Deal Or No Deal: Does The Market Hinge On Tariffs?

DANO WEIR: Hey, great to see you. Happy Friday, May 9th, 2025. You're about to go on the Markets with Sonoma Wealth Advisors. My name is Dano Weir. I'm the Marketing director for the firm. I'll be joined in mere moments by Daren Blonski, CFP, Chris Sipes, CFP, the co-founders of the firm. This week, we're talking about the impact of tariffs in real numbers. We're looking at international stocks versus U. S.

DANO WEIR: Does the run continue for international stocks? Big drops in the S&P 500 and what that means with returns moving forward. But the key question that everyone's looking towards, deal or no deal? Does the entire market just hinge on these tariffs and whether Trump can or cannot make a deal with China this weekend? We're going to find out in just a moment.

DANO WEIR: Does the rest of the market even matter at all? Does earnings matter at all? Do fundamentals matter at all? Do technicals matter at all? Is it all just these trade deals? Chris, that's, I think, the key question I think we're starting to wonder.

CHRIS SIPES CFP®: Yeah i think so too and when you look at the market what is the market saying i'm just looking back on six months and if if you look there the S&P is only down just shy of 6%, so call it 5.5%. So that's the larger US companies and the NASDAQ a little bit less than that. And so really for the big companies, at least, it's saying either tariffs are not going to happen, they're not going to happen as badly, or they just don't really matter. However, for the smaller companies, based on that index is down about 15, over 15%. So for For the little guys, it does matter. They probably won't be getting the exceptions. They probably won't be getting the carve-outs. They can't afford the lobbyists, etc. So the market right now, at least, is saying it's sort of going to matter depending on the size of the company.

DANO WEIR: This meme is perfect because it so defines how the average investor feels, which is if you're listening, you've got a kid holding what looks like a brick and it says stock. And he's asking an older guy, he says, so what do I do now? And the older guy says, now you wait. Right, Darren?

DAREN BLONSKI CFP®: Yep, pretty much. That's what it comes down to. Now you wait. And I think we're still in a waiting pattern. I'm going to show you that when we look at the S&P 500 here in just a minute.

CHRIS SIPES CFP®: Oh, sorry, Dan. I forgot to silence my phone. I'm sure I'm going to get a text message from you soon or a Teams message. I apologize. And I also forgot to turn off my Teams notification. So. Apologies, Dano.

DANO WEIR: This take you up. I'm going to take you up with our compliance officer for that.

CHRIS SIPES CFP®: That's right. This meme was from Stansberry research and it was referencing, Mr. Warren Buffett who announced his retirement this past weekend. And he, they've got a quote from Buffett that says we don't get paid for activity just for being right as to how long we'll wait. We'll wait indefinitely. And I know Buffett's not perfect. He's a person. Just like Charlie Munger wasn't perfect. But as an investor, I cannot think of any business person or investor that's impacted my life personally more in terms of books read about them, philosophy of life and investing. Just a huge, huge pillar. Of our time. And, it's kind of, it's kind of crazy to see him hang it up after all these years, 94, I believe years old. And he was still sharp as could be answering questions right off the top of his head, went for several hours at, at the Berkshire meeting, like usual. And, he still got it.

DANO WEIR: What does it mean to you to see him hang it up? I mean, what you're, you're saying, you're talking about how inspirational he was. I mean, what is that? What do you think he's going to do next?

CHRIS SIPES CFP®: Yeah, I think that, you know, it's really the, he kind of is the last of an era, you know, where. I don't know. I respected the fact that he didn't have a social media. He didn't lower himself to saying bad things. Again, he wasn't perfect because the people on the inside of the financial Markets say, look, even though Buffett looked like this folksy, charming old guy, he was actually a shark. And I'm sure he was. He had to be to be an actual. You know, one of the best investors, if not the best investor of all time, you don't get there by being, you know, dumb, right. Or, or soft, but, but he, he just had, I don't know, I guess, an era of class, you know, in the way he did things, from an investment perspective that just, and, and he was willing to share, you know, his knowledge with, with others and, and people on how. How he thought you should do it. So I actually think this account that goes by compound248 really nailed it. He said, for 60 years, Warren Buffett did it his way. His way was also the right way. Life is well-lived when the internal and external scorecards align. In business, nobody has ever done it better. I think I kind of feel. Very similar to that. And you, and the returns, you know, are reflected where he over, over his time period compounded at, you know, 5 million percent while the S&P was up in a merely 39%. So 39,000, sorry, 39,000% versus 5.5 million. So, you know, it's the proof is in the pudding. He's, he's And... He's, he's a legend.

DANO WEIR: And if you're looking at this closely, 1999, 19% loss, 3% loss in 2002, 31% in 2008, right? So if you're, this is considered the best investor of all time and he has a 30% loss on his books. So, you know, that this is up into the right is not always the case.

CHRIS SIPES CFP®: Yeah, right, right. Exactly.

DAREN BLONSKI CFP®: So, you know, you know, that what's interesting about that time when he had that 30% loss, like I remember just vividly the headlines at that time were like, oh, Buffett's lost it. He doesn't have it. You know, and now he's hitting on how many billions in cash. I just think it's so interesting. And, you know, the financial media at the time was just shredding him. And I think how important is investor not to let. These short-term things impact your long-term scope. And I think that's a hallmark of a great investor. And I think something that a lot of people struggle with these days. I guess all days it's been like this.

CHRIS SIPES CFP®: Right. And I think Buffett himself would say one of his real superpowers was being unaffected emotionally by stock prices. Now, if you read the books about him, he was unaffected emotionally about a lot of things. Maybe to his detriment. And, you know, anybody that reaches that pinnacle and, you know, sports or, or any type of career probably doesn't have, you know, a balance in their life. And Buffett was definitely the same thing. You know, he just, he would walk around his house reading financial reports and, you know, step over top of his kids cause he wasn't even paying attention. Right. He was so engrossed in what he was doing. You know, so.

