Speaker 1: Eight o four, come up in eighth five a fifty
Speaker 1: five karrosite talk station. A very happy Monday tea always
Speaker 1: made extra happy because we get to talk to Brian
Speaker 1: James and it's a financial Planner is with all words
Speaker 1: financial Brian, welcome back to the program. Timing is everything.
Speaker 1: It's good to have you on this morning.
Speaker 2: Good morning, good morning, and hey let's talk about those reds.
Speaker 2: Let's start with happy news and how that doesn't work either.
Speaker 1: Yeah, that does. I know that doesn't work either. I
Speaker 1: hope you live on high ground. I ad my Facebook
Speaker 1: are kind open and just everybody's posting pictures of how
Speaker 1: these rivers are just busting at the seams. And somebody
Speaker 1: emailed me post saying like Route fifty is underwater and
Speaker 1: it's just insane and the mt of rain that's gone
Speaker 1: out out there.
Speaker 2: Oh yes. We have some friends and family who were
Speaker 2: visiting Ohio University for it was mom's weekend, and there
Speaker 2: were texts and messages flying around over exactly how you
Speaker 2: could get out of Athens and get back here to Cincinnati.
Speaker 2: So lots of lots of that going on, and unfortunately
Speaker 2: we seem to be the toilet of our neighborhood. All
Speaker 2: of the water runs down on hill to us, so
Speaker 2: we're okay, but my sump is going to run for
Speaker 2: a month straight.
Speaker 1: Oh jeez, I'm sorry to hear that. Fortunately, we happen
Speaker 1: to be on high ground on top of the hill
Speaker 1: in Simms Township as opposed to the bottom of the
Speaker 1: hill where the Little Miami River is in Loveland is
Speaker 1: also flowing over the bank. So God Blood prayers to
Speaker 1: everybody out there who's having a cope with that. Hopefully
Speaker 1: it'll dry out real soon. Anyhow, we got to get
Speaker 1: to it. Bad news in the market. How many trillions
Speaker 1: of dollars were wiped out last week in the market?
Speaker 2: Brian James, Well, just more than a couple. So we've
Speaker 2: seen obviously a lot of volatility. And if you haven't
Speaker 2: looked at your four ohin k goes ahead and don't don't.
Speaker 2: There's no need. If you were, we will be fairly
Speaker 2: predictable on this. But if you were properly diversified in
Speaker 2: the first place, then this is just eating your vegetables.
Speaker 2: It's no fun. Nobody wants to do it. But yes,
Speaker 2: of course, when the markets are getting hammered across the board,
Speaker 2: your investments are going to come down to. So what happened,
Speaker 2: of course, was we had we've got some tariffs now
Speaker 2: that we haven't dealt with the big news from last week.
Speaker 2: And what really triggered is after President Trump unveiled his
Speaker 2: sweeping plan across all of our US partners. This was
Speaker 2: a ten percent minimum tear up on all imports in
Speaker 2: Canada and Mexico are exempt from that because they're stuck
Speaker 2: with twenty five percent, right, But the big thing that
Speaker 2: happened was China came back and said this is kind
Speaker 2: of the first response. China came back and just said, okay,
Speaker 2: we're going to put thirty four percent on products coming
Speaker 2: from the United States into China. So basically it's a
Speaker 2: bit of a tennis match now as as we fire shots,
Speaker 2: you know, kind of back and forth. But I think
Speaker 2: the market may have been sort of hoping, and I'm
Speaker 2: sure President Trump was definitely hoping that we're going to
Speaker 2: levy these big, scary tariffs. But we're going to swing
Speaker 2: such a big stick that everybody's just going to buckle
Speaker 2: and it'll all go away over the weekend. Maybe a
Speaker 2: little naive that's definitely not happening, But China's response is
Speaker 2: what triggered the massive selloff on Friday, and it's going
Speaker 2: to continue today. So prepare for a bumpy ride.
Speaker 1: Yeah, indeed, And I guess given the trade imbalance with China, know,
Speaker 1: Trump keeps talking about that they don't buy nearly as
Speaker 1: much stuff from US as we buy from them.
Speaker 2: Correct, there's a massive imbalance there. That the twenty twenty
Speaker 2: fourth deficit with China was almost three hundred billion, and
Speaker 2: our imported goods were about four hundred and thirty eight billion.
