Tariffs Shocking Markets (Uncut) 03-29-2025

Tariffs Shocking Markets: What Investors Must Do | ft. Benjamin Wallace & Todd Herman | Rise UP!

Whether it’s the investor who’s uncertain about his portfolio or this investor who’s concerned about their auto holdings, it’s less so about are our tariffs good or bad. We know they’re bad. We know they’re a big problem for GM.

They’re a challenge for Ford. They’re a challenge for a lot of the international car companies, even if they’re making their products here in the U.S., just because these supply chains cross so many borders. Welcome to Rise Up on Wealthion, our weekly show dedicated to helping you understand what’s happening in the market, all the volatility, all the changes.

We’re here to answer your questions. Each week, we bring our very best financial minds into the business to help you really sort through what’s an opportunity, what actions should you take, and how can you help grow and protect your portfolio? My name is Terry Coulson. I’m a certified financial planner.

I’m a managing partner here at Rise Growth, and I happen to be the host, the co-host of this show. Joe Duran is the other co-host. You saw him last week.

They did a fantastic job talking about the markets. I’m here this week. Joe’s not available, but really, to help with that, we have two amazing guests with us today.

First off, we have Benjamin Wallace. He’s a portfolio manager, the research director at Grimes & Company, an investment and financial planning fiduciary firm. It’s located in Boston, and they have some of the very best talent there.

Welcome, Ben. Hi, Terry. I’m excited to be here.

Awesome. We also have Todd Herman. He’s also at Grimes & Company.

He’s a certified financial planner and AIF. He’s a financial advisor that works directly with clients. I happen to know, in addition to all of those letters and degrees, he’s also an engineer.

We have two incredible minds to help us think through what is going on in the markets and how do we, as investors, respond to that. Thank you, Ben and Todd, for being with us here today. Thank you, Terry.

Happy to be here. One of the things we do on the show right away is we get into the big three. What’s going on and how is it impacting our markets right now? I’m just going to share a couple numbers with the team, with the viewership, but then I want to get some commentary on what we think is going on.

I’m not even sure I really knew tariffs and what they meant prior to the last six months, but it is now a very common term. The tariff deadline is looming, April 2nd. Just yesterday, there was an announcement of 25% auto import tariffs.

The US automakers took a big hit. There’s just a lot going on in the American car industry right now, but there’s always a bright side. Tesla was up 4%.

Lots going on there, a lot of volatility. The Mag 7 that we talked about last week, big tech stocks like Nvidia and Tesla, they had significant drops as well. There’s some good news in durable goods.

They came in stronger than expected. But bad news when it comes to consumer confidence, which slipped for the fourth month in a row, which we know is a big driver of the economy. There’s uncertainty about liquidity.

There’s two measurements showing people are worried over the global trade war, and it’s sapping liquidity of US stocks. Todd, for long-term investors, volatility may not be such a major concern, but for people just starting out, like new college grads who’ve just got their first job or they’re starting their retirement, but there’s a big impact of the sequencing of their investment returns known as the SORR. Can you explain this to us and how it affects retirement and how our viewers should be thinking about that? Absolutely.

That’s a great question. It boils down to time horizon. People who have a short time horizon, you feel this a lot more than people who are investing for 30 plus years.

Sequence of returns risk refers to essentially the timing and order of market returns year over year and how it will impact a retiree’s portfolio. The long-term time horizon, basically, you can ride the wonderful ride of the S&P 500, but if you need money now and are withdrawing actively from your portfolio, that’s detrimental. Math and money just don’t work.

Losses hurt a whole heck of a lot more than gains help. It takes about 100% return to recover from a 50% loss. Putting this in a very high level, not too nerdy format here, if you start with $1 million in 2000, you average for 20 years about 8.2%. You will end with about 400,000, assuming a 5% withdrawal rate.

Very modest, but if you flip the years around and you take the returns from 2020 and front load that, that $1 million turns into $2.4 million. A big, big change, even though you are averaging 8.2% the entire time. Timing and order is the biggest thing.