DAREN BLONSKI CFP®: It's it's tough to find a balance but anyway tariffs i think i think there's a great investment before you go on there's a great investment lesson there right because you have Buffett who displayed these very unemotional affects as a person characteristics as a person that participated at least on some level helping him be the great investor that he was and is but it's interesting i think like many things in life one like when you have someone who's really good at one thing and they're not. Super well balanced. How our society circles around that. That's amazing. You think of an athlete or you think of a great musician and these other parts of their life often suffer. And I think that's important to also understand from an investing standpoint that a balanced human brain that emotionally is adapted and connected to the world around it struggles to invest. Like the way the brain is designed is not ideal for. Long-term successful investing. And I think as investors, if we can accept that as a reality, the game gets a lot easier because often the right decision when it comes to investing is not what your brain is screaming at you to do.

CHRIS SIPES CFP®: That's right. And realize your competition, right? Buffett talks about the businesses that he started when he was a kid. He bought his first stock, I don't know, when he was like 12 or 11 or something like that. And he lived and breathed investing for 84 of his 94 years, literally all day every day and you know in a very unbalanced way versus, you know, the average person, they say the research on an individual stock before they buy is around six minutes. So, you know, you're going into the market with maybe not a ton of buffets, but, you know, there's a lot of very, very smart people. It's like picking up a basketball and saying, hey, I'm going to go, you know, compete in the all-star game. Like you really need to check yourself in terms of your confidence as far as like your decisions are that much better because Buffett makes it look easy, just like the Michael Jordans of the world make it look easy, but it's anything but easy when you're actually in that, in that position. Anyway, I can talk about Buffett the whole time, guys.

DANO WEIR: We should do a special episode. Chris memorializes Warren Buffett before he dies.

CHRIS SIPES CFP®: Yeah, much, much, much more fun topic than tariffs. I thought this was a good visual. Showing the, you know, like if, if, if, if you had goods as a boat, what's the total value versus how much of that is going to be the tariffs on the, on the Chinese goods. And so, just the tariffs on the Chinese goods alone is a significant issue. So we got the trade deal with the UK this week, which is great, but really it's insignificant in comparison to the, the. Only one that really matters is the trade deal with China.

DANO WEIR: And as announced, if you've not heard Trump and Besant, no, Besant and another advisor are going to Switzerland this weekend. They're having a meeting with a Chinese delegation. So talks are actually beginning in person. And so I think that's kind of what the central question of this week's episode is, is, is this the one thing, you know, and it would be really interesting, by the way. If they were to hammer out a deal and the market did nothing. And who's to say that it's probably not going to happen, but it's so counterintuitive that that would happen that it might.

DAREN BLONSKI CFP®: You know, if you hang around, Dan, long enough, I'm going to tell you why I think the market's telling you that a deal is going to get hammered out this weekend. I also noticed in just a headline earlier this week or maybe this morning, they all run together some days. But I noticed that Trump said... Something to the effect of, oh, it's Bessent's decision as it relates to tariffs. Like he's all of a sudden just delegated this tariff thing to Bessent, which is actually a brilliant political move, right? Because if it doesn't go well, he'd say, oh, it was Bessent.

CHRIS SIPES CFP®: It wasn't me all along.

DAREN BLONSKI CFP®: So I thought that was interesting to see him start kind of distancing himself from it. Take it what it's worth. I'm not sure, but interesting nonetheless.

CHRIS SIPES CFP®: The buck stops there.

CHRIS SIPES CFP®: Not that guy so what now why why does this matter yes

DANO WEIR: Chris doesn't make me laugh a lot but that was really good that was oh come on Dan man i make you laugh all the time that's good that was that was not an ohio state joke though that was really good that's comedy

CHRIS SIPES CFP®: That's right well okay so why why do the tariffs matter i mean it's pretty obvious right but this from Apollo showing You know, what do firms plan to do with those additional costs?

CHRIS SIPES CFP®: Well, they plan to pass that on to consumers for the most part. And especially in the manufacturing side of the world, services, not quite as much, but still, you know, the vast majority. Now, there's actually more that are planning to absorb the cost increase internally than I would have expected.

CHRIS SIPES CFP®: And maybe that's because these companies. And maybe even the market is looking at this as like, okay, yeah, it's going to be a price increase, but it's going to be a hopefully one-time price increase rather than like a progressive inflation type of issue.

CHRIS SIPES CFP®: So we'll see. But of course, as with any survey, I'd be surprised if that's actually what happens. Sometimes people respond to surveys differently than what they're actually going to do.

CHRIS SIPES CFP®: Maybe they should have asked the question like that one guy that won the the huge election, bet when he, instead of asking people who they were going to vote for, he asked. Who do you think your neighbor is going to vote for? So maybe they should ask these companies, what do you think your competition is going to do with them with these tariff expenses?

CHRIS SIPES CFP®: So the there is upward pressure again. This is from Apollo upward pressure on the PCE inflation, which is one of the main, you know, inflation indicators that the Fed looks like looks at.

CHRIS SIPES CFP®: And, that, that is going to be important because of course that kind of puts the Fed in a box, you know, they, they can't lower rates. Well, they, they look at it as they have a dual mandate of maximum employment and keeping price stability, which means that they have to keep inflation and deflation under control.

CHRIS SIPES CFP®: And this is a huge, you know, kind of wild card as far as are the tariffs going to cause inflation or not. And based on the PCE, the prices paid component is moving up across the board of the various Fed surveys.

CHRIS SIPES CFP®: And so the Fed's got to be looking at that as like, okay, well, that could be an issue for inflation, therefore kind of tying their hands when it comes to rate changes, which is essentially what they said when they had their meeting this week, or at least that's kind of what I took from it was, hey, we're not really seeing good or bad data in the, in the, in the, in the data yet, but it hasn't had time to flow through.

CHRIS SIPES CFP®: So we're therefore, we're not really sure we got to wait and see what happens.

DANO WEIR: What is PCE?

CHRIS SIPES CFP®: PCE is the, you asked me too quickly.

CHRIS SIPES CFP®: Personal, personal consumption expenditures. So it's, it's a mouthful. So it's like a measure of.

