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<v Speaker 1>Eight o four, come up in eighth five a fifty

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<v Speaker 1>five karrosite talk station. A very happy Monday tea always

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<v Speaker 1>made extra happy because we get to talk to Brian

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<v Speaker 1>James and it's a financial Planner is with all words

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<v Speaker 1>financial Brian, welcome back to the program. Timing is everything.

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<v Speaker 1>It's good to have you on this morning.

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<v Speaker 2>Good morning, good morning, and hey let's talk about those reds.

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<v Speaker 2>Let's start with happy news and how that doesn't work either.

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<v Speaker 1>Yeah, that does. I know that doesn't work either. I

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<v Speaker 1>hope you live on high ground. I ad my Facebook

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<v Speaker 1>are kind open and just everybody's posting pictures of how

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<v Speaker 1>these rivers are just busting at the seams. And somebody

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<v Speaker 1>emailed me post saying like Route fifty is underwater and

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<v Speaker 1>it's just insane and the mt of rain that's gone

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<v Speaker 1>out out there.

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<v Speaker 2>Oh yes. We have some friends and family who were

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<v Speaker 2>visiting Ohio University for it was mom's weekend, and there

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<v Speaker 2>were texts and messages flying around over exactly how you

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<v Speaker 2>could get out of Athens and get back here to Cincinnati.

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<v Speaker 2>So lots of lots of that going on, and unfortunately

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<v Speaker 2>we seem to be the toilet of our neighborhood. All

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<v Speaker 2>of the water runs down on hill to us, so

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<v Speaker 2>we're okay, but my sump is going to run for

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<v Speaker 2>a month straight.

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<v Speaker 1>Oh jeez, I'm sorry to hear that. Fortunately, we happen

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<v Speaker 1>to be on high ground on top of the hill

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<v Speaker 1>in Simms Township as opposed to the bottom of the

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<v Speaker 1>hill where the Little Miami River is in Loveland is

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<v Speaker 1>also flowing over the bank. So God Blood prayers to

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<v Speaker 1>everybody out there who's having a cope with that. Hopefully

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<v Speaker 1>it'll dry out real soon. Anyhow, we got to get

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<v Speaker 1>to it. Bad news in the market. How many trillions

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<v Speaker 1>of dollars were wiped out last week in the market?

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<v Speaker 2>Brian James, Well, just more than a couple. So we've

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<v Speaker 2>seen obviously a lot of volatility. And if you haven't

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<v Speaker 2>looked at your four ohin k goes ahead and don't don't.

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<v Speaker 2>There's no need. If you were, we will be fairly

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<v Speaker 2>predictable on this. But if you were properly diversified in

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<v Speaker 2>the first place, then this is just eating your vegetables.

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<v Speaker 2>It's no fun. Nobody wants to do it. But yes,

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<v Speaker 2>of course, when the markets are getting hammered across the board,

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<v Speaker 2>your investments are going to come down to. So what happened,

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<v Speaker 2>of course, was we had we've got some tariffs now

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<v Speaker 2>that we haven't dealt with the big news from last week.

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<v Speaker 2>And what really triggered is after President Trump unveiled his

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<v Speaker 2>sweeping plan across all of our US partners. This was

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<v Speaker 2>a ten percent minimum tear up on all imports in

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<v Speaker 2>Canada and Mexico are exempt from that because they're stuck

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<v Speaker 2>with twenty five percent, right, But the big thing that

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<v Speaker 2>happened was China came back and said this is kind

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<v Speaker 2>of the first response. China came back and just said, okay,

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<v Speaker 2>we're going to put thirty four percent on products coming

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<v Speaker 2>from the United States into China. So basically it's a

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<v Speaker 2>bit of a tennis match now as as we fire shots,

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<v Speaker 2>you know, kind of back and forth. But I think

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<v Speaker 2>the market may have been sort of hoping, and I'm

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<v Speaker 2>sure President Trump was definitely hoping that we're going to

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<v Speaker 2>levy these big, scary tariffs. But we're going to swing

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<v Speaker 2>such a big stick that everybody's just going to buckle

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<v Speaker 2>and it'll all go away over the weekend. Maybe a

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<v Speaker 2>little naive that's definitely not happening, But China's response is

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<v Speaker 2>what triggered the massive selloff on Friday, and it's going

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<v Speaker 2>to continue today. So prepare for a bumpy ride.

