Transcript

Welcome to Market. Cast presented by Michael Yhip Wealth Partners. Today Michael is giving us his partner notes, one that takes us back to April and the tectonic shift that was expected out of the United States, only to end up in a place that has us head shaking and asking, wait, seriously? Michael explains.

People woke up in April to an announcement by President Trump that he'd be looking to reset the terms of trade, the global terms of trade, and essentially append 30 to 40 years of globalization. It was a shock. I think nobody expected him to implement tariffs to the extent that he did or he tried to. And the early market reaction from the stock market and the bond market was probably correct.

Initially, you had a big sell off in stocks. Bonds were a little bit interesting. Bonds rallied at first, but then investors started to have questions about the role of the US as a reserve currency. For the first time, saw the US dollar sell off and saw bond prices being a little bit soft. And this caused Trump and the administration to do a pretty big U-turn in April.

And we all witnessed one of the craziest things I think investors have ever seen, where a sitting president with true inside information tweeted on through social that people should buy the stock market. And two hours later announced a reversal of his liberation day policies for the most part. And it had everyone scratching their heads.

One of the paradigms that investors have always had is you listen to leaders, and when they project their policy, you invest in trade accordingly. This is the first time that any investor does not do that. What they're doing now is they're fundamentally discounting the first, second, and third thing that comes out of the White House and, essentially, making decisions using their own assessments.

As time's gone on, the general assessment is it seems like it's largely business as usual. I think this has left people stunned a little bit. Even though you can have a very unstable political climate, we still have to work through it as business owners You cannot just turtle up and put your head in the sand. We have to say, OK, what is the range of best case and worst case scenarios, and how do we address that? And I think it leads to more hedging. It leads to less extreme decisions and slower decisions.

So I think the big takeaway is that Trump is probably more business as usual for the markets than anybody would have thought in April. And business as usual for the markets generally means no change. It means no change in trade agreements. It means no change in tax rates. Now, ironically, he lower tax rates through the One Big Beautiful Bill, which is supportive of the markets, not so good for US deficits.

But in general, it doesn't look like he's that different from any previous Republican president or Democratic president. We're not in a place where we would react as quickly as we did in April, because we've learned that President Trump doesn't follow through the way that he would like to. We've learned that the market does not give weighting to what he's saying.

So what we're really trying to do here is be aware and monitor the things that can change, but make changes more incrementally. And some of those incremental changes are tilting more towards global allocation versus a higher concentration in the United States. For over a year, we've added investments like gold to portfolios as well, in recognition that the US dollar is less desirable than it used to be.

And I would say it has been a time of immense learning for the investment community. It's not a good or bad thing. It's like, I think a lot of my colleagues sit around, and we look at these different moments and say, how do we react to this in the future? I remember Sunday night when some of my colleagues and I were looking at 10-year bond futures, and for the first time, we're saying, wow, it's almost like the bond market is revolting against Trump forcing his hand. So it's amazing the power of the markets have over politics. And not just politics have over markets.

And that was Michael Yhip, and I'm Stephanie Mattis, with Market Cast presented by Michael Yhip Wealth Partners. Thanks for listening.

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