Market Minute: October 13th, 2025 - Trade Tensions, the Shutdown, and Market Outlook
Trade Tensions with China
On Friday, we saw a fairly significant sell-off as President Trump announced the potential for new tariffs on China. China responded by stating they did not want a trade war, but they are certainly ready to endure the tariffs. Over the weekend, there was a significant amount of punditry on what the likely outcomes could be of a protracted trade war. By Sunday evening, my Jets were 0-6 and the U.S. was backing off enacting anew round of tariffs. As I type this on October 13th at 10:00 AM, the Dow is up nearly 1%, the S&P is up about 1.4%, and the Nasdaq has risen nearly 1.9%. The 10-year Treasury has shed about 9 basis points yielding 4.06%. The basic quote from President Trump with respect to the China situation is that “will all be fine.”
In a certain sense, the market reacts to all of the political theater coming out of Washington. The President is focused on leveling a trade relationship with China that has been lopsided for years. Of all the things that China exported to the U.S., deflation was the largest “thing” we imported. The U.S. consumer wanted low-priced goods, and China provided them. As tariffs are implemented and alternative suppliers are sought, the ability to continue having cheap goods diminishes. This is certainly one of the factors contributing to inflation moving back toward the 2% Fed target.
Government Shutdown Concerns
The government shutdown is also top of mind, with both sides battling to determine who is more at fault. Are the Republicans trying to bury the Affordable Care Act? Is Chuck Schumer trying to appease the far left and prevent Alexandria Ocasio-Cortez from challenging him in a primary for his Senate seat? Meanwhile, furloughs and job cuts are taking place, and the impact of the shutdown will be more profound the longer it lasts. Interestingly, the markets have largely treated the shutdown as political theater. However, there is a point where markets will begin to react if no resolution is in sight.
Historical Perspectives and Market Predictions
I know many get their news from social media, but there was a segment on 60 Minutes last night with Andrew Ross Sorkin, author and CNBC anchor. I don’t always agree with Mr. Sorkin, but he is a smart guy, and he just published a book about the 1929 stock market crash. Some are drawing analogies between the Roaring 1920s and the Roaring 2020s, projecting a severe crash. I am not predicting that type of market action, but in over 35 years in the markets, I have learned that economists and pundits can no sooner predict a crash than they can stop one.
Market Outlook and Recommendations
I remain concerned about U.S. debt and deficit levels and the need to get both under control, but elevated stock prices alone do not necessitate a complete market meltdown. That said, valuations are fairly rich, and the market has been running upward since 2023, so some volatility would not be surprising. We continue to recommend that clients maintain well-diversified portfolios to participate across a wide array of market environments. We are here if you would like to discuss your current portfolio structure. Call us at (475) 256-0174.
