It’s been a tough week in the markets — a reminder that sometimes it’s not fundamentals driving price action, but the steady drumbeat of unsettling headlines. Lately, it’s felt like death by a thousand cuts — or more accurately, a thousand tariff headlines.
Let’s take a moment to unpack what’s been happening, why markets have reacted the way they have, and what it all means for investors trying to stay focused on the bigger picture.
A Week Dominated by Tariffs and Political Noise
Sunday: President Trump kicked off the week by discussing a need to "detox" government spending — a statement that reminded many of Fed Chair Jerome Powell’s 2022 Jackson Hole warning about the need to “pay ahead.” That set a cautious tone heading into Monday.
Monday: Add news of a major cyberattack on X, plus a steep 15% decline in Tesla, and it triggered rage selling across the board. The result? Markets dropped 3% in a single day.
Tuesday: The tariff drama continued. Ontario’s premier announced a 25% increase in electricity export tariffs to the U.S., which prompted an immediate response from Washington — the U.S. doubled its tariffs on Canadian imports. That political tit-for-tat led the Ontario premier to walk back the electricity tariff increase, but not before the markets dropped another 1%, driven by concerns over rising trade tensions.
Wednesday: There was a brief reprieve. The Consumer Price Index (CPI) came in at just 0.2%, half of what it was in January, prompting a modest 0.5% market rebound (US Bureau of Labor Statistics). But after hours, the news turned again — Senator Schumer vowed to block a key funding bill, adding more political uncertainty.
Thursday: Europe announced a 50% tax on U.S. whiskey, prompting the White House to respond with a 200% tariff on European alcohol. That overshadowed a fairly benign PPI report — the Producer Price Index for final demand was unchanged in February (0.0%), and the 12-month change came in at 3.2%. Despite this stable inflation data, markets struggled under the weight of ongoing geopolitical tensions and tariff fears, finishing the day down another 1%. (US Bureau of Labor Statistics)
Friday (Today): As we move through today's trading session, markets are actively digesting Senate Majority Leader Chuck Schumer’s support for the continuing resolution (CR) bill, which removes a significant near-term risk around government funding. While Schumer announced his support on Thursday morning, today’s price action reflects a more measured response as investors assess the implications and look ahead to the next policy headlines.
So What’s Driving Markets Right Now?
Simply put, White House headlines are trumping economic fundamentals. It’s not about inflation or earnings this week — it’s about tariffs, uncertainty, and politics.
This leads many investors to ask a fair question: “If the next tariff implementation isn’t until April 2, shouldn’t I just move to cash now and wait it out?”
While that’s a natural reaction, I believe there are a few essential reasons why staying invested still makes more sense.
1. Resolutions Often Arrive Sooner Than Expected
April 2 might feel like a long time away, but markets don’t wait for official deadlines. They often bottom well before the resolution arrives.
Consider the Cuban Missile Crisis of 1962 — a true geopolitical nightmare with the threat of nuclear war. Stocks fell 5% in the first few days, but bottomed just seven days into the 12-day crisis, recovering two-thirds of the losses before it was resolved.
The takeaway: Markets are forward-looking, and they often begin to rebound well before clarity appears on the surface.
2. Where’s China and Mexico in All of This?
Interestingly, the most aggressive tariff headlines have targeted Canada and Europe — while China and Mexico have been notably absent. That could indicate that progress is being made quietly behind the scenes.
Even more interesting: Since the start of this tariff flare-up in mid-February, China, Europe, Mexico, and Canada have outperformed U.S. markets. That’s a signal worth watching.
4. Most of the Damage May Already Be Done
Let’s not overlook the deleveraging already happening behind the scenes. Hedge funds, quant funds, and other large money managers have likely already made significant adjustments. There are even stories surfacing about programmatic selling and sizable drawdowns.
Add to that a very negative retail investor sentiment, and it’s possible we’re closer to a rebound than another leg lower.
5. Fast Selloffs Often Mean Fast Recoveries
This week marks one of the fastest 10% market corrections on record — the fifth fastest ever, in fact. The only faster drop with worse short-term results was during the COVID-19 global pandemic.
But historically, after such fast declines, markets have done well over the next 3, 6, and 12 months. As painful as this pullback has been, it may represent an opportunity — not a reason to panic.
Bottom Line: Stay on Plan
Yes, it’s tempting to hit the brakes and move to cash — especially when the headlines feel relentless. But history has shown us again and again that the worst moves investors make are often during times of heightened emotion.
Markets don’t wait for clarity. They anticipate it. And if a resolution comes — even partially — markets could snap back well before April 2.
At Planwise Financial Partners, our focus is always on long-term goals and personalized strategy, not short-term noise. If you’re feeling anxious or unsure how this environment affects your plan, let’s talk. Staying connected and grounded in your strategy is more important now than ever.