Uncertainty and volatilty and confusion

Summary

Marketplace Morning Report: Episode Summary – "Uncertainty, Volatility, and Confusion" (April 7, 2025)

In the April 7, 2025 episode of Marketplace Morning Report, host David Brancaccio delves into the tumultuous landscape of global markets, the overlapping uncertainties surrounding U.S. tariffs, and the burgeoning issue of debt among older Americans. This comprehensive summary captures the key discussions, insights, and conclusions presented throughout the episode.

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1. Wildly Swinging Stock Markets Amid Tariff Confusion

The episode opens with a stark portrayal of the stock market's volatility, primarily driven by mixed signals regarding the U.S. administration's stance on tariffs.

• David Brancaccio reports:

  "A wildly swinging stock market in the last hour amid confusion about pausing tariffs or not." [00:01]

Despite initial declines, the Dow surged by 3.5% briefly before retracting sharply, highlighting the market's sensitivity to political and economic news.

2. Conflicting Messages from the White House

Nova Safo provides an in-depth analysis of the White House's contradictory communications concerning tariff policies.

• Nova Safo explains:

  "White House National Economic Council Director Kevin Hassett told CNBC this morning that a 90-day tariff pause for all countries except China was under consideration. But then CNBC reported that other White House advisors were unaware of any such pause." [00:29]

This inconsistency has bred uncertainty, complicating businesses' strategic planning and investor confidence.

Further complicating matters, Treasury Secretary Scott Bessant revealed that approximately 50 countries are eager to negotiate tariff reductions:

"Some 50 countries have reached out to negotiate, raising the possibility that deals could be cut soon to lower the tariffs announced last week." [00:54]

However, President took a firm stance from Air Force One, aiming for:

"Zero deficits with other nations." [01:10]

This reluctance to swiftly negotiate has kept markets on edge.

3. Global Market Reactions and Record Volatility

The episode highlights the global ripple effects of U.S. tariff uncertainties, with significant market reactions worldwide.

• The Dow has plummeted 428 points (1.1%), and the S&P has seen a decline of 4.10%, while the NASDAQ shows a minor uptick of 8 points.

• The Hang Seng Index in Hong Kong experienced a 13% drop, marking its most substantial fall since the 1997 Asian financial crisis. This was partly attributed to the market being closed last Friday for a holiday.

• Notably, the VIX Index of Volatility has surged to its highest levels since the 2020 COVID lockdown and the 2008 financial crisis, underscoring heightened investor anxiety.

4. European Union's Counteroffers on Tariffs

In response to U.S. tariff announcements, the European Union has proposed a reciprocal trade strategy.

• The EU's Trade Commissioner announced:

  "Europe has made a counteroffer, zero European import taxes on U.S. cars and other manufactured goods in return for zero U.S. import taxes on similar European Union exports." [02:10]

This move suggests the EU remains open to negotiations but is adamant about avoiding prolonged deliberations.

5. Shift to Cash Investments: Money Market Funds and CDs

Amidst declining stock markets, investors are increasingly seeking safer havens, such as cash equivalents.

• Nancy Marshall Genser discusses the surge in cash-based investments:

  "Even at the end of last year, global money fund assets rose to more than $11 trillion, a record." [02:28]

• Julia Coronado, President of Macro Policy Perspectives and UT Austin professor, advises:

  "If you are somebody who's closer to retirement, who's going to need your money and cannot afford a multi-year business cycle, then you might have to consider that CD and money market yields are still higher than they were before the pandemic." [02:58]

However, Coronado cautions against overreliance on cash:

"Those rates won't stay high forever. And over time, inflation can eat away at your purchasing power if you hold too much cash for too long." [03:12]

6. Rising Debt Among Older Americans: A New Series Introduction

A significant portion of the episode is dedicated to exploring the escalating issue of debt among older adults, a topic that unfolds in Marketplace's new series in partnership with PBS Next Avenue.