Many financial planners out there in the industry will use straight line averages, and that’s really not the best way to capture a sequence of returns risk. The best way is really stress testing your portfolio to find how resilient it actually is. Once you figure that out, you can develop a plan.

Increasing your cash reserves, maintaining a diversified portfolio, having a dynamic strategy are three very easy steps that I walk clients through almost every single meeting that are in this specific situation, because it’s real, it’s scary. Going down 20% as soon as you hit your last paycheck and retire, that’s not a good feeling. That’s how we address sequence of returns risk here.

Yeah. And then Todd, I would add that a big part of it is, you mentioned the investors will project out that 8% annual return, but you’re never going to get that 8% return every single year, right? So the big thing that we’re always focused on is we want to keep clients on their path and they have these, clients are humans, humans have emotions. So we’re always battling the two emotions, FOMO, fear of missing out, and solo, which is scared of losing out, right? I would say three months ago, we were feeling a lot of FOMO, right? Clients are pushing us to be more aggressive.

I want to do this. I want to get more exposed. Why don’t we have anything other than US stocks? But now they’re starting to feel some solo.

And I think that’s what your viewers might be thinking about. So what we’re always thinking is, we talked about the sequence of returns. That’s one of the big risks we’re focused on as far as managing risk.

The other big thing we’re focused on is managing risks to keep clients on their path, because the single biggest mistake that a client can make is to, in a period of either FOMO or solo, change their plan, right? Because if they change their plan at the wrong time, that’s how they damage their long-term financial success. So that’s what we’re very focused on, both on the planning side, from Todd’s side of things, then also from the investing side. How do we get the portfolios to get them there? Yeah, I think you’re right.

And Todd and Ben, you talked about this concept of loss aversion. And statistically, Daniel Coleman said that human beings feel the loss psychologically of a loss twice as much as they feel about a 10% or 20% gain. So losses are obviously a big deal.

And human, we then run away from risk. And one way our viewers may want to think about that is just doing dollar cost averaging. So you’re not putting it all in at once.

Like if you got a spring bonus from your company, you may decide to do dollar cost averaging. So you’re putting in money and you’re participating in the market, but you’re not doing it all in one lump sum. But you’re using dollar cost averaging and thinking about a long-term mindset so that you don’t have the emotional component over time, which can help you make better rational decisions.

So something to think about. But Ben, I want to really ask you, there’s signs of rotation occurring in the markets. Like there’s some sectors that may be possibilities, like energy, healthcare, financials.

They’re outperforming tech. Do you see opportunities today? Well, it’s funny you ask that because probably at the end of the year, I was trying to explain to people why we own healthcare companies when there’s going to be this great regulatory burden coming. Why did we want to own energy companies when there’s the risk of developments in oil that could cause the price of oil to go down? So really what we’ve seen so far this year is we have a lot of stocks that we own in the pharmaceutical sector that have done well, have had a good start to the year as investors have been shifting around.

But actually where a lot of the ideas are starting to turn up, which will be interesting, is in the tech sector space. A lot of the things that people were really excited about, we’ve actually been going through a pretty long period of turbulence in the tech space. So starting to see ideas kick up also with a lot of these tariff headlines, seeing a lot of the industrials get churned up.

So looking through ideas there, but also very happy with the energy exposure that we have, the healthcare exposure we have. It’s been a very, very volatile market below the surface. I know we’ve had this recent 10% pullback, so now everyone kind of sees the volatility from the top basis.

But below the surface for the past year, we’ve seen a lot of rotation in and out of sectors, volatility with individual stocks, and that’s really been churning around below the surface. Absolutely. So let’s talk a little bit about the 10-year Treasury and the credit market.

So the 10-year Treasury dropped 2.3 basis points. It closed Thursday as of March 27th at 4.36. There’s been convexity purchases that are believed to be mostly behind the drops today. These purchases help offset effects of mortgage refinancing to take advantage of lower rates.

Now the U.S. market borrowers are piling into European bond market ahead of April 2nd’s tariff deadline. Ben, what are the credit markets telling us as investors? Well, what we try to do on the fixed income side is take a step back. I think the really interesting thing when we’re seeing folks worried about the equities, what’s going on, what are the economic risks? The real interesting thing is the 10-year, as you said, is still at 4.36%. It’s still in the mid-fours.

