are a few things to think about when markets react like this:

• Some investors might find comfort in putting off large purchases or planned trips. Individual circumstances will differ, but might be worth considering if you are uneasy with todays market conditions. 
• This too shall pass. It’s one more economic headline in a long line of recessions, crises etc that we make it through time and again. Do not panic, but trust that we are on top of things here. It might get worse before it gets better but it always gets better. And when you’ve stuck out the tough days, the good ones are even more rewarding. My grandmother was very helpful in this regard when I was busy apologizing for her portfolio returns in the 2008 financial crisis, wondering if she would really fire her grandson as her advisor… her reply was simple; “it always comes back.” And of course, it did.

 

I thank you again for your support, and am always available to chat, as are the rest of us on the team. Please do not hesitate to reach out.

 

Best regards,

 

George