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Announcer: It’s time now on KROS for Financial focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only, and are not intended to provide specific advice, or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representatives securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA SIPC Investment advisor representative Cambridge Investment Research Advisers Incorporated. A registered investment advisor Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s financial focus program.
Nate Kreinbrink: Good morning, and welcome to this week’s Financial Focus, brought to you each and every Wednesday morning right here on KROS. Well this is Nate. I got James joined me this morning. Sunshine out there, which looking over it the past couple days I think everyone is in agreement that it is long over-due, and has been much awaited with this crazy, crazy weather we’ve been experiencing.
James Nelson: Yeah it’s about time. Hopefully the sun can dry some things out. Let the farmers maybe get in the field one of these days, I know they are way behind. Baseballs, picking up in the area here as far as high school level. So, it’d be nice to have some decent temperatures for that. And then I had to make up soccer game last night, that was pretty fun playing in the wind. So-
Nate Kreinbrink: It was definitely a cool, chilly night to be outside last night. Whether you were out soccer game, baseball game, whatever it was being outside it definitely was pretty breezy. I think you could say in the least and chilly. We didn’t have to worry about bugs I guess, which that was a good thing.
James Nelson: That’s true.
Nate Kreinbrink: I mean we didn’t have about one of those, but then again it’s just been crazy with a some of the high school graduations started last week, and then we had a few more this weekend. Usually this time of year you’re looking at a shorts and a tee-shirt. And an how hot that it’s going to be. Not necessarily the case of this a-
James Nelson: Yeah.
Nate Kreinbrink: These last couple of weeks.
James Nelson: Yeah, hopefully the weather co-operates for graduations like you said. Next couple weeks it’s big time for graduation parties.
Nate Kreinbrink: The kids getting out of school here within the next, whether this week or the end of next week or whatever. I know they are looking forward to being sunshine and being outside. Getting in the pool swimming or whatever. Definitely not in the question right now.
James Nelson: Yeah, yeah exactly. Pool water would be pretty cool right now.
Nate Kreinbrink: Getting into today’s show, James and I wanted to talk a little bit about a topic that’s been in the headlines over the last couple of weeks. If we go back to ’08, ’09 the low point as far as the markets hit, up until as of recently, it’s been a nice pretty steady ride increase with the market as far as what they’ve done. Now there’s been a few hiccups along the way, and we have addressed some of those when they came up: The Greek debt crisis, the… Just a few of those other ones.
James Nelson: Interest rates going up [crosstalk 00:03:02].
Nate Kreinbrink: Interest rates going up. There’s been a little of those headlines that have hit, and have caused a little bit of a ripple in the market, but then they’ve caught their breath, and they’ve continued on that trend.
Just recently, again this topic of tariffs has been pretty heavy in the news. And again, you can see over the last week or week and a half or so what the volatility it has caused in the market. So again, with that topic thought we would address that a little bit today. Talk a little bit, big picture, as far as how that fits into it, and how we see that moving forward.
James Nelson: Yeah, and that’s been a big topic for this administration. They want to curb the deficit. I mean the US has a 375 billion dollar trade deficit between the US and China. And that’s been a goal since Trump took office is to try to level that out. Maybe get to a more even playing field.
Problem is that we have missed a couple deadlines as far as these trade negotiations. We’ve had three or four of these deadlines set where behind the scenes we’re making some progress it sounds like. It’s been quiet, and then we get a news break where all the negotiations have stopped, or they’ve been delayed, or we’ve pushed the deadline back. And that’s where we find ourselves right now. And just last week we saw the DOW down 600 points, I can’t remember which day that was. But that was when a lot of this trade discussion surfaced again.
The US slapped China with another 25% tariff on all remaining imports that we bring in from China. So that was our last item that we had back, and sure enough we missed the deadline and then slapped them with tariffs, they slapped us back. And now the negotiations aren’t starting at square one, but we’ve missed some of the crucial items that we’re negotiating. So I think it’s back to the drawing board, and probably the next… The hypothetical deadline is now into the summer. So that’s where we are at.
Markets hate uncertainty, whether it’s the tariffs, whether it’s elections, whether it’s a Greek debt crisis like Nate just mentioned. We all know that markets hate the uncertainty, hate the headlines like that. And that’s where we find ourselves right now. So to us it’s very important to stick to our investment plan, not panic. We seen some volatility before. Earlier this year when we were going through the trade talks too, and markets rebounding fairly quickly. But we find ourselves in the same boat here and… Again, it’s something we are going to have to probably work through the rest of this year.
