Good morning.

Investors around the country are chanting a simple prayer: “Oh, lead us not into stagflation” … for it is a legitimate fear as tariff battles rage on.

Stagflation, by the way, is a combination of flat or declining economic growth … accompanied by high inflation … a situation last seen in the 1970s during the OPEC-induced oil crisis. And the  effect on investors was problematic … as the market high of 1973 was not visited again until 9 years later.  By the way … for those who think today’s rates are high … interest rates hit 18.45% in 1981 … and mortgage rates were just under 20% … during a period that Jeremy Siegel characterized as “the greatest failure of American microeconomic policy in the postwar period.”

Supposedly, this resulted in us learning important lessons. Supposedly.

Of course, stagflation is not certain … and cooler heads can gather and come to some sort of agreement … but the announced 20% tariff threat for … well … everyone … is raising alarms … and we are seeing it in today’s market action/reaction.

We are left looking for some ray of sunshine and might be seeing it in the increase in savings. Yes, it is a result of consumer spending being below expectations and weakening consumer demand … but might set things up well for the market ahead when investors think skies are once again clear.

The problem now is mood. OECD (Organization of Economic Coordination and Development) points out via Statista that “no one wins a trade war” … and a 10% tariff on non-commodities shaves -0.72% off of “baseline GDP.”  I look forward (not really) to the result of a 20% boost. Yikes.

Tomorrow promises to be a bit volatile, but it is impossible to tell (as it always is) if it will mean a jump or further decline in stocks.  It is what the White House is calling “Liberation Day.”

I just hope the president has a good night’s sleep and countries (and investors) around the globe see the decisions as fair and well thought out …

… for it this trade war worsens … we run the danger of actually adopting that scenario that opens up today’s worrisome note.

Stagflation.

It’s quite a risk.

Have a great day,

Joseph G. Witthohn, CFA

Have any questions? Please contact info@teamemerald.com

A Look At The News | March 31, 2025 As of 10:56 AM today: Goldman Sachs … which went into the year with high hopes for continued market advance … seems to be a bit concerned about the near term (CNBC) https://www.cnbc.com/2025/03/30/tariffs-to-spike-inflation-stunt-growth-and-raise-recession-risks-goldman-says-.html   … and they aren’t the only one … as GDP growth, while still positive, is seen by many economists to live just above contraction territory (CNBC) https://www.cnbc.com/2025/03/31/first-quarter-gdp-growth-will-be-just-0point3percent-as-tariffs-stoke-stagflation-conditions-says-cnbc-survey.html   … but the administration concedes there could be short-term pain … but assures that it will all be worth it at the end of the day (USAToday) https://www.usatoday.com/story/money/2025/03/31/trump-tariffs-benefits-costs/82700560007/   The Post Office is making some changes that are designed to save money over the long term. Will it help or hinder delivery? We will soon find out (Newsweek) https://www.newsweek.com/usps-changes-begin-this-week-how-mail-could-affected-2052860   There is growing evidence that sleep … or, rather, good sleep … is quite important for physical and mental health (CNN) https://www.cnn.com/2025/03/31/health/deep-rem-sleep-alzheimers-wellness/index.html   … but don’t worry if one of your body parts does start to act up. There might soon be a ready replacement … now being grown at a lab near you (TheSun) https://www.the-sun.com/tech/13885342/spare-human-bodies-bodyoid-meat-grow-lab/ The statements above are supplied for educational purposes only. The statements depict the viewpoints and opinion of the author and are not necessarily the views of Emerald Asset Management or its affiliates. The information described herein is taken from sources which are believed to be reliable, but the accuracy and completeness of such information is not guaranteed by us. Emerald Asset Management PA, LLC | 717-556-8900 | 3175 Oregon Pike, Leola, PA 17540 Want to change how you receive these emails? You can unsubscribe from this list. ———————————————————————————- The statements above are supplied for educational purposes only. The statements depict the viewpoints and opinion of the author and are not necessarily the views of Emerald Asset Management or its affiliates. The information described herein is taken from sources which are believed to be reliable, but the accuracy and completeness of such information is not guaranteed by us.