In last August, we had what we call the unemployment freakout when we saw the markets really settle off. We had a weak unemployment report. Everyone decided, oh, that month we must be in a recession.

We saw the 10-year ultimately get down to about 3.8%. It got below 4%. So for us, if you want a nice round number, 4% is an important threshold on that 10-year. Right now, the 10-year is not saying I’m worried about recession, which is interesting because in the stock market, there’s all this volatility causing these concerns.

And so for us, we look at that as one positive sign. And the second positive sign that we see in the credit markets is that despite this volatility, the S&P again pulling back 10%. High-yield and investment-grade bonds, they’ve had a little bit of a pullback, but high-yield is maybe 3% from its peak, investment-grade maybe 2%, and they’re about flat year-to-date, which is not far off what the ag is doing in the overall bond market.

So it’s interesting. We have all this action going on in the stock market, but the bond market is behaving as if things are relatively normal, at least so far. So that’s really what we’re paying attention to because if we see the high-yield market start to come apart or we see that 10-year really drop and start getting down towards 4%, going below 4%, that’s a sign that something really could be shifting.

Maybe we do have to think about what the economic outlook is, how that might be changing. Yeah. So there’s a lot of cry for recession in the equity markets, but not a lot of indicators in the credit markets.

So it’s good to have a translator like you as an advisor to help clients understand what those mile markers mean for us. So Todd, any comments on that? Yeah. When setting up a portfolio for our clients, especially on the bond side, we like to mix and match and kind of balance our risks.

So we just talked about credit risk. We didn’t talk about duration risk, but obviously duration risk is out there and Ben can definitely say a little bit more on that. But over and above the traditional bond ladder, we like to mix in a bit of credit risk and a little bit of duration risk to a portfolio so that if one outperforms, the other typically might lag, but at least you can point to something in a portfolio that is holding up based off of changing market conditions.

And so it’s really key to find that balance in the bond world and point to one versus the other based off of changing market conditions. That’s right. That’s exactly right.

I love the way that you can explain that to clients and they can understand the impact to their portfolio. So let’s talk about our next really big thought here, and that’s gold versus the S&P. So on the bright side right now, gold and other metal investors are seeing some big returns.

And I know on Wealthion, we have a lot of viewers, a lot of investors who are really thinking about precious metals right now. So all sectors of gold are outperforming the S&P. Bullion, you know, that’s really a term, it’s direct gold ownership.

Bullion has rallied 15% this year and hit a record high last week. And the ETFs for Bullion are also up. The ratio of the S&P 500 index in terms of gold has dropped to its lowest levels since the pandemic, which highlights a preference for safe haven assets among investors.

And a lot of investors see gold as that safe haven. But in addition, silver, platinum and palladium are all advancing. And copper also jumped after the US tariffs on copper imports could be coming within just several weeks, months earlier than the deadline that was originally indicated.

So we have a lot of interest in gold and precious metals. Todd, gold has long been seen as a safe haven. Are you encouraging clients to have more of this in this portfolio? And if so, how much? Yeah, I love this question.

I love it specifically because I have clients throughout the entire country. And I love hearing their affinity or hatred towards gold and precious metals. And so hearing those opinions, it’s super interesting to me because a lot of it does depend on where you’re located in the US, whether you like it or you don’t.

But the most interesting part is a lot of people view it as you gold specifically as their grandparents did as a hedge against inflation or in a financial crisis. But what we need to recognize here in the 21st century is that it’s used for other things. It’s used in electric vehicles.

It’s used in semiconductors and more and more electronics and emerging technologies. So I would encourage people to not only just own gold, but also own other metals like palladium and silver and copper. And in terms of allocation, it really is going to depend, but I really don’t want to see that more than 5% of your portfolio.

But honestly, that’s not a blanket recommendation. It’s going to depend on our conversation, the client’s risk tolerance, long-term objectives, and honestly, overall desire for owning that commodity. And there are two different ways to own it.

