Dear Clients and Friends,
As we continue to progress through the difficulties of tariff uncertainty, I am reminded of a childhood Disney ride named “Mr. Toad’s Wild Ride.” The ride began in a rickety car careening through the halls of “Toad Hall,” crashing through walls, driving into a fireplace, and busting out of Toad Hall into the English countryside, where further calamity ensued. The ride finally came to an end with a head-on collision with an oncoming train, and ultimately, an encounter with a tongue-and-cheek depiction of hell, complete with devils and a towering green dragon who granted the guests a reprieve from all of the insanity and allowed them to exit the ride. Quite terrifying for a ten-year-old.
Mr. Toad
Equity and bond markets are experiencing their own wild ride. Year to date, the S&P 500, Nasdaq, and the Dow are down -10.18%, -15.66% and -8% respectively. From all-time highs, the indices are down -14%, -19.2% and -13% respectively. Gold is up +28% year to date, and the 10-year Treasury is yielding 4.33% (Source: yahoo finance April 18th, 2025). Although the Administration’s 90 day pause on reciprocal tariffs (except China) has brought a sense of calm to the markets, we expect this to be temporary.
The global economy (not just the U.S.) is experiencing the same level of volatility as seen in the financial markets. Historically viewed as the world’s banker and gatekeeper, this Administration wants to reset the table in terms of global trade. We have quickly moved from a country with strong economic fundamentals to concern over a slowing economy, evidenced by economists and Wall Street banks increasing their odds of a recession. Unemployment, inflation, and the strength of the U.S. dollar are all being watched very closely.
Of notable importance is the level of uncertainty this has brought to Corporate America. As companies begin to report earnings for Q1, several have offered little in terms of forward guidance, with some going as far as offering no guidance whatsoever. This lack of insight could lead to lower stock market valuations and a rapidly slowing economy unless CEO’s are able to gain more clarity and confidence as to a path forward.
Where does this “ride” take us from here? Although short term we see continued volatility, investors have hope, as the “buy the dip” mentality remains strong, and supportive of equity markets. Additionally, despite the Federal Reserve’s recent proclamation they will not save the stock market from further decline, President Trump has more than once signaled positive progress in moments of fear. We feel the economy and markets are at a tipping point, one which needs tariff resolution and a coherent strategy going forward.
Mr. Toads Wild Ride was eventually replaced with “The Adventures of Winnie the Pooh.”