Speaker 2: So and ironically that's how the tariff calculation was. They're
Speaker 2: simply taking half of that deficit and applying it against
Speaker 2: against the import numbers, and so basically every country gets
Speaker 2: kind of a different calculation there. But the whole point
Speaker 2: is just to reduce the deficit. We want to make
Speaker 2: it more profitable for the United States to be in
Speaker 2: these situations in the first place, to be trading, and
Speaker 2: we have given up a lot. Of course, as President
Speaker 2: Trump says, that's very true. What has driven the stock
Speaker 2: market a lot, even American companies, is the idea that
Speaker 2: other countries are willing to trade with our country, but
Speaker 2: over decades we've allowed them to grab a little more here,
Speaker 2: grab a little more there. By levying tariffs against US,
Speaker 2: Trump wants to tear the band aid off, set us
Speaker 2: back to you know, a little more level playing field.
Speaker 2: No way to get there without somebody taking a significant hit. Obviously,
Speaker 2: these countries don't want to take that hit, so they're
Speaker 2: going to swing back, and it's just going to be
Speaker 2: a couple of rounds of haymakers back and forth until
Speaker 2: everybody settles down.
Speaker 1: Well, I guess what would the landscape look like if
Speaker 1: it was an equal playing field. If there let's say
Speaker 1: that they eradicated tariffs and nobody charged anybody for stuff
Speaker 1: coming in or going out? Would that be economically devastating
Speaker 1: to countries? Are they reliant upon these tariffs to keep
Speaker 1: their u uh, to to keep the process going, to
Speaker 1: keep their governments open, to keep them from a financial collapse?
Speaker 1: I mean that is that the point of this?
Speaker 2: Yeah? I think that in the short run, in the
Speaker 2: very short run, if everybody just agreed, you know what,
Speaker 2: we're going to take all the tariffs off the table completely,
Speaker 2: then countries that were relying on that, obviously are going
Speaker 2: to see a reduction in the income that they're getting
Speaker 2: because the United States never objected. We were We were
Speaker 2: cool with it for for decades, and so that would
Speaker 2: effectively be like a price reduction in the amount of
Speaker 2: revenue that they're bringing in, and therefore that's going to
Speaker 2: be a hit to their economies. They can't afford to
Speaker 2: simply let it all go away. You know, no country
Speaker 2: is going to be able to simply reduce the revenue
Speaker 2: they've got coming in and still get all of their
Speaker 2: bills paid. So that's why they're trying to fight back
Speaker 2: and just make sure that they retained some level of
Speaker 2: that income they had coming in because they just can't
Speaker 2: afford it. Well, I guess you know.
Speaker 1: Their component of this is it would allow their people
Speaker 1: to at least afford American products. As presently, with some
Speaker 1: of the terriffs as high as they are, they're just
Speaker 1: not buying them. I mean, there's a reason we have
Speaker 1: a trade imbalance because they cannot afford to purchase American products.
Speaker 2: Yes, yeah, that has a lot to do with it.
Speaker 2: And then we doubled down on that by making it
Speaker 2: political too, so now it's a statement to not buy
Speaker 2: American products. I saw a picture online of a Canadian
Speaker 2: supermarket where Canadian strawberries were listed at six dollars a
Speaker 2: little box of them, and those were pretty much sold out.
Speaker 2: The American ones right next door to them were four
Speaker 2: bucks a box and plenty to go around. So there's
Speaker 2: there's more than just the economics happening at this point.
Speaker 1: Yeah, and I you know, they can make their own
Speaker 1: choices along those lines. You choose not to buy something,
Speaker 1: you choose not to buy something. That's why nobody buys
Speaker 1: bud light beer anymore. And whether or not that'll ever
Speaker 1: come back is I suppose it depends upon whether we
Speaker 1: iron out our differences and get this away from politics
Speaker 1: and just start talking about, you know, plain simple economic realities.
Speaker 2: Yeah, that's true. This isn't unprecedented, though. We've had tariffs before.
Speaker 2: Remember when the Holly Smooth Act was nothing more than
Speaker 2: a funny line from Ferris Bueller Dale. Oh yeah, talking
Speaker 2: about all of a sudden it shows up all the time,
Speaker 2: because this is the that was the last time we
Speaker 2: saw tariffs raised in to this extent. Matter of fact,
Speaker 2: we're a little we're a little past that now. This
Speaker 2: is historic and scope didn't work during the Great Depression.
Speaker 2: So the goal then, though, was a little bit different.
Speaker 2: The goal was to hopefully prop up the US market
Speaker 2: from the US economy from a very very very extremely
Speaker 2: weak position. It was dead on the table. This is
Speaker 2: a little bit different where this is a negotiating tactic.
