Rudi's View | Apr 03 2025
In today’s update:
-Think Like A Farmer
–Share Market Optimists Are Disappointed
-A Warning From Yardeni
-Longview Warned First
-You Can NOT Be Serious!
By Rudi Filapek-Vandyck, Editor
There is a lot of negative criticism that can be hurdled at social media platforms (and I do join in at times) but every now and then something extremely useful will pop up, as it did this week.
Below is a message posted by Brian Feroldi on X (formerly known as Twitter). Feroldi is an ex-Motley Fool member who runs his own investor education service these days.
I see a lot of similarities with my own writings these past few weeks, as well as during prior times when the overall climate soured for financial markets.
Sometimes these simple sets of guidelines can keep the mind healthy and focused on what matters most.
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THINK LIKE A FARMER
-Don’t shout at the crops
-Don’t blame the crop for not growing fast enough
-Don’t uproot crops before they’ve had a chance to grow
-Choose the best plants for the soil
-Irrigate and fertilise
-Remove weeds
-Remember you will have good seasons and bad seasons; you cannot control the weather, only be prepared for it
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I assume everyone can identify the basic ingredients for a successful investment strategy in the share market?
Right now, as I have been advocating for weeks, it’s time to remove weeds and prepare the portfolio for when better times arrive.
Some of my recent writings:
–https://fnarena.com/index.php/2025/04/02/rudis-view-time-for-appreciating-quality/
–https://fnarena.com/index.php/2025/03/26/rudis-view-captive-uncomfortable/
–https://fnarena.com/index.php/2025/03/19/rudis-view-navigating-the-trump-slump/
–https://fnarena.com/index.php/2025/03/12/rudis-view-preparing-for-tougher-times-ahead/
–https://fnarena.com/index.php/2025/03/06/rudis-view-to-sell-or-not-to-sell-2/
Share Market Optimists Are Disappointed
Markets are made by humans, not by robots and all the other excuses we often hear about.
While I and you (hopefully) have been careful and cautious, not expecting too much to come out of the US President’s tariff intentions, in terms of positive ramifications, others have been happily telling investors to continue buying the dip because the future is bright and markets are simply having a careless hissyfit.
Trump’s tariff announcement on Thursday morning Sydney time put all that optimism instantly on the backburner, to be replaced with dismay, disappointment and, in some cases, pure and unbridled rage.
If this wasn’t as serious a matter as it is, this quick reversal on the day would be obvious material for comical satire.
Not wanting to point the finger, but Franklin Templeton sent multiple press releases into FNArena’s inbox these past couple of weeks, arguing the future looks bright and weakness in markets simply means opportunity for investors.
That sanguine view seems to have changed from the moment Trump’s Rose Garden event wrapped up. The press release I am staring at now highlights:
“The end of the free trade era.”
“Recession and inflation are now more likely.”
“Tariffs (…) will likely slow household and business spending and we expect them to increase the risk of US growth and earnings disappointments in 2025.”
“The economic implications may not be the only impact as there will likely be foreign policy implications such as shunning US products and companies moving forward.”
“Today’s announcement will likely exacerbate worries about slowing US growth and sticky inflation. Price pressures from tariffs may keep the Federal Reserve (Fed) sidelined for at least the next few meetings.”
Needless to say, the mood has soured at the firm, with talk about buying the dips now replaced with “we are cautious” and a suggestion bonds might offer a better return.
Humans! The aliens looking down upon us cannot believe the soap operas that are being played, time and again.
A Warning From Yardeni
The President of Yardeni Research, Ed Yardeni usually sides with the bulls and the optimists when it comes to the outlook for US equities, but not in 2025.
Let’s hope there will be negotiations, Yardeni’s latest message sent out to the subscribers of his US-based service states, because if those tariffs are not watered down the US economy is facing stagflation for the next twelve months or so, and such environment is not overly friendly for US equities.
Yardeni sees slowing growth, higher inflation and a Federal Reserve that cannot help out because of inflation. Simply extending the tax cuts already in place since 2017 will not provide any boost either.