CHRIS SIPES CFP®: You know cpi in some ways yes but on the manufacturing think like people who build stuff okay yes it's like it's like it's considered a leading indicator for cpi because before it gets to cpi the PCE picks it up typically there's there's a correlation there and this is saying with this graph that i'm looking at is saying what that right now it's just sort of up in the air Well, they do manufacturing surveys across the federal, the Fed system.

CHRIS SIPES CFP®: Now, the Fed has systems in Cleveland and Philadelphia and San Francisco, Kansas. That's where you're seeing the different one, Dallas Fed. And so they all survey the manufacturers of the prices paid. And then you've got the personal consumption expenditure, which is like what people are actually paying for things.

CHRIS SIPES CFP®: On top of that. So it's kind of like expectations, which you can see in the more busy part of the chart. And then you've got the PCE, which is actually what has been spent in the dark green. You can see that's a little more stable, but obviously is correlated with these numbers in some way.

CHRIS SIPES CFP®: So we got a lot of earnings this week. And over the long term, the stock market is supposed to roughly follow earnings.

CHRIS SIPES CFP®: And so the downward revisions have spiked quite a bit in line with the downward revisions that we would have seen in the financial crisis. Not quite as bad as the pandemic, but still elevated. And it's more so than 22 when we saw the total sell-off in the market. So that's the weirdest thing about this market is that we really haven't seen a sell-off commensurate with.

CHRIS SIPES CFP®: Earnings revisions commensurate with the feeling. So we talk about the sentiment indicator every week. The sentiment indicators have been in the doldrums on par with the great financial crisis and the pandemic. And yet the market, thankfully, has not seen that big of a sell-off. So it's puzzling from that standpoint. You're not seeing that same correlation. Between those that you would expect.

DANO WEIR: Can I go with an analogy here? Can I try this?

CHRIS SIPES CFP®: Let's try it.

DANO WEIR: Go for it. If Darren will allow me a football analogy, will I have to ask him permission?

CHRIS SIPES CFP®: You should just do it. You have a choice.

DAREN BLONSKI CFP®: Okay.

DANO WEIR: I want you to imagine that there's a big football game coming up, a 49Ers Cowboys game, and people are buying tickets for this game, buying and trading tickets and selling tickets. And there's prices that are moving for tickets to this game. The game itself may not even happen because of rain. And in fact, it's looking more and more like the rain is going to make the game not happen.

DANO WEIR: But the prices for the tickets and the trading of tickets continues to happen, sort of irrespective of whether the game is going to happen. Sort of just presuming like, ah, it'll be fine. Or even if the game doesn't happen, I'll still sell the tickets. That seems to be kind of what you're talking about with the market and with earnings.

CHRIS SIPES CFP®: Yeah, sort of like, I guess it would be like, what do you think the tickets are going to cost, right? What do you think the tickets are going to cost based on your expectations of the rain, based on your expectations of who's going to play in the game? Is everybody going to stay out of jail before the game, et cetera?

CHRIS SIPES CFP®: Versus what that ticket ends up costing, right? Like what at the end of the day you end up paying for it. It's sort of like that, you know, the expectations versus what actually comes through.

CHRIS SIPES CFP®: Now, the sentiment indicator. AAII were still over 50% negative. So it's definitely still pretty bearish when people are asked. However, the CNN fear and greed index jumped all the way up to 62.

CHRIS SIPES CFP®: Dan, I think you and I are going to remember that number, that four on the CNN fear and greed index and probably bring it up about a hundred more times over the next few years. But we're all the way up to 62, which is greed that's up significantly from even neutral last week now As a reminder, that's how people are actually positioned in the market based on seven different indicators that they use for that.

CHRIS SIPES CFP®: And then we've got Bitcoin, the leader of the liquidity and risk on score. We jumped back over 100,000 this week and we're up to 73 greed versus 67 greed last week. So the tip of the risk spear is saying, you know, things look good.

DANO WEIR: Do they, Darren? Do you want to take a victory lap there or you want to say anything?

DAREN BLONSKI CFP®: You know, I don't want to say anything about victory because I just don't do that when it comes to these things. But yeah, I'm going to tell you all about the S&P and how it looks here in just a minute. But I actually feel pretty good about the setup in the S&P and I'll show you why.

CHRIS SIPES CFP®: Darren just wants to have time to eat his bananas or whatever you said it was.

DANO WEIR: They are freeze-dried.

DAREN BLONSKI CFP®: Don't hate until you try. These are the Trader Joe's freeze-dried bananas. I'm a banana fan. I love to exercise. So if you like to exercise, you got to have these bananas.

CHRIS SIPES CFP®: That's right.

DAREN BLONSKI CFP®: This whole freeze-dried craze going on in candy. Have you tried some of those? Those are freeze-dried Skittles and freeze-dried... Any of these hard candies, they freeze-dry them.

CHRIS SIPES CFP®: Sounds awful.

DAREN BLONSKI CFP®: They're actually really... I love the texture of them. It's a texture thing. But what I like even more is they're like freeze-drying fruit.

DANO WEIR: Stuff now that i can eat that and not feel super guilty about it i met a guy who sells them and he had some yeah it was a a family friend that i had just met and he's like oh yeah i make these and he hands it to me and they're just m&ms these freeze-dried and i i'm like so you sell these he goes yeah and i go well i mean do you have to pay anything to m&m or is this i mean just taking their product he was probably a dentist he's probably a dentist how can.

DAREN BLONSKI CFP®: How can we make this even worse for your teeth let's freeze it yeah anyways yeah i've had it yeah i actually did a freeze-dried machine because i just love to study like small businesses and like how does it work and so we were at the sacramento state California state fair maybe two years ago and there was a booth there that was selling all this freeze-dried candy and like what is going on here and so i i looked at like how much does it cost and those machines are not cheap but that's all they're doing they're just buying this these things, freeze dry them, and then repackaging.

DAREN BLONSKI CFP®: Kind of a cool business, actually.

