This Week in Review | Tariff Shakeup, Market Swings & German Political Shifts (Apr. 11, 2025)

Transcript

Mackenzie Winner:

Hello and welcome to This Week in Review. This weekly segment is designed to highlight a few important developments you may have missed this week, what they mean for markets, and most importantly, for investors. Now, let's review what happened this week:

First, tariff developments.

On Wednesday, President Trump shared that there's going to be a 90-day pause on the higher tariffs his administration introduced just last week. The details are still being ironed out, but it looks like countries that haven't hit back could benefit from a lower 10% tariff rate, at least for now. However, tariffs on China have gone up again as the back and forth tensions between the US and China over trade continue to heat up. As we discussed last week, we believe the most likely paths forward for tariffs are strong pushback from the courts and Congress, countries come to the table to negotiate, or some combination of the two. This 90-day pause seems to support these views, with the White House signaling interest in negotiating deals with countries who have reached out for trade talks. If negotiations lead to trade deals or compromises on tariffs, it could help ease investor worries and give the market a much needed boost. But there's always a chance things don't go as planned and the tariff situation deteriorates further. While we're optimistic the overall impact of tariffs might not be as bad as some fear, they still pose a real challenge for the global economy. So this situation is important to keep a close eye on.

Next, dealing with volatility.

This week featured some historically wild swings in the stock market as investors continued to parse through fast moving tariff developments. While stocks briefly dipped beneath a -20% threshold commonly associated with a bear market. We believe the current downturn still looks and feels like a short-term correction, rather than the start of something worse. For one, stock indices have taken a sharp plunge that's more commonly associated with a correction. In mere days, investor sentiment flipped from optimism to pessimism as investors began to fret the potential impact of tariffs. Tariffs are a plausible fear, but most corrections have plausible fears. Bear markets, on the other hand, are typically driven by big fundamental negatives. And while the fundamental effect of tariffs is negative, we think fears over a global recession are premature, nor do they take into account the litany of potential outcomes we could see unfold in the coming weeks and months. As our Founder and Executive Chairman, Ken Fisher, shared in a recent appearance on CNN International's Quest Means Business, the mid-week surge we saw in stocks is an example of how quickly things can change, and a reason why remaining patient is critical, particularly for long-term investors. Whether it's a start of a market recovery or there's more downside ahead, it's impossible to predict exact turning points or market bottoms, and missing out on recovery days can come at a huge opportunity cost. Stocks often start climbing when things look bleak, long before investors can imagine better days ahead. It's not because everything is suddenly great or even improving, but because conditions turn out to be slightly less bad than expected. That little bit of an upside surprise can act like a springboard, sending stocks higher. Volatility might feel uncomfortable in the moment, but if you're investing for the long haul, patience and discipline have a way of paying off.

Finally, an update on German politics.

Germany officially has a new government. On Wednesday, the center-right Christian Democratic Union and Christian Social Union joined forces with the center-left Social Democratic Party to announce their coalition agreement. So far, their main goals appear to be strengthening European defense, tackling immigration issues and working to bring down energy costs. The new coalition government could pave the way for some policy shifts, but we think the realities of governing and broad centrist coalition likely limits controversial changes. Beyond politics, we believe German economic reality likely beats dreary expectations this year. In our view, modest economic growth, combined with falling political uncertainty, should continue supporting German and European stocks. That's it for this week. Thanks for tuning in to This Week in Review. If you're looking for more insights, then don't miss our other series, 3 Things You Need to Know This Week, released every Monday. You can also visit fisherinvestments.com anytime for our latest thoughts on markets. Thanks again for joining us and don't forget to hit 'like' and 'subscribe'!