Navigating Market Shifts: Tariffs, AI, and Fed Pause
About the Guest(s):
Amy Irvine is the CEO and founder of Rooted Planning Group, a financial planning firm dedicated to helping clients cultivate a prosperous financial future. With years of experience in the industry, Amy brings a wealth of knowledge and insight into financial planning, investments, and economic trends. Her dedication to providing approachable and actionable financial advice has made her a respected authority in the field.
Episode Summary:
In this insightful episode of Money Roots, host Amy Irvine unpacks the financial events that marked the beginning of the year with a keen focus on January's market volatility and policy shifts. With over two decades of financial expertise, Amy shares her thoughts on how the Trump administration's new tariffs, advancements in artificial intelligence, and the Federal Reserve's decisions are shaping the economic landscape. She stresses the importance of remaining calm and focused on long-term financial goals to weather these uncertain times.
Listeners interested in current financial trends and policy impacts will find this episode valuable. Amy delves into how the S&P 500, NASDAQ, and Dow Jones saw varied impacts from recent economic activities, highlighting the significance of technological and trade policy changes. The discussion extends to the Federal Reserve's decision to pause rate cuts, reflecting an effort to stabilize the economy amid persistent inflation concerns. With SEO-optimized insights on tariffs, AI disruptions, and market dynamics, this episode is a must-listen for anyone aiming to stay informed about personal finance amid global economic fluctuations.
Key Takeaways:
- Financial markets showed a positive yet volatile start in January, driven by major policy changes and technological advancements.
- Recent tariffs introduced by the Trump administration target key trading partners, adding to global economic uncertainty.
- Advancements in AI technology, especially by the Chinese company Deep Seq, are causing shifts in technology stocks and the broader market.
- The Federal Reserve's decision to pause rate cuts highlights a cautious approach amid steady economic growth and persistent inflation.
- Staying disciplined in financial planning is crucial during these volatile times to achieve long-term financial goals.
Notable Quotes:
- "All you need is love and a good financial planner."
- "Technological developments matter for all investors, not just those focused on tech stocks."
- "Tariffs have created uncertainty around the global trade relationship, inflation, and economic growth."
- "Ultimately, tariffs were a means of negotiating new trade deals."
- "Staying disciplined will only grow in importance with investor attention focused on implications and implementation of the new administration policies."
Resources:
- Connect with Amy Irvine through Rooted Planning Group's social media channels on Facebook, LinkedIn, and Instagram.
- Pay attention to market updates and newsletters by subscribing to Money Roots wherever you get your podcasts.
Dive into this enlightening episode of Money Roots to understand the significant financial trends and strategies that can help you navigate the current economic landscape. Stay tuned for more insightful content and expert guidance in future episodes.
Transcript
Welcome to Money Roots, the podcast where personal finance gets personal.
Speaker A:Each week, Amy and her guests dig deep into the world of finance, making it more approachable and understandable for everyone.
Speaker A:No matter where you are on your financial journey, from savings and investments to budgeting and planning, we'll bring you practical advice, inspiring stories, and expert insights.
Speaker A:We believe that everyone has the potential to grow a healthy financial future, and we're here to help you nurture it.
Speaker A:So whether you're a financial guru or just starting to plant the seeds of your financial knowledge, this is the place for you.
Speaker A:Get ready to uncover the tools and strategies that can help you thrive financially.
Speaker A:So without further ado, let's dive into today's episode of Money Roots.
Speaker B:Hello podcast listeners.
Speaker B:Thank you for tuning in Once again.
Speaker B:This is Amy Irvine, CEO and founder of Rooted Planning Group.
Speaker B:So I'm here to say all you need is love and a good financial planner.
Speaker B:I can't take credit for that.
Speaker B:That was something that I actually saw on the back of a T shirt at a conference that I attended several years ago.
Speaker B:So I just thought it was a perfect opportunity to share that starting in the month of love in February.
Speaker B:And I truly do believe that life is so much better when we can just find time to be around the ones that we love and to share time with them.
Speaker B:But today's topic is a little more serious than that.