Needless to say, the odds of the Republican Party losing the majority in both houses of Congress are increasing. 2016 might be the one year when financial markets do not appreciate stasis in US Congress.
The one positive highlighted by Yardeni is the price of gold is expected to rally to US$4000/oz.
Longview Warned First
Chris Watling, Global Economist & Chief Market Strategist at UK-based Longview Economics, did not wait until Trump’s Rose Garden event to advice his clientele: any share market rallies from here onwards should be an opportunity to offload more stocks.
SELL Any Rallies is the advice displayed on top of Longview’s latest equities allocation report mailed out the day before “The end of the free trade era” began in earnest.
The Longview report sums it up as follows:
-The US economy is staring at a mid-cycle slowdown, also reflecting the disruptive effects of tariffs
-Current earnings forecasts do not reflect this dimming outlook
-The adjustment process usually extends for multiple months, if not multiple quarters
-Each of the Fed, interest rates and bond markets will need to adjust their outlook
Longview’s suggestion was that equity markets might well stage a rally once Trump is done talking, on the principle of “Sell the fact, but Buy the rumour” but early indications on Thursday are not pointing into that direction.
The Australian share market closed down -0.9% on the day in response to sharply weaker US equity futures.
You Can NOT Be Serious!
Bloomberg columnist John Authers echoed a young John McEnroe in his response on Thursday afternoon: You can NOT be serious!
Some of the nuggets from Auther’s response: the effective US tariff rate has now jumped to a level last witnessed in 1935, or before that, the early twentieth century. US Value stocks are enjoying their best quarter since the bursting of the Dot Com Bubble in 2000.
The following four paragraphs are all from the immediate email response:
“It’s hard to call this an overreaction, but how to describe all of this? Jean Ergas of Tigress Capital Partners said this week that it wasn’t “rebalancing” trade: “This is verticalizing the US economy!” That appears to be right. Tariffs at these levels would turn America into its own economic island, trading only with itself. Horizontal links with the rest of the world are out. Yes, the globalized status quo isn’t working, but it’s difficult to see how this will be any better.
“Clarity is still lacking even excluding the possibility that some of these rates are never levied after a few days of negotiation but back-of-envelope math suggests that this is even bigger than the Smoot-Hawley tariffs at the beginning of the Great Depression. Omair Sharif of Inflation Insights LLC calculates as follows:
“I looked at imports from 50 countries shown on the White House chart. Together, they made up 68% of total US imports in 2024. Applying the tariff rates shown on that chart and assuming a flat 10% on the remaining 32% of imports gets you a weighted average tariff rate of 23%. We’ll likely end up somewhere between 25% and 30%. Note that this would be higher than the average effective tariff rate of about 20% in 1933 under Smoot-Hawley.
“Fitch Ratings’ Olu Sonola reckoned the new effective tariff rate at 22% (up from 2.5% last year). That would be the highest since 1910.”
Auther’s message ends on a poetic note:
“Survival Tips
“Time for some poetry. Decades of economic history, political campaigns, mistakes, misapprehensions, victories, defeats and opportunities both missed and taken have come to a tragicomic conclusion in the Rose Garden. The first lines of Four Quartets by TS Eliot seem terribly apposite:
“Time present and time past
Are both perhaps present in time future
And time future contained in time past.
What might have been and what has been
Point to one end, which is always present.
Footfalls echo in the memory
Down the passage which we did not take
Towards the door we never opened
Into the rose-garden.
“This wasn’t inevitable, and it shouldn’t have happened, but it did. There are many reasons why and plenty of blame to go around. Now it behooves us all to try to find the passage that can take us, even from this difficult starting point, to the rose garden or at least to a global economic order fairer than the last.”
More reading:
–https://fnarena.com/index.php/2025/03/27/rudis-view-coal-copper-car-group-nextdc-more/
–https://fnarena.com/index.php/2025/03/13/rudis-view-post-february-conviction-calls/
–https://fnarena.com/index.php/2025/02/20/rudis-view-best-id
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Here’s one prediction I comfortably make: investors will be hearing and reading a lot more about all of the above in the days, weeks, probably even months ahead.
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(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions.)
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P.S. II – If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
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