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🫣 Everybody Stay Calm...
Tariffs, rate cuts, & economic uncertainty.
Austin & Robert from Rich Habits
April 03, 2025
Together with Betterment
Happy Thursday,
We will be speaking today at the GRIT Money Summit — register for the virtual event with this link!
We also wanted to share that one of the most incredible startups in the social media and content creator space — Stan — is hiring for a lot of positions!
If you’re interested in exploring their job openings — click this link!
A quick breakdown — in case you don’t have the time.
⭐ Trial the Rich Habits Network for FREE for 7 Days (seriously)!
⭐ “Reciprocal tariffs” ended up being much more than expected.
⭐ We broke down how to build a winning stock portfolio, automatically.
⭐ The 2025 rate cuts odds have nearly doubled overnight.
⭐ Economic policy uncertainty is tanking the market.
⭐ Newsmax stock plunged -80% after its crazy IPO debut.
Market Overview
As of market open, 4/3/2025
Chart of the Week
“Reciprocal tariffs” ended up being much more than expected.
The U.S. has implemented a historic tariff spike — raising the weighted-average tariff rate to 29% — surpassing even the Smoot-Hawley Act of the 1930s. Markets are reacting sharply, with oil prices dropping nearly -7% and concerns growing that long-term tariffs could lead to a 40%+ decline in oil prices. Inflation is projected to rise to 5.0% or higher.
Initially, markets assumed reciprocal tariffs would remain at 10%, but they fell sharply once Trump announced additional, higher tariffs (shown above and more linked here).
The S&P 500 has seen a dramatic plunge — wiping out over -$2.5 trillion in market cap — marking one of the worst single-day drops since 2020. The Trade Policy Uncertainty Index has soared to record highs, tripling the peak of the previous Trump Trade War in 2019. Economic activity is slowing, with M&A transactions collapsing and private equity firms reducing investments due to heightened risk.
Falling yields on U.S. government bonds signal that markets are pricing in a recession, even as inflation is expected to rise. Companies like Nike, which rely on overseas production, are being hit hard, with Nike’s stock down more than -13% today following a 46% tariff on Vietnam (46% of Nike’s workforce resides there). Foreign demand for U.S. stocks has plummeted, with central bank net outflows nearing -$30 billion, marking a historic shift in global market sentiment.
Goodness gracious — this is wild!
President Trump has officially shown everyone how much he loves tariffs. Now we wait to see who comes to the negotiating table. If there aren’t some resolutions over the coming days, then a serious correction becomes much more likely.
Bill Ackman tweeted this morning something I think we’re all hoping is Trump’s plan: “Sometimes the best strategy in a negotiation is convincing the other side that you are crazy.”
TAX TIP: You have until April 15 to contribute to and max out an IRA for 2024. And you might even be able to deduct those contributions on your 2024 tax return.
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In Case You Missed It…
In this week’s Monday-morning episode of the Rich Habits Podcast (linked here) — Austin and Robert sat down with JJ Maxwell — CEO of Double Finance.
Here’s what they talked about:
Custom Investment Strategies — The Double platform enables users to create personalized stock indices. Offering over 30 pre-built strategies (such as Large Market Beaters which delivered 6.9% returns in six months versus the S&P 500’s 3.9%) Double merges active and passive investing for a $1/month fee.
Automatic Portfolio Management — Double enhances efficiency with automation, including Tax-Loss Harvesting to optimize tax benefits by strategically selling and replacing stocks. Users share portfolio allocations — like 60% in a custom index — and Double automatically manages the execution and rebalancing, providing advisor-level service without the cost.
Low Minimums — Designed for the average retail investor, Double’s minimum investment is only $1,000. Once deposited you can invest as little as $140 toward a strategy of your choosing. If you can’t find something you like, consider using their “stock screener” tool to build your own strategy from scratch optimizing for things like dividends, profits, cash flow, growth, and more.
Here’s a link to the Q&A episode that was posted this morning.