Speaker 2: I don't think President Trump would would mind at all
Speaker 2: if all these tariffs went away pretty quickly, if he
Speaker 2: got what he wanted in terms of, you know, of
Speaker 2: the concessions from our customers. Basically that's the goal. I
Speaker 2: think this is a negotiation tactic. The man is a
Speaker 2: he wrote The Art of the Deal was his big
Speaker 2: book back in the eighties. That's what he's all about.
Speaker 2: So this is simply a way to say, hey, this
Speaker 2: is what what America is willing to do and what
Speaker 2: it is no longer willing to do. Some of it
Speaker 2: is going to be a little bit of a sleight
Speaker 2: of hand, smoking mirrors, because I don't think anybody believes
Speaker 2: we're truly going to maintain fifty percent tariffs on some
Speaker 2: of these countries forever and ever, because they'll simply never
Speaker 2: buy from US again. That makes it a negotiating tactic.
Speaker 1: Well, and I know we learned from COVID that we
Speaker 1: and I know it's a broad statement, maybe too large
Speaker 1: a brush. We don't make anything anymore here, but you know,
Speaker 1: it is a fact that China does manufacture the vast
Speaker 1: majority of the complete in parts of going to pharmaceuticals,
Speaker 1: if not manufacture them, generally speaking, that's a dangerous position
Speaker 1: to be in considering, you know, we could end up
Speaker 1: in some sort of shooting war with China and we
Speaker 1: can't get pharmaceuticals. So this may bring back some of
Speaker 1: those some of those manufacturing facilities here in the United States,
Speaker 1: which would provide some measure of security. I think that'd
Speaker 1: be a positive benefit from.
Speaker 2: It, absolutely, and if that actually happens. Now. The one
Speaker 2: scary thing that I can't quite get my head around
Speaker 2: is we had the same situation with semiconductors. We were
Speaker 2: buying so much of them, virtually all of them from Asia,
Speaker 2: a lot of them from Taiwan, with whom we have
Speaker 2: a good relationship. But it does seem like any day
Speaker 2: now that could become China. So the answer to that
Speaker 2: was to build a couple plants a little southeast of Columbus.
Speaker 2: Intel was building plants to produce these things on shore.
Speaker 2: I don't understand why that has come in the crosshairs,
Speaker 2: but for some reason there is there are concerns that
Speaker 2: that's not going to be happen anymore. So some of
Speaker 2: these puzzle pieces don't quite fit.
Speaker 1: Okay, and real quick here before we take a break
Speaker 1: and come back, Brian James. When the Smooth Holly terror
Speaker 1: fact went in, and obviously it was a disaster for US.
Speaker 1: It exacerbated the Great Depression, and it has always gone
Speaker 1: down in history. It is a really terrible policy position
Speaker 1: by Hoover. But what were the what was the teriff
Speaker 1: situation like relative to American exports?
Speaker 2: Was it the same?
Speaker 1: Were there did other countries tariff American imports or or
Speaker 1: or was the landscape different? I mean, in other words,
Speaker 1: is it a comparable comparison?
Speaker 2: It is so. Yeah, So a lot of countries did
Speaker 2: respond with their own tariffs, and that just reduced the
Speaker 2: overall trade activity with the United States. Became very protective
Speaker 2: and isolationist, and other countries responded in kind, and that
Speaker 2: led to a sixty five percent decrease in international trade
Speaker 2: between nineteen twenty nine and nineteen thirty four. So that's
Speaker 2: why ben Stein says they did not work, and the
Speaker 2: United States sank further into the Great Depression.
Speaker 1: Yeah, boy, the Wall Street journals really got its hire
Speaker 1: up against the Trump administration for this. Normally they're you know,
Speaker 1: kind of sied with conservative leaning at least to a certain degree.
Speaker 1: I know, they're rather politically neutral, but leaning towards you know,
Speaker 1: pro business, pro capitalism. Man, you can't find a positive
Speaker 1: word to be said in the Wall Street Journal of
Speaker 1: late not a lot.
Speaker 2: Yeah, Automotive CEOs Jim Farley, Ford, Mary Barrow General Motors
Speaker 2: are expressing really strong concerns. The technology industry has never
Speaker 2: been a huge fan of Trump, other than magically showing
Speaker 2: up on the dais this inauguration overnight, but they've been
Speaker 2: absolutely crushed. Steel is one of the places where that
Speaker 2: actually possibly could benefit from all of this. So some
Speaker 2: of those CEOs have been a little more supportive than
Speaker 2: the rest, but in general, generally speaking, things that slam
Speaker 2: on the brakes in the economy are generally not good
Speaker 2: for any publicly traded company, and CEOs are starting to
Speaker 2: pipe up about it.
