Stay Calm and enjoy the price break. Inflation has been a major issue for Americans. President Trump’s trade policies contributed to reducing inflation, which has been challenging for the Federal Reserve and the administration under Biden. Today’s stock market sell-off is taking money out of the market but resulting in lower prices for Main Street. President Trump worked with OPEC to quickly reduce oil production costs by implementing planned cuts within one month instead of three.
This action aligns with the tariff changes, leading to an increased supply of oil in the country, contributing to disinflation. While the stock market adjusts to these changes, it could positively impact stocks overall. There will be winners and losers, but these developments may ultimately prove beneficial.
Global markets are experiencing concern following China’s retaliation against the United States with new sanctions and a 34% tariff on American imports. This has sparked fears of a global trade war. Despite these concerns, President Trump’s tariffs may have addressed inflation by reducing oil prices to multi-year lows and lowering the cost of lumber and building materials.
While some fear an impending recession, market fundamentals suggest otherwise. The tariffs could enable the Federal Reserve to cut interest rates, increasing consumer spending power and making housing more affordable. The decrease in commodity prices could assist young people in achieving financial stability by alleviating previous inflation, ineffective trade policies, and challenges related to immigration.
Although the market is reacting negatively, the adjustment in global asset prices may benefit economic recovery. Concerns about rising gasoline prices are prevalent, particularly during periods of economic stagnation.
Globally, the wealth disparity caused by rampant inflation has significantly impacted the poor and middle class. Although there may be short-term pain and stock market volatility, it is anticipated that the tariffs will not dramatically affect the jobs market. On the contrary, they may present more opportunities, especially for Americans. Post-adjustment, this period may lead to one of the most vibrant economies seen in years.
In the past four years, consumers have faced reduced purchasing power and real wages, leading to higher living costs and difficulties in saving and investing. Despite these challenges, the stock market sell-off presents opportunities.
Certain stocks might be undervalued because the market has not yet acknowledged their potential advantages from decreasing commodity prices. While a trade war could increase car and food costs, reduced commodity and oil prices might mitigate its impact on most Americans. Stay strong, seek opportunities, and avoid panic.
Oil prices may get a boost from the charged report and it’s going to be very interesting when Fed Chairman Jerome Powell speaks today at 10:25a. It’s very possible that Jerome Powell may signal additional rate cuts, or it leaves that possibility and if Mr. Powell does talk about cutting rates that could put a bottom in all the markets.
Natural gas is still getting a boost due to cold weather and seems immune to all of the outside market data.