DANO WEIR: Okay, well, so should we do that instead of financial planning?

DAREN BLONSKI CFP®: Perhaps.

DANO WEIR: Guys, I got a new plan. I got a new plan.

CHRIS SIPES CFP®: It's the curse of the entrepreneurial brain, Dan.

DAREN BLONSKI CFP®: It just never stops.

CHRIS SIPES CFP®: Is there any topic that's potentially more boring than hearing you guys talk about freeze-dried candy? I've got one, and it's international stocks. Okay.

DANO WEIR: Chris is on fire today.

DAREN BLONSKI CFP®: I know there's somebody listening to us out there or will be listening to us out there that just love the freeze-dried conversation.

CHRIS SIPES CFP®: And that's all they'll remember about everything we say in this. Yeah. Well, now let's talk about international stocks. This is from Charlie Bielo. And he says, international stocks have outperformed U. S. Stocks by 16% over the last four months, which is the biggest four-month outperformance on record.

CHRIS SIPES CFP®: So you know, there's been, there's been parts of the market that have been doing well, despite despite the the struggles in the headlines right and i don't know who would have guessed that international stocks would do well you know after the election in the fall i i feel like that that was maximum pessimism on international stocks and then had you told people hey on top of that there's going to be massive tariffs across the board who's going to do well i can't think of anybody that would have expected international stocks to do well including myself i would have been like Like, wow, that can't be good for international stocks.

CHRIS SIPES CFP®: And yet here we are. So again, you can't know when these things are going to happen ahead of time. Never fall in love with your ideas because you could potentially be wrong. Even the best in this game are only right a little more than half of the time.

CHRIS SIPES CFP®: And before you get too excited, right? This is one representation of international stocks, which is the IFA index. And this is from Mike Sicardi saying, happy all time high. He published this on May 5th. And he said, happy all time high. The first since October of 2007. So going on 20, what is that?

CHRIS SIPES CFP®: Almost 22 years, 20, 25 years. Where are we now? 18 years. And so as with any market, you could potentially be in limbo for a long period of time. So potentially, you know, there might be room to run on this. We're just getting back to where we were 18 years ago, plus in the IFA index.

DANO WEIR: And it's such a good example that one thing that crossed my mind this week was.

DANO WEIR: The stock market is unlike so many normal things in our life. When things start going down, you know, when the car starts having more and more and more and more and more problems, it doesn't just magically fix itself and turn around by you doing nothing. You have to start doing something, which when your portfolio starts going down, there is that natural reaction to start.

DANO WEIR: Doing something, right? So if you're an international investor here in 2008, you're seeing it just go through the floor. I've got to do something. This is natural human, but the stock market is unlike anything else in that by doing absolutely nothing on its own, leaving it alone, look what happens over the next 22 years. It takes 22 years, but it does come back. Well, not always, but it can.

CHRIS SIPES CFP®: That's a very good point. And, A lot of times, especially recently, those stock returns can be very confusing because they're not what they seem on the surface.

CHRIS SIPES CFP®: This is from the JP Morgan Guide to the Markets, and they show since October of 22, which is when some would say this most recent bull market started, if you take NVIDIA out of the S&P 500, that's the gray line here, The S&P 500 would have underperformed both Japan and Europe since 2022. Now, I don't have the exact stats, so don't quote me here, but there's something mind-blowing like European bank stocks.

CHRIS SIPES CFP®: I know it's European bank stocks, but I can't remember if it's over the last three years or the last five years have outperformed the MAG-7. Okay, so that is mind-blowing. You know, old, old economy. In Europe, supposedly the worst place to invest.

CHRIS SIPES CFP®: And those stocks have just done absolutely fantastic.

CHRIS SIPES CFP®: So you got to look under the hood a little bit and make sure that you're diversified as usual, because there's just things that are going to happen that nobody expects, especially recently. Which speaking of that, here's another chart from Charlie Bielo showing the VIX, which is the volatility index.

CHRIS SIPES CFP®: Or what I like to think of as kind of a panic index in the stock market. How much are people panicking? And he says the 50% decline in the VIX over the last four weeks is the second biggest volatility crash in history.

CHRIS SIPES CFP®: So we had that huge spike when we got the tariffs announced, and then we just got the second biggest, fastest collapse in that panic in history. So Markets are moving faster now, good and bad. And so you just got to be prepared for all these things that have, you know, potentially not happened before happening again in the market.

CHRIS SIPES CFP®: Now, when you look at what is the two-year treasury rate saying about the Fed, because we got the Fed meeting this week and they did not lower rates. They kept them the same. That's that orange line that you see here.

CHRIS SIPES CFP®: That's the Fed funds upper limit, which is at four and a half percent versus the two-year treasury, which is kind of what the bond market or the fixed income market is pricing those short-term interest rates to be. Is at 3.78. So a little bit of a spread, meaning that the Fed is tight here, according to the market's interpretation of the rates.

CHRIS SIPES CFP®: When that orange is above the purple line, they're tight. When it's below, they're a little bit loose with their monetary policy. And as we talked about, the Fed is deciding to stay tight because they're not, one, we haven't really seen the deterioration in the market in terms of employment.

CHRIS SIPES CFP®: Or price stability. So nothing's really changed on that front. And two, they're reactive. They have been in the past. I'm assuming they're going to be reactive here in the future.

CHRIS SIPES CFP®: But as far as the short-term market rates, the betting Markets, if you will, not a huge collapse in that two-year rate and not a huge difference in spread between those two, but tight nonetheless.

DANO WEIR: Chris, when you say the Fed is reactive, you mean that as an institution institution, they're assessing what is, and then take action versus trying to dictate what should be.

CHRIS SIPES CFP®: That's correct. Yes. With, with, and that's of course my opinion. But you know, when they see a crisis happening, like the Silicon Valley bank, as an example, they take action once the crisis is, is clear, you know, but they didn't come out and preempt that.

CHRIS SIPES CFP®: You know, so, same with COVID, you know, we knew about COVID in December.