Speaker 1: All right, We'll bring Brian James back to talk more
Speaker 1: about these and other topics at take fifteen Right now.
Speaker 1: If you have care city detoxication one place I know autation.
Speaker 1: Brian Thomas The Money Monday's Brian James. Yes, but I
Speaker 1: tried to put a positive spin on this disaster disaster
Speaker 1: several days, and looks like it's going to drop again today,
Speaker 1: I guess futures. When I got up this morning, we're
Speaker 1: about three and a half four percent down, but they
Speaker 1: backed off a little bit to about two percent. But
Speaker 1: we're dealing with do we call this a bear market?
Speaker 1: I mean, at what point is there a declaration like, hey,
Speaker 1: we're in a bear market. I mean, there's a thing
Speaker 1: called a correction and we've been hearing about that coming
Speaker 1: for a long time. Is this perhaps related to a
Speaker 1: market correction that was expected? Is this the beginning of
Speaker 1: the recession that you really joked about last week, Brian?
Speaker 1: That's been coming now what for three and a half
Speaker 1: four years? Oh my god. Recessions right around the corner.
Speaker 1: Recessions right around the corner. So put this in perspective
Speaker 1: and maybe try to spend this positively, because as you know,
Speaker 1: and I know, and you and I both lived through
Speaker 1: a lot of these market downward trajectories, they always end
Speaker 1: up popping back up and ended up ended up making
Speaker 1: more money over the long haul.
Speaker 2: So what's the story. Yeah, they absolutely so, yeah, we're
Speaker 2: we in a bear market. Yeah, it's look that way.
Speaker 2: Depends on your definition of bear market. But let's just
Speaker 2: say we're not in a good one. So still, as
Speaker 2: you hinted that, though stocks are cyclical, we've had twelve
Speaker 2: bull markets and twelve bear markets since nineteen forty nine,
Speaker 2: and that might think that might make you go, well,
Speaker 2: we got a one out of two chance, right, it's
Speaker 2: either good or it's bad. The difference is that bull
Speaker 2: markets are much longer and they rise much further than
Speaker 2: bear markets, so bear markets relatively short. The average length
Speaker 2: of a bear market is one point one year, at
Speaker 2: one point one years, and it averages about a thirty
Speaker 2: five percent decline, so that that's basically on average, we
Speaker 2: take that hit and we lose about a third and
Speaker 2: then we move on. A bull market, on the other hand,
Speaker 2: last five years and the average return over that time
Speaker 2: period TU relatively is two hundred and seventy percent, so
Speaker 2: we grow a lot further. We go. Think think of
Speaker 2: the long term chart of a market. They go up,
Speaker 2: not down, and a lot of people get panicked when
Speaker 2: we are at a when we're out of market peak,
Speaker 2: which we were in mid February, the market was an
Speaker 2: all time highest. Recent is mid February. News came out,
Speaker 2: headlines came out, the market didn't like, and it's taken
Speaker 2: back some of that value. But people get worried when
Speaker 2: they hear we're at an all time high. Well, the
Speaker 2: next step is down, right, it has to be down.
Speaker 2: We're at an all time high. The market is usually
Speaker 2: at an all time high. That's what it does. It
Speaker 2: goes up, not down. Therefore, we're almost always at a
Speaker 2: long time high. So the thing to share about this
Speaker 2: And I actually just got an email a little bit
Speaker 2: from a little bit ago from a client saying, am
Speaker 2: I looking at this right? Am I only down seven percent?
Speaker 2: When I know the market's down fifteen or twenty percent
Speaker 2: based on whatever index you're looking at? And answers, yeah,
Speaker 2: all work is good at what we do. But this
Speaker 2: is the whole point of diversification. For this gentleman, he's
Speaker 2: got a diversified portfolio. He's also got international stocks, he's
Speaker 2: got fixed income in there. These are two things that
Speaker 2: nobody has cared about for a couple of decades, but
Speaker 2: those are propping up the market. If you have a
Speaker 2: diversified portfolio, then that's kind of holding you up. You
Speaker 2: might actually be making money in some of those positions,
Speaker 2: believe it or not. And again, that is the point
Speaker 2: of a diversified portfolio. That's why we don't go all
Speaker 2: in on the S and P five hundred just because
Speaker 2: it seems like you don't need to own anything else.