Speaker B:It's about, I guess, year to date, what's been going on.
Speaker B:Certainly there's been a lot of information in the news and a lot of scramble to try to figure out exactly what's been going on.
Speaker B:We'll put a link to a video that we put out earlier this month around tariffs in the show notes, if you want to learn a little bit about that.
Speaker B:But today, certainly I wanted to talk about what happened in the month of January.
Speaker B:It marked a positive but very volatile start to the year for investors amid market shifts and policy concerns.
Speaker B:President Trump returned to the White House and signed dozens of executive orders that Chinese artificial intelligence company Deep Seq shook the tech industry and the Fed hit pause on rate cuts.
Speaker B:So those three things were pretty impactful in the month of January.
Speaker B:Looking forward, investors are focused, I believe more, more on the latest rounds of tariffs and impacts on the global economy.
Speaker B:And certainly inflation continues to be a concern.
Speaker B:Some key market and economic drivers, The S&P 500 gained about 2.7% in January, the NASDAQ 1.6% and the Dow Jones Industrial Average was up about 4.7%.
Speaker B:The 10 year treasury yield ended the month at 4.5 but reached a high of 4.8 in mid month.
Speaker B:And remember, yield means that the price went down.
Speaker B:When we see a higher yield, that means that the price went down.
Speaker B:When we see a lower yield, that usually means that the price went up.
Speaker B:The Federal Reserve held its key policy rate at 4.25 to 4.5 following three consecutive rate cuts.
Speaker B:But they did express, you know, that they wanted to pause and kind of take a look around and see what was going on, which I think is why we saw that short term price decline in the higher yield.
Speaker B: across all of: Speaker B:So inflation remained stubborn with the consumer price increase.
Speaker B:Excuse me, Consumer price index rising at 2.9% year over year and personal consumption expenditure index climbing to 2.6%.
Speaker B:Some of the big key topics in January, AI tariffs and the Fed pause.
Speaker B:I mentioned those earlier.
Speaker B:In January, financial markets were driven by technical disruption and policy transitions.
Speaker B:A reported AI breakthrough by the Chinese company Deep Seek led to declines in some technology stocks, certainly notably Nvidia.
Speaker B:Deepseek has purportedly built cutting edge models that require 95 to 97% foreign fewer resources to train than those created by OpenAI and other leading companies.
Speaker B:While this is still being validated, OpenAI alleges that deep SEQ utilized its model.
Speaker B:The possibility that the industry requires far fewer computing resources and energy has rippled through the financial markets.
Speaker B:So information technology stacks were impacted across the board by AI.
Speaker B:We saw positive growth, growth in all of the sectors year to date except technology.
Speaker B:So technological developments matter for all investors, not just those who are focused on tech stocks because these sectors have grown in importance in the past several years.
Speaker B:Technology and artificial intelligence now represent a significant portion of the major indexes like the S&P 500 and the NASDAQ and are increasingly used by every sector of the economy.
Speaker B:So another important development is in Washington where the Trump administration implemented new tariffs, including the 10% tariff on China and potentially the 25% tariff on Canada.
Speaker B:A 25% tariff on goods from Mexico has been paused and from Canada has been paused for a month after reaching a deal with the two.
Speaker B:Or I guess they're still in negotiation as of this recording.
Speaker B:That may change by the time it's released.
Speaker B:Seems to be changing on a daily basis at this time.
Speaker B:Tariffs have created uncertainty around the global trade relationship, inflation and even economic growth.
Speaker B:Canada has already responded with their own tariffs on US goods as of yesterday and I'm recording on the 4th of February.
Speaker B:So that gives you some idea when you're listening what may have happened between the recording and when this is actually being released.
Speaker B:But the exact economic impacts are not yet clear and will take, you know, some time to unfold.
Speaker B:While tariffs imposed during President Trump's first administration were primarily focused on specific industries in China, the new measures cast a much wider net.
Speaker B:And the new tariffs impact our closest trading partners.
Speaker B:So that stated purpose of these tariffs is to generate additional government revenue to negotiate on border security and to protect domestic industries.