You can own the physical gold bars, or you can own an ETF like GLD that’s backed by the commodity. And so going back in the history, in the late 70s under Carter, when interest rates were 16, 17%, gold had an amazing run. But people who had gold bars there after that run, couldn’t really sell it as quickly because of illiquidity.

And so if they held GLD, then potentially they would have sold it at less of a loss. But in reality, they had to hold it for about two decades in order to break even. So I would say it’s going to be client dependent, whether or not I’m going to recommend a commodity like this, but definitely no more than a very small portion of your overall portfolio.

Yeah, I think you’re right. When I’ve worked with clients before as a CFP, really understanding their risk tolerance is incredibly important for clients in this case, because they could own gold futures, but there’s a lot of price volatility risk in that. You can own precious metals, RIAs.

There’s some tax advantages to that if you have gold and silver in those, but you really need to understand the individual client situation to help make that decision. Ben, we have a lot of people on Wealthion that maybe are predicting a big upside, especially for bullion, saying it could reach $8,000 an ounce. What do you think? So I think the interesting thing, and you touched on the S and P to gold ratio, I think that’s a great way to look at it.

One of the challenges we have with gold is that it doesn’t generate income, and it’s always kind of hard to figure out, well, what exactly is gold worth? It’s worth what people want to pay for it. When you’re buying it, you’re relying on someone to pay more for it later, and there’s reasons you could expect that, but that’s always something you want to keep in mind. If you’re buying securities just because you think someone else is going to get more excited about it and buy it for a higher price later, you want to be cognizant of that.

Also, if it’s a security that people buy when they’re worried about stuff, if people are worried about things right now, you’ve got to worry about some type of a premium coming in there, but you touched on the S and P to gold ratio, which is a great thing to talk about, and how it’s the lowest it’s been since March, of course, since 2020, right? So if you go back to August of 2020, the S and P 500 was at, let’s see, 3,500. It had started to bounce back, but was still down. Gold was at about $2,000 an ounce.

So at that point, the ratio is 1.75, which is funny because today S and P is at 5,700, gold’s at about just over 3,000, and that ratio is 1.85, right? So that ratio is down about the same level we were in late 2020. From that point in August of 2020 to today, the S and P is up 60%, gold is up 50%. So when you see that ratio start to get lower, that means gold is getting more expensive relative to stocks.

And so that means that more people might be going into gold for that safety, for all those reasons why you might want to own it, but you just have to, as the ratio comes down, you have to get a bit more comfortable with it. So if you’re talking about getting up to 8,000 on gold, if the S and P is at 5,700, that means that ratio is going to go to about 0.7. And it’s very rare that that ratio has been that low. So you’d have to see a very big run in gold to get to that point.

However, I know we have an engineer here on the call, but some simple math, if the S and P were to find itself at 8,000, gold could be at 8,000 and that’s a ratio of one. So that might not be quite as ridiculous, but you do have to think about where the S and P goes as well on that. So at some point in the future, it could get there.

I would just be cautious about putting out a number like that, which is over a hundred percent above where gold is now. I think it’s had a very nice run. I think it’s been doing a nice job diversifying portfolios.

So if you’ve had that 5% weight, that’s great. It’s doing its job. But again, it’s always good to be cautious when things have had a period of exceptional outperformance because sometimes they’ll have to digest that performance.

Yeah. Maybe good in moderation, right? 5%, that’s not going to do too much damage. That’s the joy of diversification, right? As long as they don’t store gold bars underneath their mattress, I’m happy.

Yeah. Well, Todd, I know your daughter’s turning two years old this weekend. So are you buying her a gold bar possibly? Ooh, I don’t know if I’m going to head over to Costco.

I hear they’re a hot commodity over there. Yeah. Maybe 5% of a gold bar.

See if you can break it up like that. That sounds great. All right.

Let’s move on to our big three topics. So this is really when we look at what’s happening overall and comment on some of the news. We’re going to answer any questions from viewers as well.

So let’s just take a step back and look at where we stand with tariffs because I think the average bear out there listening and trying to consume the news may be a little confused. So I’m going try to set some numbers here and then we can comment. But as of March 12th, 25% U.S. tariffs on imports of steel and aluminum from all countries took effect.