We answered questions from: Anuja K, Jim D, Luke S, Ben T, Michael B, Carlos B, Jay F, Kaleb M,
You can submit questions for these episodes by asking them inside of the Rich Habits Network, replying to this email, or sending us a DM on Instagram.
The Rich Habits Podcast is available on Spotify, Apple, iHeart, YouTube, and wherever else you get your content!
Robert’s Callout
The 2025 rate cuts odds have nearly doubled overnight.
Just a few days ago, the market was pricing in two rate cuts from the Fed in 2025, with an outside chance of three. With the recent turbulence in the market and the 10-Year Yield heading toward 4% again (as shown below) — the market is now expecting four rate cuts this year.
The Trump Administration believes that tariffs and DOGE efforts will lead to increased U.S. tax revenue and eventually — government-sponsored inflation data that reflects that progress has been made. Beyond the amount of rate cuts — there’s also a serious question surrounding how rate cuts would be delivered.
Would Jerome Powell and the Fed be willing to make an “emergency” rate cut of 50 bps or higher? If so, there’s honestly no way of knowing how the market would perceive it…
Austin and I have been saying it since before the holidays in 2024 — this year is all about volatility. Now that it’s officially here, what are you going to do?
I’m continuing to hold my precious metals and position my portfolio in a way that makes red days easier to absorb. If we do see a much larger correction, I cannot wait to increase my positions in long-term winners like Amazon and Nvidia.
On the bright side, as the 10-year yield continues to decline 30-year mortgage rates fall with it. If we see the 10-year yield fall below 4% in the coming days or weeks it might be a good idea to refinance your mortgage (assuming your interest rate is above 6% or so).
Austin’s Callout
Economic policy uncertainty is tanking the market.
The Trade Policy Uncertainty Index has surged to record highs, with uncertainty levels now three times higher than during the first Trump trade war. Markets struggle the most in times of uncertainty, and with inflation rebounding — the risks are even greater. As a result, economic activity is slowing — with many sectors feeling the impact.
I hate to make an ultimatum — but it seems like we are in an interesting, yet simple situation here. If President Trump gets world leaders to the negotiating table and numerous tariffs get rolled back one-by-one, then this market has a chance of moving higher.
If not — then any market jump would likely be a “dead cat bounce” before moving lower. I don’t have a crystal ball, but we’ve only seen this level of uncertainty across the market a handful of times over the last few decades.
As I’ve mentioned to our Rich Habits Network members, I will be using a potential bounce in the market to “sell the rip” and make my portfolio more defensive. I began this strategy weeks ago and was able to cash in on over $18K of profits from the most high-octane growth stocks in my portfolio. I’ve since begun to slowly redeploy those funds into defensive names and commodities.
We’re not going to beat around the bush — things aren’t looking good. Have a plan to dollar cost average toward the S&P 500, Nasdaq-100, and other blue chip index funds and ETFs over the coming 18-24 months.
We’re obviously not in a bear market yet, but the average bear market (when accompanied by an economic recession) lasts 23 months. If done correctly, you’ll come out the other side with +100 to +200% gains on your investments.
Traders become short-term rich during bull markets, while investors build generational wealth during recessions and bear markets. Be on the right side of history and have a plan! This soon will pass and the last thing you want to do is be kicking yourself saying “I wish I was buying at those prices.”
If you want week-to-week updates on the stock market, how we’re positioning our own portfolios, and what trades we’re making — join the Rich Habits Network. Every Tuesday night we jump on a Zoom call and share our playbook with you all.
The Rich Habits Radar
👉 Tesla Q1 deliveries fell short — down -13% YoY.
👉 Amazon submitted a surprise bid for TikTok ahead of U.S. deadline.
👉 Newsmax stock plunged -80% after its crazy IPO debut.
👉 RH plunged -43% after poor earnings & tough timing with tariffs.
👉 U.S. ETFs attracted record +$296B in Q1 inflows.
👉 Job openings dipped lower, hires remained flat in February report.
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Disclaimer: This is not financial advice or a recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.