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<v Speaker 1>Yeah, indeed, And I guess given the trade imbalance with China, know,

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<v Speaker 1>Trump keeps talking about that they don't buy nearly as

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<v Speaker 1>much stuff from US as we buy from them.

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<v Speaker 2>Correct, there's a massive imbalance there. That the twenty twenty

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<v Speaker 2>fourth deficit with China was almost three hundred billion, and

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<v Speaker 2>our imported goods were about four hundred and thirty eight billion.

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<v Speaker 2>So and ironically that's how the tariff calculation was. They're

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<v Speaker 2>simply taking half of that deficit and applying it against

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<v Speaker 2>against the import numbers, and so basically every country gets

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<v Speaker 2>kind of a different calculation there. But the whole point

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<v Speaker 2>is just to reduce the deficit. We want to make

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<v Speaker 2>it more profitable for the United States to be in

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<v Speaker 2>these situations in the first place, to be trading, and

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<v Speaker 2>we have given up a lot. Of course, as President

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<v Speaker 2>Trump says, that's very true. What has driven the stock

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<v Speaker 2>market a lot, even American companies, is the idea that

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<v Speaker 2>other countries are willing to trade with our country, but

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<v Speaker 2>over decades we've allowed them to grab a little more here,

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<v Speaker 2>grab a little more there. By levying tariffs against US,

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<v Speaker 2>Trump wants to tear the band aid off, set us

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<v Speaker 2>back to you know, a little more level playing field.

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<v Speaker 2>No way to get there without somebody taking a significant hit. Obviously,

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<v Speaker 2>these countries don't want to take that hit, so they're

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<v Speaker 2>going to swing back, and it's just going to be

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<v Speaker 2>a couple of rounds of haymakers back and forth until

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<v Speaker 2>everybody settles down.

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<v Speaker 1>Well, I guess what would the landscape look like if

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<v Speaker 1>it was an equal playing field. If there let's say

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<v Speaker 1>that they eradicated tariffs and nobody charged anybody for stuff

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<v Speaker 1>coming in or going out? Would that be economically devastating

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<v Speaker 1>to countries? Are they reliant upon these tariffs to keep

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<v Speaker 1>their u uh, to to keep the process going, to

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<v Speaker 1>keep their governments open, to keep them from a financial collapse?

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<v Speaker 1>I mean that is that the point of this?

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<v Speaker 2>Yeah? I think that in the short run, in the

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<v Speaker 2>very short run, if everybody just agreed, you know what,

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<v Speaker 2>we're going to take all the tariffs off the table completely,

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<v Speaker 2>then countries that were relying on that, obviously are going

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<v Speaker 2>to see a reduction in the income that they're getting

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<v Speaker 2>because the United States never objected. We were We were

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<v Speaker 2>cool with it for for decades, and so that would

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<v Speaker 2>effectively be like a price reduction in the amount of

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<v Speaker 2>revenue that they're bringing in, and therefore that's going to

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<v Speaker 2>be a hit to their economies. They can't afford to

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<v Speaker 2>simply let it all go away. You know, no country

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<v Speaker 2>is going to be able to simply reduce the revenue

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<v Speaker 2>they've got coming in and still get all of their

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<v Speaker 2>bills paid. So that's why they're trying to fight back

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<v Speaker 2>and just make sure that they retained some level of

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<v Speaker 2>that income they had coming in because they just can't

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<v Speaker 2>afford it. Well, I guess you know.

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<v Speaker 1>Their component of this is it would allow their people

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<v Speaker 1>to at least afford American products. As presently, with some

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<v Speaker 1>of the terriffs as high as they are, they're just

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<v Speaker 1>not buying them. I mean, there's a reason we have

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<v Speaker 1>a trade imbalance because they cannot afford to purchase American products.

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<v Speaker 2>Yes, yeah, that has a lot to do with it.

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<v Speaker 2>And then we doubled down on that by making it

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<v Speaker 2>political too, so now it's a statement to not buy

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<v Speaker 2>American products. I saw a picture online of a Canadian

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<v Speaker 2>supermarket where Canadian strawberries were listed at six dollars a

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<v Speaker 2>little box of them, and those were pretty much sold out.

