Finance

DONALD TRUMP’S tariff announcement on April 2nd has drawn mockery for its spurious maths. Any bilateral trade deficit is treated as gross unfairness; the tariffs are set by taking the measure as a share of goods imported from each country, and halving it. But there are other oddities too, from the fact that the tariff rates appear to be calculated for places with an internet domain name to the fact that they are based on a single year of data. The starkest demonstration of the absurdity of the tariffs is to look at the bizarre outcomes they produce. Here is our list of the five craziest duties. More

The average investor would have better investment results by doing nothing.
Investors often have bad habits that cause them to buy high and sell low.
Buying and holding investments like all-in-one funds that automate tasks like rebalancing is a good bet for investors, experts said.

Andrew Fox | The Image Bank | Getty Images

“Dead” investors often beat the living — at least, when it comes to investment returns.
A “dead” investor refers to an inactive trader who adopts a “buy and hold” investment strategy. This often leads to better returns than active trading, which generally incurs higher costs and taxes and stems from impulsive, emotional decision-making, experts said.

Doing nothing, it turns out, generally yields better results for the average investor than taking a more active role in one’s portfolio, according to investment experts.
The “biggest threat” to investor returns is human behavior, not government policy or company actions, said Brad Klontz, a certified financial planner and financial psychologist.
“It’s them selling [investments] when they’re in a panic state, and conversely, buying when they’re all excited,” said Klontz, the managing principal of YMW Advisors in Boulder, Colorado, and a member of CNBC’s Advisor Council.
“We are our own worst enemy, and it’s why dead investors outperform the living,” he said.

Why returns fall short

Dead investors continue to “own” their stocks through ups and downs.

Historically, stocks have always recovered after a downturn — and have gone on to reach new heights every single time, Klontz said.
Data shows how detrimental bad habits can be relative to the buy-and-hold investor.
The average stock investor’s return lagged the S&P 500 stock index by 5.5 percentage points in 2023, according to DALBAR, which conducts an annual investor behavior study. (The average investor earned about 21% while the S&P 500 returned 26%, DALBAR said.)
The theme plays out over longer time horizons, too.

The average U.S. mutual fund and exchange-traded fund investor earned 6.3% per year during the decade from 2014 to 2023, according to Morningstar. However, the average fund had a 7.3% total return over that period, it found.
That gap is “significant,” wrote Jeffrey Ptak, managing director for Morningstar Research Services.
It means investors lost out on about 15% of the returns their funds generated over 10 years, he wrote. That gap is consistent with returns from earlier periods, he said.
“If you buy high and sell low, your return will lag the buy-and-hold return,” Ptak wrote. “That’s why your return fell short.”

Wired to run with the herd

Emotional impulses to sell during downturns or buy into certain categories when they’re peaking (think meme stocks, crypto or gold) make sense when considering human evolution, experts said.
“We’re wired to actually run with the herd,” Klontz said. “Our approach to investing is actually psychologically the absolute wrong way to invest, but we’re wired to do it that way.”
Market moves can also trigger a fight-or-flight response, said Barry Ritholtz, the chairman and chief investment officer of Ritholtz Wealth Management.
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“We evolved to survive and adapt on the savanna, and our intuition … wants us to make an immediate emotional response,” Ritholtz said. “That immediate response never has a good outcome in the financial markets.”
These behavioral mistakes can add up to major losses, experts say.
Consider a $10,000 investment in the S&P 500 from 2005 through 2024.
A buy-and-hold investor would have had almost $72,000 at the end of those 20 years, for a 10.4% average annual return, according to J.P. Morgan Asset Management. Meanwhile, missing the 10 best days in the market during that period would have more than halved the total, to $33,000, it found. So, by missing the best 20 days, an investor would have just $20,000.

Buy-and-hold doesn’t mean ‘do nothing’

Of course, investors shouldn’t actually do nothing.
Financial advisors often recommend basic steps like reviewing one’s asset allocation (ensuring it aligns with investment horizon and goals) and periodically rebalancing to maintain that mix of stocks and bonds.
There are funds that can automate these tasks for investors, like balanced funds and target-date funds.

