Interim Monthly Market Insights - April 2025
Greetings Team!
Mom – I’m not going to school today! Have you noticed that they’re closing the Department of Education? Playing Eric Cartman (in “South Park,”), that would have been the line for the month. It makes you wonder how parents would have responded!?
In times like this- it’s often difficult to rationalize the irrational. Talking about the “climates of the country”, whether economic, social, political, etc., it seems like we are living in a clown world abducted by aliens… or perhaps it’s just artificial intelligence!?
April has been a tough month for the markets – one of the most volatile across markets in modern history. What’s happening and where are we heading?
It all began on April 2nd which the industry now refers to as Liberation Day. Liberation Day has many dark meanings from the past, but this context was quite different and not certain this will become an officially recognized holiday or event.
Trump Tariff Liberation Day was the official rollout of President Donald Trump’s trade policies. Tariffs have always been part of his presidency as we witnessed during the trial run – his first term. During his presidency (2017 – 2021), Trump imposed numerous tariffs, including steel & aluminum on imports from our allies and rivals, a trade war with China had been ignited and threats of auto tariffs were placed on the European Union and some of our other major trading partners. These policies were controversial, with critics arguing they hurt U.S. businesses and consumers while supporters claimed they protected American industries. Sound familiar?
Liberation Day quickly turned into Capitulation Day for the global trading markets …. And potentially the swiftest transfer of wealth in modern history ensued!
Let’s break down what’s actually happening:
Tariff Talk- in order to level the playing field and potentially balance trade/budgets, maybe this had to happen. The initial cards put on the table outlined an approximate 30% average tariff rate (of course, this was a starting point for negotiations) with all of our major trading partners, including China, Japan, Europe, UK, Canada, Mexico, and South Korea. In order to move forward in a potentially productive fashion, we would need to settle in the 10-15% range. Interestingly enough- Iceland, who we bankrupted in 2008 was at the “magic 10% mark”, an unexpected “upside surprise” for Icelanders in general.
As the first weekend of April was beginning, the future appeared bleak at best. Markets were spiraling, volatility was spiking – like a scene out of “The Walking Dead”. Not to mention, April is our least favorite month of the year as Winter is waning (not to mention April Showers!) … so, our future appeared particularly lonely.
Similar to the weekends during the Fall of 2008, the news flow occurred at a feverish pace. Emergency meetings ensued and then Monday morning arrived….
Monday, April 7th – volatility spikes to levels not seen since 2008, equity markets open up in bear market territory meaning down greater than 20% - something we had not seen since the beginning Pandemic Days. Not only were the markets in free-fall, but it also seemed the World as we knew it would never exist again.
Until the “infamous tweet” arrived (or did it?) … and alas we were delaying implementation of the tariffs for 90 days and the market quickly reversed over 10% within 20 minutes – volatility the Street had never seen.
We soon found out the “tweet” was not “intentional”, and the markets retreated a bit… however not down to the morning lows registered because by this time many major trading partners, including the European Union and Japan, had stepped into the negotiating table. China seemed to be the “hold out”!
By Tuesday evening, April 8th, President Trump was on national television telling everyone “Now would be a great time to be investing in the market” for those who were listening (or maybe for those who were reading in-between the lines.) Given the progress in trade negotiations, interest rates dropping, overwhelmingly negative sentiment, and oversold and market based on fear – we had a hunch we were in store for a sharp reversal and stated to our team that we wouldn’t be at all surprised to see the “biggest” up day in overall markets in US History coming up here very soon.
Alas, by midday on April 9th, the reversal occurred. Tariffs were delayed & adjusted, and we ended with one of the best market days in history. April 9th will live in our memory as one of the swiftest transfers of wealth to be bestowed upon the American people. We can’t say we weren’t warned!!!
Behind the scenes- many tailwinds are blossoming and Spring will arrive, we believe, sooner rather than later. Interest rates have been artificially lowered due to Treasury Secretary Bessent’ mechanizing and Trump creating fear causing a short-term growth scare. The growth scare is taking care of the “inflation” problem with demand destruction- one of our favorite terms and the only solution for controlling inflation. This will allow the Federal Reserve to officially lower interest rates – soon and probably 2-3x this year- providing a further blossom.
Then we have “sandbagging” – another favorite industry term used to describe lowering future earnings guidance – setting themselves up (by the 3rd and 4th qtr. of this year) to handily beat expectations. This is one example of financial engineering that has been utilized for a long time, especially when funds are currently low to fund massive buybacks of company stock.
Today is another mostly cloudy day…. But there appears to be much sunshine on the horizon for the economy, markets and our country.
Our active management strategy allows us to be nimble while remaining defensive, and to continue deploying cash into dislocations in the marketplace that rarely present themselves.
This is our time to shine ( The Schmitt Group), as we’ve weathered through many of these tenuous cycles over the past two decades.
We will leave you with some sunshine as we head into a holiday weekend. The potential “extra funds” raised with the tariffs will hopefully extend the 2017 tax cuts, but more importantly be expanded to include everyone. Perhaps a reduction/elimination of Social Security benefit taxation is on the table!? We see us moving toward a balance with faith restored and stability returning to our lives. Again, these are challenging times - Let’s not allow emotion to impact our sound financial strategy.
The markets are going to be choppy for a while to come, but one thing is certain: you have The Schmitt Group @ Raymond James on your side! We will manage through successfully, as we always have; the sun will shine again!
Onward & Upward Always!
Steven & Daniel
STEVEN W. SCHMITT, MBA, CFP®, CPM®, CRPS®, ADPA®
Managing Director, Private Wealth Advisor
CA Insurance # 0G61253
The Schmitt Group of Raymond James
Raymond James & Associates, Inc. // 3CV
61 S. Paramus Road Suite 360, Paramus NJ 07652
Direct 551.497.5531 // Text 201.559.0775 // eFax 201.291.4298
steven.schmitt@raymondjames.com
raymondjames.com/schmittgroup
Member of the Raymond James Pride Financial Advisors Network
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