And then the EU corresponded with counter tariffs on 28 billion in U.S. goods, but delayed the importation until sometime in mid April. So that’s still coming. And we’ve heard a lot about Canada and Mexico.

Trump’s 25% across the board tariffs went into effect on March 4th, but then paused tariffs on anything compliant with the U.S. states, Mexico, Canada agreement, the USMCA until April 2nd, which is next Tuesday. Canada then retaliated to the steel and aluminum tariffs with new duties of about 20 billion in U.S. goods. And the two countries have agreed to new trade talks.

So we’re back to new trade talks. And then let’s look at China. Trump enacted a new blanket tariffs of about 20% on top of the existing 10% duties that went into place during the first term.

So now China has responded on that up to 15% duties on U.S. goods, such as chicken, pork, and went into effect March 10th. So on Wednesday, the president said he would consider a reduction in tariffs now on China if approves the sale of TikTok, because you know TikTok is very important to our viewers, to Trump, and in the U.S. So if we can negotiate that, we can do a little relief on Chinese tariffs. And now Venezuela, Trump says the U.S. will impose a secondary tariff on Venezuela to take effect again April 2nd.

Any country that buys oil or gas from Venezuela would face a 25% tariff when trading with the U.S. So the complexity here is quite large, and someone needs to keep track of all this to understand where the opportunities may be. But we do have a question from Rich in Wichita, Kansas. He said, you know, I’m struggling with my portfolio.

It’s just not clear. It’s hard to keep track of all this. The president this week seemed to soften on some potential tariffs, but then, you know, we certainly have additional tariffs coming on.

Should Rich be making different decisions in his portfolio proactively based on what he’s seen going on? Todd, what are you telling your clients? That’s a lot of uncertainty there. I mean, you said tariff in three paragraphs about 40 different times. So, you know, I don’t have a crystal ball.

I can’t go like this and predict what the president is going to do and how the media, and more importantly, the markets are going to react. You know, I would say here’s some things to consider. A good mentor of mine once said a great portfolio has multiple ways to win.

All right. And we talked earlier about diversification, and, you know, we all know that that works. Okay.

Thank you, Harry Markowitz. Love it. But rather than trying to time the market, you want to go in now or want to go out now based off of news headlines, you know, you can consider introducing active risk management to allow your portfolio to go to cash during times of volatility.

That might not be coinciding with the peaks or the troughs, but it’s going to get you a much smoother ride. Hitting singles and doubles is what I’d much rather do than go 0 for 9 and have one home run. I know today’s baseball’s opening day, but I had to ship that one in there.

But, you know, most importantly, you have to set realistic expectations. You know, you want to balance risk and return here, but, you know, you don’t want to shoot for the moon because if you shoot for the moon, you are likely to go to zero than 100. You have the same odds.

So setting realistic returns, adding in diversification, adding in active risk management are two keys that we set all of our clients’ expectations up up front. Now, it’s really important to communicate with your advisor because right now equities aren’t the only answer. You know, you’re getting bond yields that are 7-8% at this point.

That’s fantastic. So, you know, the question always comes is like, why do you need to take the risk? Do you need a 20% return in your portfolio or are you okay with a 7% return for your portfolio? Because those two asset allocations look completely different. And so, you know, trying to not react to short-term noise is crucial because as Ben said earlier, selling when your portfolio is down is the worst thing you can do.

But you want to keep your long-term goals in perspective when these headlines start to come out. And that’s the most important thing. So don’t try and time the market, stick to your plan.

You will see, you know, your account go up and go down, but diversification, active risk management really play crucial roles in smoothing out your ride, so to speak, in the market. Yeah, that’s exactly right, Todd. And one of the things we really, if clients do want to make a change, they should always focus on quality overall and diversification.

There are some alternatives out there that could give you some lift. And we just talked about precious metals, you know, fixed income, hedging risk, and, you know, really understanding diversification. Those are all really important things because we are going to continue to see this volatility.