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<v Speaker 2>The American ones right next door to them were four

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<v Speaker 2>bucks a box and plenty to go around. So there's

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<v Speaker 2>there's more than just the economics happening at this point.

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<v Speaker 1>Yeah, and I you know, they can make their own

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<v Speaker 1>choices along those lines. You choose not to buy something,

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<v Speaker 1>you choose not to buy something. That's why nobody buys

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<v Speaker 1>bud light beer anymore. And whether or not that'll ever

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<v Speaker 1>come back is I suppose it depends upon whether we

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<v Speaker 1>iron out our differences and get this away from politics

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<v Speaker 1>and just start talking about, you know, plain simple economic realities.

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<v Speaker 2>Yeah, that's true. This isn't unprecedented, though. We've had tariffs before.

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<v Speaker 2>Remember when the Holly Smooth Act was nothing more than

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<v Speaker 2>a funny line from Ferris Bueller Dale. Oh yeah, talking

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<v Speaker 2>about all of a sudden it shows up all the time,

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<v Speaker 2>because this is the that was the last time we

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<v Speaker 2>saw tariffs raised in to this extent. Matter of fact,

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<v Speaker 2>we're a little we're a little past that now. This

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<v Speaker 2>is historic and scope didn't work during the Great Depression.

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<v Speaker 2>So the goal then, though, was a little bit different.

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<v Speaker 2>The goal was to hopefully prop up the US market

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<v Speaker 2>from the US economy from a very very very extremely

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<v Speaker 2>weak position. It was dead on the table. This is

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<v Speaker 2>a little bit different where this is a negotiating tactic.

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<v Speaker 2>I don't think President Trump would would mind at all

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<v Speaker 2>if all these tariffs went away pretty quickly, if he

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<v Speaker 2>got what he wanted in terms of, you know, of

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<v Speaker 2>the concessions from our customers. Basically that's the goal. I

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<v Speaker 2>think this is a negotiation tactic. The man is a

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<v Speaker 2>he wrote The Art of the Deal was his big

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<v Speaker 2>book back in the eighties. That's what he's all about.

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<v Speaker 2>So this is simply a way to say, hey, this

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<v Speaker 2>is what what America is willing to do and what

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<v Speaker 2>it is no longer willing to do. Some of it

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<v Speaker 2>is going to be a little bit of a sleight

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<v Speaker 2>of hand, smoking mirrors, because I don't think anybody believes

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<v Speaker 2>we're truly going to maintain fifty percent tariffs on some

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<v Speaker 2>of these countries forever and ever, because they'll simply never

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<v Speaker 2>buy from US again. That makes it a negotiating tactic.

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<v Speaker 1>Well, and I know we learned from COVID that we

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<v Speaker 1>and I know it's a broad statement, maybe too large

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<v Speaker 1>a brush. We don't make anything anymore here, but you know,

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<v Speaker 1>it is a fact that China does manufacture the vast

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<v Speaker 1>majority of the complete in parts of going to pharmaceuticals,

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<v Speaker 1>if not manufacture them, generally speaking, that's a dangerous position

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<v Speaker 1>to be in considering, you know, we could end up

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<v Speaker 1>in some sort of shooting war with China and we

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<v Speaker 1>can't get pharmaceuticals. So this may bring back some of

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<v Speaker 1>those some of those manufacturing facilities here in the United States,

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<v Speaker 1>which would provide some measure of security. I think that'd

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<v Speaker 1>be a positive benefit from.

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<v Speaker 2>It, absolutely, and if that actually happens. Now. The one

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<v Speaker 2>scary thing that I can't quite get my head around

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<v Speaker 2>is we had the same situation with semiconductors. We were

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<v Speaker 2>buying so much of them, virtually all of them from Asia,

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<v Speaker 2>a lot of them from Taiwan, with whom we have

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<v Speaker 2>a good relationship. But it does seem like any day

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<v Speaker 2>now that could become China. So the answer to that

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<v Speaker 2>was to build a couple plants a little southeast of Columbus.

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<v Speaker 2>Intel was building plants to produce these things on shore.