CHRIS SIPES CFP®: And the market started falling in, you know, February or March, the Fed reacted and, you know, came out with the bazooka, you know, after all of that had happened in, in the Markets. And so they're the lender of last resort.

CHRIS SIPES CFP®: They're meant to be there when Markets get disorderly. And so they are somewhat reactive as part of their overall function. So what you're looking at here, the headline, this is from Redfin by way of Mike Sicardi again.

CHRIS SIPES CFP®: Home buyers need to earn over $50,000 more than renters. So talking about the real estate market now, and this is residential real estate, the red line is how much income. Is required to afford the typical home for sale versus the income that's required to afford the typical apartment rent.

CHRIS SIPES CFP®: And there's a lot of turmoil kind of going along in the commercial spaces at the moment and apartments would be part of that. But a lot of times people feel like, hey, I can't afford a house. I'm therefore missing out financially. I do not agree with that. I do not think that you...

CHRIS SIPES CFP®: Absolutely have to be a home buyer to be successful financially. Buffett talked about that this weekend, real estate versus the Markets. And he was kind of more talking about it from an investment perspective and not necessarily a residential living perspective, which I think you could argue is maybe part investment, but mostly consumption.

CHRIS SIPES CFP®: And so we're constantly kind of talking to people about, hey, you don't feel like you're completely missing the boat, especially in today's market with real estate. If you're not a, if you're not able to afford it, as far as a purchase.

DANO WEIR: I will just add this out there. Anecdotally, there are first time home buyer programs. There is down payment assistance.

DANO WEIR: There are things that can, if buying a home is a dream of yours someday, and you're listening to this, if you don't have one, there are programs out there that are super annoying with paperwork and you've got to qualify, et cetera, et cetera, et cetera. But. There are things out there to help you do things that perhaps you didn't think are possible.

CHRIS SIPES CFP®: That's right. That's right. And so this is from Resi Club and it shows the home prices since March of 95. So call it 30 years. And you've got the various states with California leading the way at a 400% increase. And then you've got the national average of the USA there at 300%.

CHRIS SIPES CFP®: The state with the least amount of appreciation was West Virginia at 159 over that 30 year period. Now, of course, that takes into account 2008 where you did see losses, but we've, we've seen some pretty dramatic gains since then, which looks great.

CHRIS SIPES CFP®: And, you know, but if you look at the next slide, Dan, you'll see what the S And P 500 has done in terms of total return. So this would be dividends. And price appreciation since March of 1995. And there's really no comparison.

CHRIS SIPES CFP®: Now, my colleague Gaetano brought up a great point, a big asterisk with this is that former chart that we looked at where California had appreciated by 400% does not take into account the effects of leverage. So borrowing money to buy a property, which is a big Yes, that's true.

CHRIS SIPES CFP®: So that other chart is no leverage on the effects of leverage on a home prices. This is also no leverage on the effects of the S And P 500. So if you took into the, into account the effects of leverage, which most people put, you know, 20% down.

CHRIS SIPES CFP®: So they've, they're five X-ing, you know, their investment in terms of how much leverage they're putting on, which most people, including myself. Would never be crazy enough to go buy a 5x levered S&P fund.

CHRIS SIPES CFP®: But there are effects of using borrowed money on those returns that could be taken into account as far as that.

DAREN BLONSKI CFP®: Chris, I just want you to know that if you ever tell me you buy a 5x leveraged ETF, I'm going to call your wife and tell her I'm very concerned and I think something's wrong and you need to take him to the hospital. Yeah. I think he's having a stroke.

CHRIS SIPES CFP®: That's right. You'll know that our buy-sell agreement is ready to execute at that point. It's over. It's over for me.

DANO WEIR: Chris, what are you trying to say, though? What are you trying to say, though, with these two slides?

CHRIS SIPES CFP®: You're trying to say that- I'm comparing the returns of residential real estate versus the stock market.

CHRIS SIPES CFP®: A lot of times people will say- especially now they're like well i want to buy a house because i think it's a good investment right i don't want to miss the boat financially and so trying to show them well hey you know if you're trying to get a return on your investment the market might be a good alternative for you right so if you're buying a house just to live in and it's not it's not an investment and blah blah, blah, you're looking at is purely like hey, this is my home and this isn't part of my investment plan.

CHRIS SIPES CFP®: That's different. But if you're one of those people that says, hey, real estate is the place to be. A home is your best investment. I think you could argue that from a behavioral standpoint because it forces people to stick with it.

CHRIS SIPES CFP®: It forces people to put money into it every month, every year. People prioritize that over everything else, making that mortgage payment. So I think you could argue that behaviorally, but I think it's hard to argue that historically from a returns, pure return standpoint.

DANO WEIR: Makes sense.

CHRIS SIPES CFP®: You shouldn't feel bad by putting money into the market, right? Versus real estate if you can't afford a house.

DAREN BLONSKI CFP®: Well, I think this is a really interesting point, right? Because I think that in going back to the psychology of investing that we talked about earlier and that there was this kind of... Absence of emotional affect from Buffett. And that probably was part of the reason that helped him be such a good investor all these years.

DAREN BLONSKI CFP®: I think there's one of the things with real estate is that the friction to transact is very difficult, right? It's very costly to transact. And so thus it forces people to stick with it longer, which then allows it and gives it the opportunity to appreciate.

DAREN BLONSKI CFP®: Because over the years, I had lots and lots of people tell me, real estate's a great investment. It's way better in the Markets. And I think sometimes that's true in Markets like in Northern California, Southern California, et cetera, areas that have just really appreciated over the last 20 years, 30 years.

DAREN BLONSKI CFP®: But there's a whole swath of the Midwest that really hasn't appreciated significantly. And then the returns aren't great when it comes to rents, et cetera. But one of the things that makes real estate such a good investment is that it forces people in a way just to hold on. Whereas the Markets, because it's so easy and it's gotten easier to transact in and to move money in and out, it doesn't force people to stay.