And there, you know, there’s a lot of discussion that all these tariffs that I just mentioned could reduce GDP to a negative 0.7 percent. So we have to be ready for this and, you know, take account in of our portfolio and talk to our advisor about the long term. So we do have a second question coming in from Charlotte in Charleston, South Carolina, and it’s really about the 25 percent auto tariffs.

And, you know, can you imagine being Mary Barra right now at GM? I mean, she’s she’s I don’t even know if she’s sleeping at night, but it was just announced South Carolina has a huge BMW plant in Spartanburg. She’s got a decent investment in BMW. Well, any parts of, you know, American won’t be taxed.

Anything that isn’t, well, she’s wondering how much of her investments could be threatened because she has such a large stake in BMW and, you know, this hit on automakers. And, you know, Ben, I know your son is 16 and he’s going to get his auto permit soon. So will you be buying him a BMW anytime soon? No, no, he will not be getting it.

It’ll be it’ll be a hand-me-down headed his way when the time comes there. So, yeah. But, you know, if I if I was sitting here thinking about buying a car in six months from now, I’d be getting a little concerned because, you know, they’ve done some studies looking at these tariffs as they’ve been announced on the average U.S. automobile.

It could be five to ten thousand dollar impact on price, depending on how the tariffs work out. And when it comes back to the tariffs, you know, everyone is you know, was so excited with the new new administration. It’s going to cut taxes.

It’s going to cut regulation. Right. That’s what that was the that was the magic elixir in the first Trump administration.

Unfortunately, as I explained to people, the nice thing with tariffs, they’re a tax and a regulation at the same time. So you get both at once. And so we know the markets don’t like that.

We know the economy doesn’t like that. But why are things just chopping up and down? It’s because people don’t know what’s going to happen with the tariffs already. You know, we had the big tariff announcement yesterday.

Autos, 25 percent. Eleven thirty this morning, the story, the news comes out that, well, you know, the Commerce Secretary of the U.S. has talked to some trade minister in Canada and, you know, Canada might be getting some exemptions. Well, that’s a huge impact.

Canada is a huge trading partner. And one of the reasons the auto tariffs are so damaging is because parts for cars jump back and forth between Ontario and Detroit, sometimes five or six times. So if they’re getting a tariff every single time they jump across that Ambassador Bridge, it’s going to ratchet up the prices really quickly.

We have a very developed, very integrated auto supply train of supply chain across the U.S., Mexico and China. I mean, U.S., Mexico and Canada. Sorry, I misspoke there.

So anyway, so what does it come back to? So going back to whether it’s the investor who’s uncertain about his portfolio or this investor who’s concerned about their auto holdings, it’s less so about our tariffs, good or bad. We know they’re bad. We know they’re a big problem for GM.

They’re a challenge for Ford. They’re a challenge for a lot of the international car companies, even if they’re making their products here in the U.S. just because these supply chains cross so many borders. But it’s more about what are the tariffs going to end up being? Are they really going to come in at these levels? Is this just something that’s going to be announced and then there’s going to be a negotiation that’s come to a lower level? So it’s really, it’s playing that sentiment, which is what we’re dealing with.

So the thing is, you have a day like yesterday when these things get announced, you see GM selling off. Well, you know, you’re going to get to the point where it’s not about is it good or bad for GM, but does GM reflect the high likelihood that these tariffs are going to be enacted and are going to be permanent and going to be lasting for years? And if you get to that point where it looks like, yeah, the stock price is basically saying, you know, there’s a 60, 70% chance of these tariffs. And we really think maybe there’s a 20% chance of these tariffs.

Well, then that’s when those, those stocks start to look interesting. And I think we’re definitely getting into this stage where the market is starting to ratchet up that probability of tariffs and it’s going up beyond what the likely outcome is. And so that’s when the auto companies in particular could get interesting, but really any of these industries that we’re talking about getting tariff could start to start to become more appealing.

So again, it’s not just our tariffs, good or bad. It’s what is the likelihood of them being enacted and of them staying permanent for an extended period of time? Yeah, it’s really that likelihood because as we see the administration is changing their mind fairly quickly. So let’s get to our third question, which is a great question by Derek in Bozeman, Montana.