Nate Kreinbrink: Right, and I think the biggest thing like with these tariffs is just understanding that it’s basically it goes down to the simple term of cause and effect. Because of the tariffs, what is the effect of it going to be? And when you look at tariffs from a US stand point, it’s like a double-edged sword. Where it’s going to affect the US companies from selling goods, or their services, or products, or parts. Whatever to Chinese companies because of that imposed tariffs that’s going to be on that. Likewise, it’s going to be affecting companies that buy products from Chinese companies as far as what they bring into the US. So if that’s going to be added onto the cost of what they had originally planned, the cost is probably going to go up. And hence, either the price is going to go up to consumers, or they’re going to have to eat into their earnings report as some of them has reported when they have been released as of recently. So, when we look at this simple cause and effect what it’s going to do to the markets.
That’s what investors have been looking at, analysts have been looking at. And hence, those price declines that James mentioned as far as last week. Why we saw some of those happen, and why they were so sharp and just sticking to that day as far as when they happened with that. So again, we still want to remain disciplined to our overall approach when we look at this. Obviously, it’s something we need to keep an eye at. If we look at the overall markets and how they move. One headline, one decision that the government is going to make, isn’t the sole driver behind what the markets do. It plays a part in it obviously. But again, it’s not the sole driver of what that, markets are going to do whether positive or negative. So again, we want to look at the big picture, stay disciplined to our approach. And again, look at all the other factors that lead into which way the markets go. See that how those are going to lend, and then make the decision accordingly.
James Nelson: You’re right. And we all know the headlines are going to have a knee jerk reaction in the market. So I mean, anytime there is a big headlines like that, markets are going to react to some degree. But we also have to be honest with ourselves. We are 10 years into this bull market. The markets… The economy is slowing down, like it or not, it is slowing down. The tariffs aren’t necessarily helping especially this area with the farmers. They’re feeling the pain as much as about anybody.
But we are 10 years into a bull market, and this uptrend in the markets doesn’t continue forever. Our concern would be, could this be the start of something maybe more serious? Time will tell, we don’t know yet. But that’s our job is to manage that, keep a close eye on this. How are these tariffs going to effect investments? How are they going to effect the overall economy, and where do we find ourselves here in the next three to six month? I personally think this is going to be an ongoing thing, for at least the first half of this year, if not the whole year. Hopefully, we can get some clarity just from the market’s perspective. Because again, investors hate uncertainty, markets hate uncertainty, and it would be nice to get a little clarity on the trade front to calm things down, and calm some people’s nerves.
Nate Kreinbrink: Right, I think that goes right along with everything that we talk about as far as having a plan and sticking to that. And again, you look at back to ’08, ’09 again. Lot of people’s accounts they come in and say yeah, my 401K account, or my investment account, or whatever it may be. I lost about 50% of that, and everyone was so scared to get back in the market, they just didn’t want to do anything. They didn’t trust it.
Well… You again, as James mentioned, we’re 10 years into now a bull market. That feeling from ’08, ’09 has been muted a lot. Because people have had such good returns. They made back, for the most part, what they’d lost. And now they are just cruising along on this and thinking that this thing is going to go up forever. We all know that’s probably not going to happen. And when we are sitting at all time highs, any little headline that’s negative, any little thing that comes out. Whether it’s political or whether it’s a tariffs, whether it’s a just whatever it may be, is going to have people to start having that panic again and they overreact. Where this is where I think you see some of those quick drops in the market as far as people just overreacting and panicking all the sudden, where they’re selling it and trying to get out of it. But again, understanding big picture and where that’s going to come into play.
James Nelson: Yeah exactly. We tell people if there’s questions… People want to know, how these tariffs could impact their investments that they currently hold. Please give us a call and let us know. We can sit down and talk about an individual situation anytime. So, it’s important stuff, and something that everybody needs to keep an eye on.
Nate Kreinbrink: We are out of time here. But did want to mention that every Friday NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of May will be donated to the Miss Clinton County Scholarship Program.
James, appreciate you joining me today.
James Nelson: Yep, absolutely.
Nate Kreinbrink: Again this is Nate and James with NelsonCorp Wealth Management bringing you this weeks Financial Focus. Thanks for tuning in, and have a great rest of your week.
Announcer: Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only, and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representatives securities offered through Cambridge Investment Research Incorporated. A broker-dealer member of FINRA SIPC, Investment Advisor Representative, Cambridge Investment Advisors Incorporated are registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information visit our website at www.NelsonCorp.com.
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