• Sweeping Import Tariffs Implemented – Beginning April 5, a 10% universal tariff will apply to all imported goods, with an additional tariff for countries running a trade deficit with the U.S. starting April 7. This move signals a broad protectionist shift in U.S. trade policy 

• Existing Tariffs Remain Intact – The new tariffs do not replace prior trade restrictions, such as the 2018 China tariffs, compounding the overall cost of imports for businesses and consumers. 

• Key Exemptions for North America & Select Sectors – Canada, Mexico, and certain industries (e.g., pharmaceuticals, autos) are exempt. 

• Historic Economic Impact – If fully implemented, these tariffs would increase the U.S. effective tariff rate from 2% to 20%, generating ~$640 billion in revenue, comparable to doubling corporate tax revenue. If we called a tariff a tax, this would represent the largest tax increase in modern U.S. history.

• U.S. Equity Selloff – The S&P 500 fell -5.6% in March and -4.3% for the quarter, its worst since 2022, as stretched valuations and concentrated leadership fueled volatility. 

• Mag Drag – Despite 61% of securities posting returns better than the index, AI concerns and a selloff in high-valuation stocks pulled down the market. Six of the “Magnificent 7” fell between -11% to -36%, underperforming the S&P 500. 

• Global Rotation to Stability – Investors shifted away from U.S. equities, favoring Europe and China. MSCI EAFE outperformed the S&P 500 by 11% for the quarter, its strongest lead since Q2 2002, while China gained 15% on stronger manufacturing data and renewed policy efforts. 

• Growth Scare – The Federal Reserve is expected to hold rates, while fiscal policy tightens. Tepid consumer spending and declining confidence add to economic growth concerns. 

• Growth Scare Hits Risk Assets – Weaker economic data, a patient Fed and shifting policy dynamics fueled slowdown fears triggering a broad selloff of U.S. equities, with defensive sectors outperforming.

• Growth Puts Spotlight on Valuations – High-valuation stocks fell more than peers, while value and defensive sectors led. Consumer staples outperformed consumer discretionary by 11%, while Treasuries rallied amid shifting markets sentiment.

• International Extends its Lead – EAFE took another step forward and added to its 2025 lead over the S&P 500, led by EU financial and defense spending along with a cooling of U.S. high valuation stocks.

As 2025 unfolds, we know many of you are feeling uncertain about the markets and what’s ahead. In this special update, we break down the latest trends, including stock performance, the impact of a weakening US dollar, and how we’re managing portfolios to stay resilient. Watch the video for a data-driven look at where things stand and how we’re helping you navigate the road ahead.

Ben Hockema reviews the 2024 performance and looks ahead to 2025, including:

• 2024 Investment Performance

• 4 Reasons to be Bearish

• 4 Reasons to be Bullish

• How to Position Portfolios for 2025 and beyond

• Despite a Federal Reserve rate cut in September, rising inflation concerns and a cooling labor market overshadowed optimism, leading to a cautious market environment in October.

• While October brought challenges, year-to-date returns remain strong, highlighting underlying market resilience despite the month’s turbulence.

• The path to normalized inflation may not be linear, strengthening the case for resilient portfolios in preparation for the road ahead.

Join Ben Hockema to review the investment markets through September 30th, 2024.

• Markets were generally positive in August, despite a tough start to the month as investors wrestled with weakening economic data, geopolitical unrest and global growth.

• Shifting language at the Federal Reserve’s Jackson Hole summit indicated a renewed focus on the employment situation more so than inflation.

• Markets have priced in a first rate cut in September, shifting the question of “when?”  to “how much?”