And it really has to do with the threat of secondary tariffs. And so one example is now we have a 25% tariff imposed on all goods imported from countries that buy Venezuelan oil. And, you know, we have the US based Chevron, which is actually based not far from my home, right there in San Francisco, California and Richmond, California.

It’s a huge importer of Venezuelan oil. And now, you know, supposedly, we have two months to figure this out. You know, two months from now, we’re going to be at the peak of summer driving, right? Because that’s when people are taking vacations, driving throughout the country, prices of gas, oil going up.

Derek wants to know if this will threaten the volatility of oil markets even more. So, Ben, what are your thoughts on that? Well, so the interesting thing with Venezuela, because, again, markets are about what is what’s the information today and what’s the marginal change, right? So, yes, Venezuela, 17% of estimated global oil reserves, right? But even right now, it’s only producing just under 1% of global oil production, right? They’re vastly underproducing what their reserves are due to an array of issues, which I don’t think we have time to go into on this call, but they’re vastly underproducing, mostly for political reasons, trade reasons. And so if they go from, you know, their current, you know, just under a million barrels per day and go down to zero, it’s only 1% of global production.

That’s a small amount. That’s nowhere near the type of market impact we saw, for example, when Russia invaded Ukraine. That was a massive impact.

We saw huge volatility in oil prices, but even that huge impact got digested by the market over, you know, probably six months. Six months, oil prices were coming back down, had come down significantly. So this particular impact, I don’t think it’s going to move oil prices much one way or the other.

The thing that is going to move oil prices one way or the other is not a supply question, but it’s a demand question. And demand comes from economic growth. So we talked a little bit about how the 10-year and the fixed income markets are kind of holding it together.

The interesting thing is that we’ve been watching is oil is gone from like 70 to 68 this year, flat, okay? If, again, markets were really worried about the economy slowing down, the economy going towards a recession, we would see oil being under much more pressure and trading off more on that. So rather than worrying about what the little, you know, the side stories, the political stories with Venezuela, et cetera, that might move oil up or down a dollar or two. That’s not going to really impact things.

But what’s going to end up impacting oil and move oil around is the economic growth expectation. So if we do really see rifts of global economic growth slowing, that’s when we’re going to see oil start to react and pull back. Conversely, if we feel like, hey, the economy is picking up, it’s going to, you know, it’s going to take off, you might see oil pushing back up into the 70s.

So it’s mostly about the demand side of things and economic growth in oil prices right now. Yeah, I also think about who are the, oh, go ahead, Todd, go ahead, please. I was going to say a lot of things can change in two months.

Yeah, exactly. The other thing I think about is, you know, India and China are two of the biggest purchasers of Venezuelan oil. And if that continues, what impact downstream will have on China and India as their economy, something we’ll need to watch as we move towards the future.

But I think now what we want to do is get to the three big stories for next week. And this is really, we’re going to continue our coverage on tariffs and understanding what’s going on there. So, you know, there’s a lot of tariffs going in April 2nd.

We’ll be able to have an update on that and give you at least our perspective on, you know, what do you need to do with your financial plan to be able to still achieve your goals. But there’s additional reports coming out next week, and that’s the March final PMI, along with the ISM. So Ben, could you help us understand the PMI and the durable goods order, as well as next week’s ISM? Sure.

So again, we’ve been talking a lot about the tariffs here. The concern about tariffs is how it impacts the manufacturing part of the economy, right? Those are the folks who are importing, exporting, dealing with costs, et cetera. So durable goods orders, which were reported this past week, the headline number was on the strong side.

The core number was on the weak side. What was the difference? Well, it was a lot of auto parts orders coming in early because they’re placing their orders to get them in before the tariffs. So the headline looked good.

The core was fine. It was pulling back from a strong January. But those are some of the places we’re starting to see those tariffs impacts trickle in.

But a really good number to look at when we’re talking about the tariff impact are the manufacturing surveys. You mentioned the consumer sentiment surveys. Those are very, very unreliable, just because consumers basically will tell you how they feel right now.

But we have the markets. They tell us what’s going on right now. But the business surveys are really good because they call up and it’s right in the title, Purchasing Managers Index.