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<v Speaker 2>I don't understand why that has come in the crosshairs,

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<v Speaker 2>but for some reason there is there are concerns that

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<v Speaker 2>that's not going to be happen anymore. So some of

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<v Speaker 2>these puzzle pieces don't quite fit.

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<v Speaker 1>Okay, and real quick here before we take a break

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<v Speaker 1>and come back, Brian James. When the Smooth Holly terror

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<v Speaker 1>fact went in, and obviously it was a disaster for US.

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<v Speaker 1>It exacerbated the Great Depression, and it has always gone

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<v Speaker 1>down in history. It is a really terrible policy position

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<v Speaker 1>by Hoover. But what were the what was the teriff

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<v Speaker 1>situation like relative to American exports?

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<v Speaker 2>Was it the same?

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<v Speaker 1>Were there did other countries tariff American imports or or

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<v Speaker 1>or was the landscape different? I mean, in other words,

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<v Speaker 1>is it a comparable comparison?

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<v Speaker 2>It is so. Yeah, So a lot of countries did

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<v Speaker 2>respond with their own tariffs, and that just reduced the

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<v Speaker 2>overall trade activity with the United States. Became very protective

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<v Speaker 2>and isolationist, and other countries responded in kind, and that

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<v Speaker 2>led to a sixty five percent decrease in international trade

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<v Speaker 2>between nineteen twenty nine and nineteen thirty four. So that's

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<v Speaker 2>why ben Stein says they did not work, and the

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<v Speaker 2>United States sank further into the Great Depression.

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<v Speaker 1>Yeah, boy, the Wall Street journals really got its hire

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<v Speaker 1>up against the Trump administration for this. Normally they're you know,

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<v Speaker 1>kind of sied with conservative leaning at least to a certain degree.

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<v Speaker 1>I know, they're rather politically neutral, but leaning towards you know,

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<v Speaker 1>pro business, pro capitalism. Man, you can't find a positive

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<v Speaker 1>word to be said in the Wall Street Journal of

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<v Speaker 1>late not a lot.

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<v Speaker 2>Yeah, Automotive CEOs Jim Farley, Ford, Mary Barrow General Motors

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<v Speaker 2>are expressing really strong concerns. The technology industry has never

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<v Speaker 2>been a huge fan of Trump, other than magically showing

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<v Speaker 2>up on the dais this inauguration overnight, but they've been

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<v Speaker 2>absolutely crushed. Steel is one of the places where that

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<v Speaker 2>actually possibly could benefit from all of this. So some

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<v Speaker 2>of those CEOs have been a little more supportive than

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<v Speaker 2>the rest, but in general, generally speaking, things that slam

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<v Speaker 2>on the brakes in the economy are generally not good

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<v Speaker 2>for any publicly traded company, and CEOs are starting to

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<v Speaker 2>pipe up about it.

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<v Speaker 1>All right, We'll bring Brian James back to talk more

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<v Speaker 1>about these and other topics at take fifteen Right now.

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<v Speaker 1>If you have care city detoxication one place I know autation.

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<v Speaker 1>Brian Thomas The Money Monday's Brian James. Yes, but I

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<v Speaker 1>tried to put a positive spin on this disaster disaster

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<v Speaker 1>several days, and looks like it's going to drop again today,

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<v Speaker 1>I guess futures. When I got up this morning, we're

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<v Speaker 1>about three and a half four percent down, but they

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<v Speaker 1>backed off a little bit to about two percent. But

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<v Speaker 1>we're dealing with do we call this a bear market?

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<v Speaker 1>I mean, at what point is there a declaration like, hey,

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<v Speaker 1>we're in a bear market. I mean, there's a thing

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<v Speaker 1>called a correction and we've been hearing about that coming

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<v Speaker 1>for a long time. Is this perhaps related to a

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<v Speaker 1>market correction that was expected? Is this the beginning of

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<v Speaker 1>the recession that you really joked about last week, Brian?

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<v Speaker 1>That's been coming now what for three and a half

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<v Speaker 1>four years? Oh my god. Recessions right around the corner.