Speaker 1: Yeah, and you've made that point many times, and it's
Speaker 1: just it is sound, sound advice, and it's one of
Speaker 1: the reasons why you have a financial planner. Now in
Speaker 1: terms of the FED and interest rates, what impact might
Speaker 1: this downward trending market have on that?
Speaker 2: Yeah, So these tariffs are going to act like a
Speaker 2: pretty good tax increase on imported goods. So that's going
Speaker 2: to slow the economy, there's no doubt about it. The
Speaker 2: debate is what will degree be. So what we're thinking
Speaker 2: right now, and this kind of echoes a lot of
Speaker 2: what you hear from other economists. If all these announced
Speaker 2: tariff stick GDP growth is going to be cut by
Speaker 2: a couple percentage points over the next year or two,
Speaker 2: So that will take us from what we did have
Speaker 2: a modest growth outlook and could push it toward recession.
Speaker 2: Not going to be overnight recessions never are. We're not
Speaker 2: going to wake up one day and say that, hey,
Speaker 2: we just started a recession this morning, it's going to
Speaker 2: be yeah, the recession started a few months ago. If
Speaker 2: this happens, and the same way on the way out
Speaker 2: as we exit a recession. And we've been through this before.
Speaker 2: Don't forget we had a recession. We had a COVID
Speaker 2: related recession that was over and done with pretty quickly.
Speaker 2: But it won't be announced that. Everybody back in the pool,
Speaker 2: you know, this morning, everything's wonderful, It'll be okay. A
Speaker 2: couple months ago things turned positive and we've confirmed that
Speaker 2: the numbers are and we're now out of a recessionary environment.
Speaker 2: This one is self inflicted. We chose to put in
Speaker 2: the catalysts that are causing it. That is, I sort
Speaker 2: of compare that to COVID a little bit, because COVID
Speaker 2: had nothing to do with the overall economy and how
Speaker 2: it was progressing on its own. It was something that
Speaker 2: came out of left field, of course, and it was
Speaker 2: how we reacted to it. Underneath it all the economy
Speaker 2: before that was acting okay, was in pretty good shape.
Speaker 2: That's the same situation we have right now. We chose
Speaker 2: to put these tariffs in place. Countries chose to react
Speaker 2: the way they have, and the market is reacting accordingly.
Speaker 2: Versus a two thousand and eight where the underlying structures
Speaker 2: were at risk.
Speaker 1: Okay, well, and like you said, the market would have
Speaker 1: continued and percolated along fine until we decided to shut
Speaker 1: everything down and lock everything down and stop the economy
Speaker 1: from moving forward.
Speaker 2: Correct. We pushed a button. This is not just the
Speaker 2: weather turning bad. We pushed a button to make it happen.
Speaker 2: All right, Well, don't panic, is what you're saying. The
Speaker 2: financial planner in here, which is more of a counselor,
Speaker 2: it's talking people off the ledge and just let it
Speaker 2: ride out. We too will come out the other side
Speaker 2: at some juncture. Just got to have to wait and
Speaker 2: see approach to it. So it is, we'll learn your history.
Speaker 2: We've been through these things before. We'll go through them again.
Speaker 2: Go back in time and see what the market has done.
Speaker 2: There have been five years that are attention getters where
Speaker 2: we're down more than twenty percent. That's including your great depression,
Speaker 2: the seventies, the tech bubble bursting nine to eleven, two
Speaker 2: thousand and eight, and so forth. Each and every one
Speaker 2: of those five years Brian Thomas was followed by a
Speaker 2: year that had a huge upswing. The pendulum swings back and.
Speaker 1: Forth, it does, Brian James. Appreciate your sound advice and
Speaker 1: little dose of optimism there toward the end, with obviously
Speaker 1: a concern for expressed by a lot of people where
Speaker 1: the markets are going. Brian, we'll talk again next month.
Speaker 1: I have you have a wonderful week and good luck
Speaker 1: talking people off the ledge this.
Speaker 2: Week, right, I appreciate it. You have a good week
Speaker 2: day drive.
Speaker 1: Thanks man, you too, take twenty five fifty five Caro
Speaker 1: sleeve talk station. Feel free to call uh Sean can
Speaker 1: open up the phone lines. We got a little time
Speaker 1: before we get to Todd Sledge from since Nava maybe
Speaker 1: got a