DAREN BLONSKI CFP®: And what I'm going to show you in a minute is really. We're back to exactly where we were before all this tariff garbage. And you think of all the hype about it that's been pumped into the media at us. It really didn't matter a month later.

DANO WEIR: And one more thing out the door, since we're talking about it, I do think I thought about this a lot lately. Just that, you know, you see the 400 percent price appreciation for California. You're like, in my lifetime, is my house going to appreciate another 100 percent?

DANO WEIR: Really, 200 percent? And what happens? Is is there a Roche limit? Is there a point where this finally escapes, you know? The atmosphere. And it's just like, man, I put all this money into my house. And now for, for reasons, you know, that does that ever come back down or again, is just, is the real estate market also just up into the right?

DAREN BLONSKI CFP®: Well, I mean, yeah, I can show you lots of places all through the United States where it's not up into the right, you know, areas where industry moved out and it's absolutely decimated.

DAREN BLONSKI CFP®: There's lots of instances where that's not the case. And I think there's a, Some element of a confirmation bias exists here in California because of the experiences we've had over the last 50 years or whatever here that is just always up and to the right. And I think that's somewhat true, but then at some point, maybe not.

DAREN BLONSKI CFP®: And I think when you look at real estate, there's the big global trends of it or the big market trends. And then you look at more centralized Markets. You take Austin, for example. Real estate in Austin has gone through the roof over the last few years and it's coming down.

DAREN BLONSKI CFP®: And there's a lot of people underwater in those areas or in Florida because they bought in high just thinking, well, it'll just keep going up forever. And that might be true, but it might be 10 years. And whenever I buy real estate, I always tell myself, if I'm going to buy this, it's a 10 year hold. I'm not making any judgment on whether or not I made money on this real estate or not for 10 years.

DAREN BLONSKI CFP®: And that has served me well. Over the years and forced me not to freak out when things aren't where they should be, et cetera. We've gone through 08, 2001, through COVID. And I think if, if we could look at our other investments that way, that is, it's an asset, right?

DAREN BLONSKI CFP®: If you're buying truly a good asset, a stock or a bond or an alternative asset and treat it that way, like you're owning these assets and hold that through the thick and thin, you're going to be better off. And I think that's what Buffett really taught us a lot and has continued to teach is like, buy good assets and hold them and don't dump them when things are weird.

CHRIS SIPES CFP®: Probably nobody thought to themselves, tariffs are announced. I got to get rid of my house.

CHRIS SIPES CFP®: But in me, you're like, I got to get out of my stock portfolio. Should I be making changes or whatever it might be?

CHRIS SIPES CFP®: And that you just don't have that same behavioral issue with the house.

DAREN BLONSKI CFP®: Investment that's that's one huge advantage that real estate has over other types of investments is the psychology piece of it that's a great point about friction too Darren i think that's the key you know there's so much to that principle and we teach us a lot when we're teaching our clients budgeting etc which is you know like you know saving money and investing and is often about the slowing down the velocity of money in our wallets, right?

DAREN BLONSKI CFP®: Money comes in, can we slow it down and store some away for a later date? And that money velocity piece is really, really critical to understand. And what real estate does is it creates a lot of friction. And the impact of that is it slows the velocity down that forces you to slow down and not make emotional decisions about your money. And that's the tariff, whatever we're going through.

DAREN BLONSKI CFP®: Whatever you want to call it. I think it depends on what you call it, depends on your politics. And I don't try to be one side or the other. I try just to look at it as a fair shake one way or the other. And this is the ag. So this is the US aggregate bond ETF. So it tracks, in theory, the entirety of the bond market.

DAREN BLONSKI CFP®: And this is just one product that's out there. I'm not recommending it by any means, but just a way to kind of get a barometer for what's happening in quote-unquote the bond market. And you can see when the tariff situation came about, bonds just really started rocketing up and then they went down. And then we're basically exactly where we were in the bond Markets right before all that tariff junk started.

DAREN BLONSKI CFP®: Almost to the point, exactly right there. And when we look at the SPY, the S&P 500, you can see we're almost exactly where we were when the whole tariff stuff came about. And we went way down and way back up. And now we're exactly back where we were. And what a great, I mean, this is just a perfect example for investors of like, hey, like.

DAREN BLONSKI CFP®: All this stuff came at us. The world was ending, blah, blah, blah. We were all going to fight each other and whatnot. And typically the market recovers. When the bond market freaked out, the U. S. Capitulated, whether the Trump administration wants to admit it or not. That's another story. But they said, okay, maybe we're doing this wrong because the bond market's infinitely bigger than the stock market.

DAREN BLONSKI CFP®: But just a great moment in the lesson in investing. When things are crazy, it's usually the... Best thing you can do is nothing at all. As long as you own good assets. If you own junk assets that are going to blow out and not be worth anything because it's some crazy hedge fund idea that's far out on the risk curve, then yeah, maybe you better sell it.

DAREN BLONSKI CFP®: But if it's good quality broad market index assets, you just ride it and you just try to ignore all the noise that's out there. So for those who watch the show on a regular basis, Last week, I talked about the SPY, the S&P 500 ETF trust. And the S&P 500, we talked about this area of right around, you know, 569 being really important for the market.

DAREN BLONSKI CFP®: And kind of a proving ground to see if the market was going to roll over and go back down or go higher. And so what we saw, let's look at the daily chart. So this is looking at the S&P 500 on each day. And what happened over this last... Week is we came right up into this point of 560. Let's see, the high was 568.92 and rolled over.

DANO WEIR: You said 569. You promised 569. That was not, that was 0.08 away, Darren.

DANO WEIR: I want a better prediction than that.

DAREN BLONSKI CFP®: They held miserable. And it wasn't really even a prediction. So let's be honest. All I did is look at the Fibonacci lines and I said, look, based upon the 61.8.

DAREN BLONSKI CFP®: Percent Fibonacci line which is an important kind of reverberation line for the Markets it's actually very natural geometric number and we could have a whole session on the Fibonacci lines but nonetheless this 61.8 retracement line on the market is an important proving point for a rebound and so we've recovered this being the high up here at 610 on the SPY went down to 482 we've bounced up We hit the 50% retracement, which is actually not a Fib line, but now we're at the 61.8.