• Chris Farrell, Marketplace’s senior economics contributor, presents alarming statistics:

  "Debt more than quadrupled in households headed by people 65 years to 74 years old. And for those 75 years and older, debt increased sevenfold." [04:35]

• Farrell further elaborates on the severity:

  "Nearly half of older adults surveyed are using credit cards to cover base living expenses." [05:10]

He attributes this trend to several social and economic factors:

• Financial Innovation: Easier access to borrowing options.
• Stagnant Wage Growth: Wages have grown slowly over decades.
• Job Insecurity: Increased instability in employment.
• Lack of Retirement Savings: Approximately half of the private sector workforce lacks access to retirement savings plans.

Moreover, rising costs in essential areas such as healthcare, rent, and utilities compound the problem, leaving older adults with limited financial buffers and increased susceptibility to debt accumulation.

Farrell emphasizes the dual-edged nature of debt:

"Debt by definition is not bad. But the debt concerns are concentrated among older adults of modest means." [05:10]

He warns of the long-term implications:

"Inflation can eat away at your purchasing power if you hold too much cash for too long." [03:12]

7. Upcoming Initiatives and Partnerships

The episode concludes with a preview of Marketplace's upcoming series:

• David Brancaccio announces:

  "Marketplace's series Buy Now, Pay Later will air every Monday starting today for the next 12 weeks." [06:07]

This series aims to delve deeper into the financial challenges faced by older adults, providing actionable insights and fostering informed discussions.

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Conclusion

This Marketplace Morning Report episode underscores the pervasive uncertainty enveloping global markets due to conflicting tariff policies and highlights the resultant investor behavior shifts towards safer investments like money market funds and CDs. Additionally, the spotlight on rising debt among older Americans serves as a crucial reminder of the broader socio-economic challenges exacerbated by stagnant wages, increasing living costs, and insufficient retirement savings. Through expert analyses and compelling data, Marketplace provides listeners with a nuanced understanding of the current economic climate and its multifaceted impacts.

Transcript

[David Brancaccio]

A wildly swinging stock market in the last hour amid confusion about pausing tariffs or not. I'm David Brancaccio in Los Angeles. Stock market indicators started way down today but then shot into positive territory for a brief moment and as we speak are back deeply into negativatory, at least for the Dow and the S and P. Hard to believe that about a half hour ago the Dow had been up 3.5% for a brief second. Marketplace's NovaSafo is here with more.

[Nova Safo]

Yeah, we're getting a lot of confusing messages from the White House. White House National Economic Council Director Kevin Hassett told CNBC this morning that a 90 day tariff pause for all countries except China was under consideration. But then CNBC reported that other White House advisors were unaware of any such pause. The back and forth highlighted the confusing set of messages coming from the White House and the uncertainty that's created over the weekend. Treasury Secretary Scott Bessant said some 50 countries have reached out to negotiate, raising the possibility that deals could be cut soon to lower the tariff tariffs announced last week. But the president speaking to reporters on Air Force One, David, on Sunday appeared in no hurry to strike deals, saying he's aiming for zero deficits with other nations. The president also seemed unfazed by the global market reaction so far. And David, this morning he said that he called on the Federal Reserve to lower interest rates.

[David Brancaccio]

All right, Nova, thank you. Okay, so here are the indicators at the moment. The dow is now down 428 points, 1.1%. The S&P is down not so much, 4, 10%. But the NASDAQ index just turned ever so slightly positive, up 8 points. Overnight. The Hang Seng Index in Hong Kong fell 13%, the biggest drop since the 1997 Asian financial crisis. But that drop is partly due to the fact that the market was closed Friday for a holiday. Here, the so called stock market fear gauge, the VIX index of volatility is up again today, the highest since the 2020 COVID lockdown and the 2008 financial crisis. Meanwhile, the EU's trade commissioner said just now that Europe has made a counteroffer, zero European import taxes on U.S. cars and other manufactured goods in return for zero U.S. import taxes on similar European Union exports. The EU says it remains open to talks, but we will not wait. Endlessly with stocks down so hard, people turn to cash which doesn't zig or zag. Money market funds, Certificates of deposit, CDs. Here's Marketplace's Nancy Marshall.