They call up purchasing managers. They call up folks who are managing businesses. It’s a set group of questions that they ask and they say, how do you feel about your business? And these two surveys, both the ISM and the PMI, they’re both centered on 50.

And so if they’re saying a 50, that’s basically people are saying, I feel about as good last month as this month. And so it’s around 50. So they’ll fluctuate right around that level.

They’ve been fluctuating around that level throughout this entire soft landing process we’ve had. They’ve been around that level for the past two years or so. Get a little stronger, get a little weaker, they move up and down.

So the reason why these numbers are interesting is they’re looking forward. So not looking backwards, right? Like for example, today we got fourth quarter GDP. That’s great.

I threw that in the trash. I don’t care about fourth quarter GDP. I want to know about first quarter.

I want to know about second quarter GDP, right? That’s what these ISM and PMI numbers are going to tell us. And that’s why the markets are going to be looking at them because you go back to 2018, right? Maybe if you can find historical examples, that’s the last time we saw a trade fight with tariffs, sorry, trade fight with tariffs on China. We saw the negotiation over NAFTA, all these trade issues came up.

And so what we saw is in 2017 with the tax cut and jobs act, we saw the ISM go from 50 to 60. That’s going to super excited, like 50 average 60. Hooray.

We love this stuff, right? Well, in the fourth quarter of 2018 and into 2019, that number went from 60 back to 50. What changed? We saw the China trade conversation, the NAFTA trade conversation. And at the same time, folks tend to forget this.

The S&P went down 18% in the fourth quarter of 2018. Okay. And so that was at the peak of the trade conversation.

So we’re sitting here. Sounds kind of familiar now, right? Lots of trade headlines, market pulls back. So if we see these PMIs start to fluctuate, that’s another sign of, oh, geez, we got to worry about it.

So of all the numbers that have been coming out, we’ve had GDP this past week. We’ve got unemployment next week. It’s actually these ISM PMI numbers are taking on more importance right now because it’s less about, oh, what’s the Fed going to do about unemployment or what’s the Fed’s going to do about inflation? Really, honestly, the Fed’s sitting there trying to figure out what’s going on with trade too, right? I think we’re going to say tariff one more time so we can get our 100 tariff card punched, right? But that’s what the Fed’s sitting here looking at.

They don’t know. So we’re trying to assess what it is. So if we see these PMIs start to fluctuate, then we’re going to start to know that, okay, maybe these tariffs are starting to be a problem and we got to start thinking harder about it.

So maybe the 10-year is going to start looking at it and start reacting more to it. So that’s why it’s important. It comes out next week.

And so we’ll be paying attention and it’s just a good one. So for viewers who are watching the headlines, that’s a good number to watch and pay attention to. Yeah.

Thank you, Ben. And no one has a crystal ball here, not even the Fed, right? But what I think you’ve given our viewers is a new, I think, charter to look at for PMI to understand what’s coming, but I’d encourage viewers to come back next week so that we can continue to share the story because we’ll know the numbers and we’ll be able to translate those for our viewers so that you continue to help protect and grow your portfolio. And of course, Ben, you mentioned the March unemployment numbers come out Friday morning.

So all of that will help us design the show next week to help you translate what’s happening. So again, thank you so much, Ben, for your input. Todd, we really appreciate your input.

This has been incredibly helpful for me and for the viewers. Thanks for watching all of our viewers. We really want to know what you think of Rise Up.

We want to hear from you. What topics would you like us to cover? What questions do you have? We really want your engagement so we can continue to improve our show and share even more helpful information with these brilliant minds of our guests that we have. And if our conversation today sparked a question or you want a portfolio review because you want to be proactive in managing your portfolio, just like Ben and Todd have suggested, I’d like you to go to Wealthion.com backslash free and you can actually get a free portfolio review from a fiduciary who’s always going to do what’s best in your interest.

And we can do that at Grimes so that you can get helpful with an advisor to help you navigate through these challenging times. So again, thank you, Ben and Todd. I know you have a lot to celebrate.

Todd’s daughters has a big birthday coming up. Ben has his son getting his driver’s license. Good luck with all of that.

And we look forward to you joining us again.