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<v Speaker 1>Recessions right around the corner. So put this in perspective

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<v Speaker 1>and maybe try to spend this positively, because as you know,

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<v Speaker 1>and I know, and you and I both lived through

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<v Speaker 1>a lot of these market downward trajectories, they always end

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<v Speaker 1>up popping back up and ended up ended up making

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<v Speaker 1>more money over the long haul.

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<v Speaker 2>So what's the story. Yeah, they absolutely so, yeah, we're

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<v Speaker 2>we in a bear market. Yeah, it's look that way.

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<v Speaker 2>Depends on your definition of bear market. But let's just

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<v Speaker 2>say we're not in a good one. So still, as

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<v Speaker 2>you hinted that, though stocks are cyclical, we've had twelve

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<v Speaker 2>bull markets and twelve bear markets since nineteen forty nine,

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<v Speaker 2>and that might think that might make you go, well,

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<v Speaker 2>we got a one out of two chance, right, it's

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<v Speaker 2>either good or it's bad. The difference is that bull

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<v Speaker 2>markets are much longer and they rise much further than

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<v Speaker 2>bear markets, so bear markets relatively short. The average length

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<v Speaker 2>of a bear market is one point one year, at

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<v Speaker 2>one point one years, and it averages about a thirty

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<v Speaker 2>five percent decline, so that that's basically on average, we

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<v Speaker 2>take that hit and we lose about a third and

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<v Speaker 2>then we move on. A bull market, on the other hand,

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<v Speaker 2>last five years and the average return over that time

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<v Speaker 2>period TU relatively is two hundred and seventy percent, so

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<v Speaker 2>we grow a lot further. We go. Think think of

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<v Speaker 2>the long term chart of a market. They go up,

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<v Speaker 2>not down, and a lot of people get panicked when

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<v Speaker 2>we are at a when we're out of market peak,

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<v Speaker 2>which we were in mid February, the market was an

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<v Speaker 2>all time highest. Recent is mid February. News came out,

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<v Speaker 2>headlines came out, the market didn't like, and it's taken

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<v Speaker 2>back some of that value. But people get worried when

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<v Speaker 2>they hear we're at an all time high. Well, the

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<v Speaker 2>next step is down, right, it has to be down.

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<v Speaker 2>We're at an all time high. The market is usually

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<v Speaker 2>at an all time high. That's what it does. It

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<v Speaker 2>goes up, not down. Therefore, we're almost always at a

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<v Speaker 2>long time high. So the thing to share about this

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<v Speaker 2>And I actually just got an email a little bit

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<v Speaker 2>from a little bit ago from a client saying, am

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<v Speaker 2>I looking at this right? Am I only down seven percent?

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<v Speaker 2>When I know the market's down fifteen or twenty percent

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<v Speaker 2>based on whatever index you're looking at? And answers, yeah,

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<v Speaker 2>all work is good at what we do. But this

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<v Speaker 2>is the whole point of diversification. For this gentleman, he's

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<v Speaker 2>got a diversified portfolio. He's also got international stocks, he's

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<v Speaker 2>got fixed income in there. These are two things that

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<v Speaker 2>nobody has cared about for a couple of decades, but

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<v Speaker 2>those are propping up the market. If you have a

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<v Speaker 2>diversified portfolio, then that's kind of holding you up. You

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<v Speaker 2>might actually be making money in some of those positions,

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<v Speaker 2>believe it or not. And again, that is the point

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<v Speaker 2>of a diversified portfolio. That's why we don't go all

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<v Speaker 2>in on the S and P five hundred just because

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<v Speaker 2>it seems like you don't need to own anything else.

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<v Speaker 1>Yeah, and you've made that point many times, and it's

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<v Speaker 1>just it is sound, sound advice, and it's one of

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<v Speaker 1>the reasons why you have a financial planner. Now in

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<v Speaker 1>terms of the FED and interest rates, what impact might

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<v Speaker 1>this downward trending market have on that?

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<v Speaker 2>Yeah, So these tariffs are going to act like a

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<v Speaker 2>pretty good tax increase on imported goods. So that's going

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<v Speaker 2>to slow the economy, there's no doubt about it. The

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<v Speaker 2>debate is what will degree be. So what we're thinking

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<v Speaker 2>right now, and this kind of echoes a lot of

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<v Speaker 2>what you hear from other economists. If all these announced

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<v Speaker 2>tariff stick GDP growth is going to be cut by

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<v Speaker 2>a couple percentage points over the next year or two,

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<v Speaker 2>So that will take us from what we did have

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<v Speaker 2>a modest growth outlook and could push it toward recession.