DAREN BLONSKI CFP®: The probabilities of us going higher increase dramatically if we hold the 61.8 Fib line. And that becomes a very, very important point. Now, where the heck did I get 569 from? Well, I looked back on the chart and you can see this little area over here, which was resistance.

DAREN BLONSKI CFP®: This was back in November 4th. Of last year and we were trading up into that area and the fact that it traded down into that area and bounced up tells me that that was an important point in the market for us to pay attention to. And so when we looked at that, we got rejected.

DAREN BLONSKI CFP®: Rejected mean you go up and it gets rejected, went down, but then we found more support in this area and it's gone back up and held above that 61.8% Fibonacci line, which also corresponds magically with...

DAREN BLONSKI CFP®: Support level back from October 4th right and then we had the election and went up and then rolled over so long story short looking at the technical data so barring all the other in my opinion garbage you hear on the news it's the end of the day what the market's saying is their strength here the fact that we're claiming 61.8 and it's holding And now let's look at the weekly chart.

DAREN BLONSKI CFP®: So this is looking on the weekly chart and you can see that 61.8, we were sitting right on top of it this week, like dead center. Like what's the chances of that, that we opened at the 61.8% Fib line and stayed above it all week.

DAREN BLONSKI CFP®: That's a pretty constructive, positive look on the market. That tells me there's support here. There's buyers here. So what does that all support mean? It means there's buyers. What does resistance mean? It means there's sellers. That means that the market's looking at this and saying, we like this.

DAREN BLONSKI CFP®: We're going to buy here. We're going to buy here. And that will push the market higher. Now, we're going to come into some resistance somewhere around 574 in range. There's going to be a lot of resistance in sellers up in this area.

DAREN BLONSKI CFP®: But right now, the setup actually looks pretty positive. And it's looking pretty good. And that's why I said earlier in the show, if I'm a betting person, this is just if I'm a betting person, I'm betting on magically we're going to see some.

DAREN BLONSKI CFP®: Resolve happen amongst the politicians and okay we've agreed and tariffs are not going to be as bad as we thought they were blah But also what's whispering to us their strength in the market is the Bitcoin market. Because the Bitcoin, like Chris said earlier, is the front tip, the spear when it comes to risk, or at least it's behaved that way over the last few years.

DAREN BLONSKI CFP®: And the fact that now Bitcoin is staring at an all-time high and is very close. Now, Bitcoin closes at 5 o'clock Pacific today and then opens up a new candle. We're staring at all-time highs right now. And the fact that we've covered all that in a matter of a few weeks. And we're back up there, that's telling you we've got a risk-on atmosphere happening.

DAREN BLONSKI CFP®: And then we look at some of the other cryptos that are on the risk spectrum. Ether would be even more risk-friendly. And that's even going up. So there's definitely risk back in the system. There's buyers back in the system. There's some push there. It needs to be paid attention to.

DANO WEIR: When you say risk-on, what does risk-on mean?

DAREN BLONSKI CFP®: Risk-on just means that the general sentiment of the market is buy, buy, buy versus sell, sell, sell. So a completely different sentiment than perhaps we saw a month ago where everyone's like, world's ending. This is all bad.

DAREN BLONSKI CFP®: What a mess.

DANO WEIR: We knew it was coming. We should have seen it coming.

DAREN BLONSKI CFP®: That's right.

DANO WEIR: It's all finger pointing this person's fault.

DAREN BLONSKI CFP®: Yeah, exactly. That's when Trump had his thing like, well, this is the Biden market. I'm pretty sure you said this was the Trump market like a few weeks ago. I mean, who's paying attention anyway, right?

DAREN BLONSKI CFP®: So this is also interesting. So oil dipped down pretty considerably. It dipped below this 60% line that I've been talking about since last year. And then we traded back above that. So this is kind of saying, maybe there's a recession coming. What I think is happening, and I talked about this last week, I think the government's functionally printing money again and stimulating the economy.

DAREN BLONSKI CFP®: And I think that's already coming into the system.

DANO WEIR: How do we know if that's actually happening? Is there ever like a green light on a website that says like money printing on?

DAREN BLONSKI CFP®: Well, there's lots of different arguments, right? So like one of the arguments is the M2 money supply. Right. So that tracks how much money supply. So this is April 22nd and you can see this tail up. This is how much money in billions is out there floating around. And you can see, and we said this kind of, you know, we, we had this kind of like tail down in money supply.

DAREN BLONSKI CFP®: This is after COVID. So this is the COVID, all the money that got printed and then it went down here. And then this was in going into, so that's December 2024. And they've basically been printing all along. I'm going to change this. And this is confirming that that's continuing out there. So that in my view, they're probably still stimulating the snot out of this.

DANO WEIR: When they print the money, how, where does it go? Who gets it? How, where does it go?

DAREN BLONSKI CFP®: There's a, there's a great 60 minute. I love this. It was during COVID and they interviewed chair pal and it was the host. And he's like, so what happens when you.

DAREN BLONSKI CFP®: Print money is it like you just add zeros in a computer and chair pal said something to the tune of yeah yeah we just add zeros in the computer but then but then who get where who where do they send it to people are borrowing this this is where like where does it they just start giving away in bags there's lots of different ways right like during Covid it just showed up in your bank account don't you know or did you not have your bank account connected but i haven't gotten any recently, Chris.

DANO WEIR: I'm trying to buy a... I'm trying to buy a Nintendo Switch 2 here and the money hasn't arrived from Mr. Besson.

CHRIS SIPES CFP®: Right. Well, it's not just us. It's also what other central banks are doing. And China announced their stimulus, I don't know, a week or two ago.

CHRIS SIPES CFP®: And Europe's stimulating to rebuild their defense structures. So it's not just what's happening in the United States, what's happening around the globe in terms of the... The money being put into the system.

