Weathering the storm

Are you as sick of reading about the orange guy as we are scrobbling about him?

Well, suck it up. There’s more.

Tomorrow is Trump’s ‘Liberation Day’ when he unveils (at 3 pm) an economic policy that’s failed every other time in history. A full-on trade war and protectionism. Expected is a 20% universal reciprocal tariff on all goods exported to the US from anywhere. Also promised is a 25% levy on autos, while an equal tax is already in place on our steel and aluminum guys.

Canada is not being singled out. Nor are we being spared, yet. But no other country is as massive an exporter to the States as ours – and no wonder. We make good stuff and share a border with the biggest market on earth. Access to it is critical to our standard of living.

That’s why Mulroney made history with the FTA (Free Trade Agreement) four decades ago, why the 1965 Auto Pact was critical in bringing massive investment to places like Oakville, and why we secured a continent-wide deal with NAFTA, which Trump and Trudeau renewed as USMCA six years ago.

But now the American president has abrogated that treaty – not by going to Congress (which ratified it), but with a single executive order. Yeah, like the one he signed directing that Canadians be fingerprinted at the border.

Stock and bond markets are jumpy going into LD. Nobody knows what the exact outcome will be. But for us, probably a bump in unemployment, the worst housing market in a few decades and a recession. The current Leader of the Opposition may even have to go looking for a private sector job. What a shock that’ll be.

As you know, equities have had a cow. The S&P has flirted with correction for a while. Down almost 10% since just the middle of February. Off 5% for the year so far. Wobbly again today. The Mag 7 have been slammed. Tesla crushed. Bay Street has done much better, surprisingly. Ditto for the bond market.

You can’t do anything about Tariff Man. But you can look after your family.

“I have a balanced and diversified 60/40 etf portfolio,” blog dog Andrew says. “However, US has made up about 30% of this portfolio. Do you think it’s wise to decrease my US exposure?”

And he asks this: “A couple years ago you recommended buying bond etfs. They have done very well. Just wondering what your current thoughts are about them. Should I sell and replace? If so, with what?  Or should I hold or buy more?”

Before doing anything in reaction to tumbling events, remember the two golden rules of not being an emotional dork (GRNBED): First, never sell into a storm. Odds are you’ll get it wrong and, besides, the storm will pass. Second, never turn paper losses into real ones. If you don’t need the money immediately, why dump an asset that’s down? It will recover.

Andrew should not exit his American assets. Trump’s evil and crazy, but he’ll probably carry through with US corporate and personal tax cuts, increase public spending, loosen regulations and force greater capital investment through the trade war that America alone can endure. If all that happens without a big hike in inflation (and Fed rates) the S&P may be in record territory again within a year.

As for bonds, hang on. Those fixed-income ETFs have done just peachily of late as stock investors vexed. Bond prices are up because yields have decreased as recession odds mount. The sentiment is that central banks will have to deal with rising unemployment and economic contraction. That means holding the line on interest rates, or lowering them, while pumping liquidity into the system. Yields fall more. Bond swell in value.

The best advice for A – already with a B&D portfolio – is do nothing. Hands off the portfolio. Stop watching BNN. Walk the dog more. Load up your playlist with soma from Ed Sheeran and Lady Gaga and chill. Check your portfolio next in May. Of 2026.

Other ways for looking after your family during the Reign of 47?

If you need real estate, the moment to buy is not here, but the time to begin looking has arrived. Odds are the Bank of Canada will try to soften the tariff blow with cheaper money, that lenders will fish for borrowers with rate reductions and anxious house sellers will yield on their asks. The Spring market is already dead, and the coming three or five months could bring the most meaningful buyer’s market since the depths of Covid.

One other key point. Stay employed.

The hallmark of recession is the erasure of hundreds of thousands of jobs, all the more likely this time as we see serious sectoral tariff threats. Like the making of cars. This s hardly the time to be a problem employee, to resist a back-to-the-office directive, to threaten a strike or go hardass into a compensation review.

Stability is the goal now, and for at least the next two years. Keep your job. Keep your marriage. Keep your cool. Keep perspective. Stay calm.

He’ll be 79 in June.

About the picture: “Rosie getting her chin scratch and LuLuBelle going for their car ride,” writes Steve. ”  These two have the biggest hearts ever!”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2025/04/01/weathering-the-storm/