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<v Speaker 2>Not going to be overnight recessions never are. We're not

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<v Speaker 2>going to wake up one day and say that, hey,

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<v Speaker 2>we just started a recession this morning, it's going to

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<v Speaker 2>be yeah, the recession started a few months ago. If

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<v Speaker 2>this happens, and the same way on the way out

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<v Speaker 2>as we exit a recession. And we've been through this before.

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<v Speaker 2>Don't forget we had a recession. We had a COVID

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<v Speaker 2>related recession that was over and done with pretty quickly.

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<v Speaker 2>But it won't be announced that. Everybody back in the pool,

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<v Speaker 2>you know, this morning, everything's wonderful, It'll be okay. A

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<v Speaker 2>couple months ago things turned positive and we've confirmed that

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<v Speaker 2>the numbers are and we're now out of a recessionary environment.

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<v Speaker 2>This one is self inflicted. We chose to put in

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<v Speaker 2>the catalysts that are causing it. That is, I sort

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<v Speaker 2>of compare that to COVID a little bit, because COVID

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<v Speaker 2>had nothing to do with the overall economy and how

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<v Speaker 2>it was progressing on its own. It was something that

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<v Speaker 2>came out of left field, of course, and it was

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<v Speaker 2>how we reacted to it. Underneath it all the economy

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<v Speaker 2>before that was acting okay, was in pretty good shape.

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<v Speaker 2>That's the same situation we have right now. We chose

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<v Speaker 2>to put these tariffs in place. Countries chose to react

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<v Speaker 2>the way they have, and the market is reacting accordingly.

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<v Speaker 2>Versus a two thousand and eight where the underlying structures

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<v Speaker 2>were at risk.

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<v Speaker 1>Okay, well, and like you said, the market would have

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<v Speaker 1>continued and percolated along fine until we decided to shut

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<v Speaker 1>everything down and lock everything down and stop the economy

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<v Speaker 1>from moving forward.

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<v Speaker 2>Correct. We pushed a button. This is not just the

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<v Speaker 2>weather turning bad. We pushed a button to make it happen.

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<v Speaker 2>All right, Well, don't panic, is what you're saying. The

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<v Speaker 2>financial planner in here, which is more of a counselor,

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<v Speaker 2>it's talking people off the ledge and just let it

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<v Speaker 2>ride out. We too will come out the other side

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<v Speaker 2>at some juncture. Just got to have to wait and

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<v Speaker 2>see approach to it. So it is, we'll learn your history.

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<v Speaker 2>We've been through these things before. We'll go through them again.

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<v Speaker 2>Go back in time and see what the market has done.

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<v Speaker 2>There have been five years that are attention getters where

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<v Speaker 2>we're down more than twenty percent. That's including your great depression,

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<v Speaker 2>the seventies, the tech bubble bursting nine to eleven, two

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<v Speaker 2>thousand and eight, and so forth. Each and every one

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<v Speaker 2>of those five years Brian Thomas was followed by a

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<v Speaker 2>year that had a huge upswing. The pendulum swings back and.

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<v Speaker 1>Forth, it does, Brian James. Appreciate your sound advice and

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<v Speaker 1>little dose of optimism there toward the end, with obviously

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<v Speaker 1>a concern for expressed by a lot of people where

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<v Speaker 1>the markets are going. Brian, we'll talk again next month.

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<v Speaker 1>I have you have a wonderful week and good luck

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<v Speaker 1>talking people off the ledge this.

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<v Speaker 2>Week, right, I appreciate it. You have a good week

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<v Speaker 2>day drive.

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<v Speaker 1>Thanks man, you too, take twenty five fifty five Caro

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<v Speaker 1>sleeve talk station. Feel free to call uh Sean can

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<v Speaker 1>open up the phone lines. We got a little time

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<v Speaker 1>before we get to Todd Sledge from since Nava maybe

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<v Speaker 1>got a