These “all-in-one” funds are widely diversified and take care of “mundane” tasks like rebalancing, Ptak wrote. They require less transacting on investors’ part — and limiting transactions is a general key to success, he said.
“Less is more,” Ptak wrote.
(Experts do offer some caution: Be careful about holding such funds in non-retirement accounts for tax reasons.)
Routine also helps, according to Ptak. That means automating saving and investing to the extent possible, he wrote. Contributing to a 401(k) plan is a good example, he said, since workers make contributions each payroll period without thinking about it. More

Fed Chair Jerome Powell said Friday that he expects President Donald Trump’s tariffs to raise inflation and lower growth.
Powell added the Fed faces a “highly uncertain outlook” because of the new reciprocal levies the president announced Wednesday, keeping the Fed on hold for interest rate moves.
“We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy,” he said.

Federal Reserve Chair Jerome Powell said Friday that he expects President Donald Trump’s tariffs to raise inflation and lower growth, and indicated that the central bank won’t move on interest rates until it gets a clearer picture on the ultimate impacts.
In a speech delivered before business journalists in Arlington, Virginia, Powell said the Fed faces a “highly uncertain outlook” because of the new reciprocal levies the president announced Wednesday.

Though he said the economy currently looks strong, he stressed the threat that tariffs pose and indicated that the Fed will be focused on keeping inflation in check.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said in prepared remarks. “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”
The remarks came shortly after Trump called on Powell to “stop playing politics” and cut interest rates because inflation is down.
“I make it a practice not to respond to any elected officials comments, so I don’t want to be seen to be doing that. It’s just not appropriate for me,” Powell said at the onset of a question-and-answer session following his speech.
There’s been a torrent of selling on Wall Street following the Trump announcement of 10% across-the-board tariffs, along with a menu of reciprocal charges that are much higher for many key trading partners.

Powell noted that the announced tariffs were “significantly larger than expected.”
“The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” he said. “The size and duration of these effects remain uncertain.”

Focused on inflation

While Powell was circumspect about how the Fed will react to the changes, markets are pricing in an aggressive set of interest rate cuts starting in June, with a rising likelihood that the central bank will slice at least a full percentage point off its key borrowing rate by the end of the year, according to CME Group data.
However, the Fed is charged with keeping inflation anchored with full employment.
Powell stressed that meeting the inflation side of its mandate will require keeping inflation expectations in check, something that might not be easy to do with Trump lobbing tariffs at U.S. trading partners, some of whom already have announced retaliatory measures.

Jerome Powell, chairman of the US Federal Reserve, during the Society For Advancing Business Editing And Writing (SABEW) annual conference in Arlington, Virginia, US, on Friday, April 4, 2025. 
Tierney L. Cross | Bloomberg | Getty Images

A greater focus on inflation also would be likely to deter the Fed from easing policy until it assesses what longer-term impact tariffs will have on prices. Typically, policymakers view tariffs as just a temporary rise in prices and not a fundamental inflation driver, but the broad nature of Trump’s move could change that perspective.
“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” Powell said. “Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices.”
Core inflation ran at a 2.8% annual rate in February, part of a general moderating pattern that is nonetheless still well above the Fed’s 2% target.
In spite of the elevated anxiety over tariffs, Powell said the economy for now “is still in a good place,” with a solid labor market. However, he mentioned recent consumer surveys showing rising concerns about inflation and dimming expectations for future growth, pointing out that longer-term inflation expectations are still in line with the Fed’s objectives.
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Warren Buffett went on the record Friday to deny social media posts after President Donald Trump shared on Truth Social a fan video that claimed the president is tanking the stock market on purpose with the endorsement of the legendary investor.
Trump on Friday shared an outlandish social media video that defends his recent policy decisions by arguing he is deliberately taking down the market as a strategic play to force lower interest and mortgage rates.

“Trump is crashing the stock market by 20% this month, but he’s doing it on purpose,” alleged the video, which Trump posted on his Truth Social account.
The video’s narrator then falsely states, “And this is why Warren Buffett just said, ‘Trump is making the best economic moves he’s seen in over 50 years.'”