Speaker B: ared escalating trade wars in: Speaker B:And despite many uncertainties, markets generally performed well over that period of time.
Speaker B:And businesses adapted by diversifying their supply chains.
Speaker B:Ultimately, tariffs were a means of negotiating new trade deals such as the United States, Mexico, Canada Agreement, what's called usmca, and the phase one trade deal with China.
Speaker B:Economists and market analysts project these measures could have economic implications for consumers and for businesses, including the possibility of higher inflation.
Speaker B:And various sectors face distinct challenges.
Speaker B:The automotive industry must navigate complex border cross border supply chains.
Speaker B:Agricultural importers are, you know, they're kind of struggling and trying to grasp what potential price increases on fresh fruit and produce could be.
Speaker B:And energy markets need to adjust to new costs on Canada oil imports.
Speaker B:Even though it could be at a lower 10% rate, it's still an increase despite the market's immediate reaction.
Speaker B:It's certainly going to take time to play out.
Speaker B:So I think it's one of those things that we need to be calm during the negotiations.
Speaker B:The answer is usually somewhere in the middle.
Speaker B:Finally, the Federal Reserve decided to keep rates at 4.25 to 4.5% as its January as at its January meeting.
Speaker B:Excuse me.
Speaker B:This present.
Speaker B:This represents a pause in rate cuts after lower rates at the previous three months meetings.
Speaker B:Currently, markets based.
Speaker B: d may cut rates only twice in: Speaker B:Although these expectations can change quickly.
Speaker B:The Fed made this decision because the economy is growing steadily, the job market is strong and inflation remains stubborn.
Speaker B:Recent data shows that inflation accelerated slightly over year over year basis due to factors such as energy costs.
Speaker B:Long term interest rates have remained elevated as well, which suggests that investors also believe the monetary policy will need to maintain, restrict, remain restrictive for an extended period of time to ensure price stability.
Speaker B:All I can say is staying disciplined will only grow in importance with investor attention focused on implications and implementation of the new administration policies.
Speaker B:Certainly also the Fed reserve decisions and ongoing technology developments, those are all going to require some, you know, holding true, holding steady kind of behaviors.
Speaker B:Just keep doing what you're doing, I guess is the best way to saying it.
Speaker B:Because over time we know that typically these shocks to the system flush out.
Speaker B:With these factors continuing to influence markets, those who can maintain a broader perspective will probably be better positioned to achieve the overall financial goals.
Speaker B:So hopefully this was helpful.
Speaker B:You know, we understand that these times can be stressful and we certainly want to make sure that we provide enough information so that you feel like you can hang tight and continue to save.
Speaker B:And if there's a need for cash soon, then we may want to talk about shifting some of the assets as a whole.
Speaker B:Or you may want to think about shifting some of some of your assets as a whole because it's never a great idea to keep short term needs and long term investments in our opinion.
Speaker B:Thanks everyone for listening.
Speaker B:We hope you enjoyed this podcast.
Speaker B:If there's more information that we can share with you that helps educate you in any given way, we would love to do that.
Speaker B:Please drop us a note and share this with anybody that you find might get some use out of this information or find it helpful.
Speaker B:Thank you so much and we hope that you have a lovely February.
Speaker A:You've been listening to Money Roots, your Go to podcast for making personal finance accessible and approachable.
Speaker A:Thanks for joining us today.
Speaker A:Amy and her guests have enjoyed guiding you through the roots of your financial journey.
Speaker A:Remember, whether you're planting new seeds of financial knowledge or nurturing the growth of your existing financial plans, Money Roots is here to support you every step of the way.
Speaker A:Be sure to follow them on Facebook, x, LinkedIn and Instagram for more resources.
Speaker A:And of course, subscribe to Money Roots wherever you get your podcasts so you never miss an episode.
Speaker A:A big thank you to the sponsor, Rooted Planning Group for making this show possible.
Speaker A:At Rooted Planning Group, they're committed to helping you cultivate a thriving financial future.
Speaker A:Until next time, keep growing your Money Roots.