CHRIS SIPES CFP®: And they do that, you know, via, via the banks and, and, and through swaps on treasuries and, and reserve ratios, there's all different kinds of ways they can grease the skids of the economy, trying to lower the price of money, to stimulate more borrowing.

CHRIS SIPES CFP®: And, and, and so there's ways to get that money into the economy up to and including... Just dropping people money, what they used to call helicopter money, where they would just drop it out of a helicopter. Well, they don't need to do that. You can just wake up and check your bank account and there's money from the government there.

DAREN BLONSKI CFP®: Wasn't that so surprising when that happened during COVID? It was. They know all my bank accounts. They had no problem putting money in it.

CHRIS SIPES CFP®: Yeah. You're like, this is awesome. They put money in. And then you think to yourself, wow, they put money in.

DANO WEIR: I wonder if they can take money out.

DAREN BLONSKI CFP®: They can.

DANO WEIR: They can.

CHRIS SIPES CFP®: Yeah.

DAREN BLONSKI CFP®: That was wild, man. That was an eye-opening moment of like, oh, okay.

DAREN BLONSKI CFP®: When i hear clients too sometimes like well i don't use email and computers and i i just don't want my information out there i'm like hey you have a bank account because it's all out there and people have access to it pretty wild be interesting to talk to someone who really understands the architecture of how all that works there's like probably some bureaucrat somewhere in the IRS that has access to all our bank accounts and can push buttons and he just got fired yeah he he took the buyout of eighty thousand dollars that news for us there's not going to be any helicopter money any time no one knows how to run the system so this is the 10-year bond why it's super important is because so much of the economy is based upon it all the loan rates etc and Watching what happens is the 10 years really important.

DAREN BLONSKI CFP®: It's also a very political number. Besant and Trump have been very loud about the fact that they want this to go down. It was also partially responsible for, you could see this was right back when the tariff debacle happened, how fast the 10 year went up.

DAREN BLONSKI CFP®: And there's a lot of people that suggest that the reason that we started kind of capitulating on the tariffs and finding ways to step off. The course we were headed was because the bond market was breaking. What do they mean by that? The 10 years going up significantly. Why?

DAREN BLONSKI CFP®: Because, all of a sudden there's additional, it be, so the way the 10 year, if you think about it, the yield, if there's less demand for the 10 year bond, then the yield has to go up to invite buyers to step in. And if the 10 years going up too fast, there's no buyers to buy government bonds, et cetera. That can be problematic for a lot of the.

DAREN BLONSKI CFP®: Machinery in the economy so what we're watching though is this kind of a ascending triangle and if you can kind of see this here it's kind of call it this and you see this kind of ramping up so i would expect the 10-year to bounce between these two areas something like that and then eventually break through or break up and then it would be some type of geopolitical event that would arrive just on time for that to move that we would keep an eye on magically right like that's what i talked about this week when last week i'm like hey 69 569 in the S&P that's the Mark and then we were joking this week like okay what what news is coming out and it's just going to switch and change and yeah i forget even forget what it was technical guys just forget all about like what actually happens we just care about what the chart says Let's take a look at gold.

DAREN BLONSKI CFP®: Gold started spiking again this week, right? So then everyone started saying, oh, there's risk back on, what's going on? And you can see gold spiked way up, almost 3,500 an ounce again, and then dumped back down over the week. So now what you have forming in gold for all those gold bugs out there is a potential double top. And so if you're a gold person, you want to really watch 3,200. 3,280 is going to be an improvement.

DAREN BLONSKI CFP®: Important point to keep an eye on on gold if it breaks through that then i think you'll probably see a trip down to 3100 if it breaks somewhere in that kind of range if we break through there and that would be a double top would be a topping pattern for gold which would actually coincide with the risk on sentiment that we seem to be seeing in the market what doesn't make sense to me yet and what i haven't quite figured out i'm still waiting to see is like you have like you know, 30% of the docks are empty now.

DAREN BLONSKI CFP®: There's 30% of the ships that aren't coming in from China. Like that has to pull through the economy. What I don't know is, is the government just going to stimulate and make up for that difference? And then so we don't actually slip into a recession, but there are a lot of things like the yield curve that suggests we're headed for a recession.

DAREN BLONSKI CFP®: We could potentially see that. We've had this steepening of the yield curve, and this is one of the yield curves, the 10 year, two year. And this is what's called an inverted yield curve when you're below zero. And when you go up above that, that's a reinversion, and that can be a sign of recession is headed our way. We're already in place. It's possible.

DAREN BLONSKI CFP®: Well, I think we put that at almost an hour. So those who stuck with us, thanks for joining us.

DAREN BLONSKI CFP®: I think in general, there's a positive sentiment in the market right now. We've recovered all that we gave up through the tariffs. And what a great investment lesson for all of us out there to remember just to stay the course when things get crazy.

DANO WEIR: Let's try to answer that question that we asked at the start of the episode, which is, deal or no deal, Chris, does the market entirely hinge on tariffs?

CHRIS SIPES CFP®: I would say no.

DAREN BLONSKI CFP®: I say no.

DAREN BLONSKI CFP®: There you go. I think it impacts it, but I come from the technical side that says the market's going to do what the market does, and the news is going to fit the narrative as it wants to fit it.

DANO WEIR: So those are some of the things that we're following this week at Sonoma Wealth Advisors. As you can see, it's nuanced. It comes at the market from many different... Factors, many different levels, many different inputs and indicators. And if you're doing things yourself or if you're working with someone who maybe doesn't consider all these factors, we would love to talk to you.

DANO WEIR: We would love to share our insight with you if you are not a client already. SonomaWealth. Com, you can take our free wealth analysis. And I'd like to thank you very much if you're listening to minute, one hour and one minute into the show, if you're listening right now. We really appreciate you sticking through to the end.

DANO WEIR: We put these together because we feel every minute matters. Every piece of conversation matters, especially talking about freeze-dried candy. So thank you for checking out the show. Wherever you're listening or watching, make sure you subscribe and check out SonomaWealth. Com for more. We'll see you next week. Thanks for being on the Markets.

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