[Nancy Marshall Genser]

Genser Crane Data says even at the end of Last year, global money fund assets rose to more than 11 trillion doll, a record. NerdWallet says the best rates on CDs are in the low to mid 4% range. So who should pile into cash? Julia Coronado is president of Macro Policy Perspectives and professor at UT Austin. She says cash is especially attractive for older investors right now. If you are somebody who's closer to retirement, who's going to need your money and cannot afford a multi year business cycle, then then you might have to consider that CD and money market yields are still higher than they were before the pandemic. But Coronado says, remember, those rates won't stay high forever. And over time, inflation can eat away at your purchasing power if you hold too much cash for too long. I'm Nancy Marshall Genser for Marketplace.

[Quinton]

Location the Lab. Quinton only has 24 hours to sell his car. Is that even possible? He goes to Carvana.com what is this, a movie trailer? He ignores the doubters, enters his license plate. Wow, that's a great offer. The car is sold, but will Carvana pick it up in time? They'll literally pick it up tomorrow morning. Done with the dramatics. Car selling in record time. Save your time. Go to Carvana.com and sell your car today.

[Chris Farrell]

Pick up.

[Quinton]

These may apply.

[David Brancaccio]

It's one thing to have to pay back hefty loans when you have decades left on your prime earning years, but it's something else to be finished working but still owing money. That's the subject of our new series in partnership with PBS Next Avenue. Marketplace's senior economics contributor Chris Farrell knows this space very well. Morning, Chris.

[Chris Farrell]

Good morning.

[David Brancaccio]

Let's start with your reading of the research. Debt can be a tool, right? But for older people, carrying debt into retirement can be a problem.

[Chris Farrell]

It really is. And particularly for people of modest means, debt more than quadrupled in households headed by people 65 years to 74 years old. And that's over the two decade period, 1992 to 2022. And the data comes from the Federal Reserve. And for those 75 years and older, debt increased sevenfold.

[David Brancaccio]

I mean, I'm hearing you, but if a grandma wants to borrow for a new Mazda Miata, that doesn't sound awful if she can pay it back. And young adults borrow to pay for education or to start a family, a house. I mean, again, it's a tool.

[Chris Farrell]

That's right. And debt by definition is not bad. But the debt concerns are concentrated among older adults of modest means. And a recent survey by AARP reveals that nearly half of Older adults surveyed are using credit cards to cover base living expenses. So not surprisingly, many older adults are burdened by debt. Let me just give you one last figure, David. Bankruptcies among older adults are rising faster than among middle aged and younger adults.

[David Brancaccio]

But this trend of carrying debt into retirement years, what are the main social forces driving it?

[Chris Farrell]

So let me highlight several factors. One is financial innovation means it's easier than ever to borrow wages. They grew slowly over several decades while job insecurity increased. And about half the private sector workforce doesn't have access to a retirement savings plan at work. So debt, think of it as the other side of the coin of little to no retirement savings.

[David Brancaccio]

And right. Things are not getting cheaper out there that can contribute to this.

[Chris Farrell]

That's right. You know, healthcare, rent, utilities, and the economic risks that were once absorbed by institutions, large institutions, they've been moved onto the fragile balance sheet of households. I mean, we used to have pensions, now we have 401 s. Employers used to pay a lot for the employee health insurance. Now the employee is paying more and more for health insurance. So many workers late in life they find themselves with few resources, greater exposure to the risks of setbacks, and not surprisingly, more debt.

[David Brancaccio]

Marketplace's series Buy Now, Pay later will air every Monday starting today for the next 12 weeks. You can also read into the series at PBS Next Avenue, the online magazine targeting the 50 plus demographic. You know who you are. Looking forward to it. Marketplace's Chris Farrell, thank you.

[Chris Farrell]

Thanks a lot, David.

[David Brancaccio]

And in Los Angeles, I'm David Brancacciotes. The Marketplace Morning report from APM American Public Media.

[Janelie Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janelie Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined, wherever you get your podcasts.