Arrows pointing outwards

Truth Social

The president shared a link to an X post from the account @AmericaPapaBear, a self-described “Trumper to the end.” The X post itself appears to be a repost of a weeks-old TikTok video from user @wnnsa11. The video has been shared more than 2,000 times on Truth Social and nearly 10,000 times on X.
Buffett, 94, didn’t single out any specific posts, but his conglomerate Berkshire Hathaway outright rejected all comments claimed to be made by him.
“There are reports currently circulating on social media (including Twitter, Facebook and Tik Tok) regarding comments allegedly made by Warren E. Buffett. All such reports are false,” the company said in a statement Friday.

CNBC’s Becky Quick spoke to Buffett Friday about this statement and he said he wanted to knock down misinformation in an age where false rumors can be blasted around instantaneously. Buffett told Quick that he won’t make any commentary related to the markets, the economy or tariffs between now and Berkshire’s annual meeting on May 3.
‘A tax on goods’
While Buffett hasn’t spoken about this week’s imposition of sweeping tariffs from the Trump administration, his view on such things has pretty much always been negative. Just in March, the Berkshire CEO and chairman called tariffs “an act of war, to some degree.”
“Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay ’em!” Buffett said in the news interview with a laugh. “And then what? You always have to ask that question in economics. You always say, ‘And then what?'”
During Trump’s first term, Buffett opined at length in 2018 and 2019 about the trade conflicts that erupted, warning that the Republican’s aggressive moves could cause negative consequences globally.
“If we actually have a trade war, it will be bad for the whole world … everything intersects in the world,” Buffett said in a CNBC interview in 2019. “A world that adjusts to something very close to free trade … more people will live better than in a world with significant tariffs and shifting tariffs over time.”
Buffett has been in a defensive mode over the past year as he rapidly dumped stocks and raised a record amount of cash exceeding $300 billion. His conglomerate has a big U.S. focus and has large businesses in insurance, railroads, manufacturing, energy and retail. More

NEVER INTERRUPT your enemy when he is making a mistake. That sounds like Sun Tzu, a renowned Chinese strategist, but the adage, attributable to Napoleon Bonaparte, originated on the other side of the world. Perhaps that explains why China’s leader, Xi Jinping, seems oblivious to the advice. More

Source: Finance – cnbc.com More

A few months ago everyone on Wall Street was discussing the “Trump trade”. The consensus was that Donald Trump’s presidency would boost the outperformance of American stocks, raise Treasury yields and strengthen the dollar. So far this year, all three bets are deep in the red. American stock prices have plunged, while those listed elsewhere have held up far better. Treasury yields have fallen, with investors worried about faltering growth. Both trends accelerated after Mr Trump, on April 2nd, slapped swingeing new tariffs on virtually all of America’s trading partners. More

Traders work on the floor of the New York Stock Exchange during morning trading on April 03, 2025 in New York City. 
Michael M. Santiago | Getty Images

Traders are now betting the Federal Reserve will cut interest rates at least four times this year, amid fears President Donald Trump’s tariffs could tip the U.S. into a recession.
Odds of five quarter-point reductions coming this year jumped to 37.9%, up from 18.3% one day prior, according to data from the CME Group on Friday morning. That would put the federal funds rate at 3.00% to 3.25%, down from 4.25% to 4.50% where it has been since December.

Markets are also pricing in a roughly 32% chance the federal funds rate will fall to 3.25% to 3.50%, which would mean four quarter-point cuts from the Fed.
At the same time, the likelihood of a half-percentage point trim coming in June also jumped, to 43.8% from 15.9% previously.
The implied odds the Federal Reserve will cut aggressively rose after Trump’s tariffs raised fears of a global trade war, and hurt economists’ forecasts for both growth and inflation. Investors are expecting that a slowdown in economic growth could spur the Fed to lower rates in a bid to avoid a recession.
However, many worry the Fed has a tough road ahead of it, as the central bank would have to cut rates in an environment where inflation has yet to go down to its 2% target. If implemented, the tariffs are expected to drive core inflation north of 3%, possibly even as high as 5% according to some forecasts.
On Friday, Roger W. Ferguson, economist and former Fed vice chair, told CNBC the central bank may not cut at all this year, saying the Fed has to worry about the inflation part of its mandate.

— CNBC’s Jeff Cox contributed to this report.
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