Did Tariffs make you look?

There is plenty more to make you stare!

Welcome back to Look Up Money. A slight delay in getting this one to you - part market chaos and part my 18year old son has just left home on an overseas adventure. The latter has been quite the distraction as I attempt not to helicopter parent, but also love planning travel (or that’s my story and I’m sticking to it). Seemingly he’s all very independent but then is messaging from his Australia layover to see if we’d like to buy him lunch - so we have some way to go yet (for my husband too who is already missing him so promptly gave him $20!).

The delay has also been caused by every time I go to write this issue something new happens with the “on - off - on - paused - tech is exempt - for a while” Tariffs that have markets in a spin. It did not seem the time for my planned topic which was about the next layer of my ‘investing pyramid’ - picking stocks! Instead, I want us to pivot slightly from looking at Investing to looking at ‘The Economy’.

For most people ‘The Economy’ isn’t something we think about enough, but when we do it tends to be from a local perspective and seems to mean a few things: cost of living, mortgage rates and whether the government can afford tax breaks. But I think, zooming out and having a basic understanding of what the global levers are (which drive all those local ones) is essential to thriving financially and closing the gender wealth gap. It also means we can read what is happening with a more discerning eye, rather than relying on dramatic headlines.

So, if these tariffs made you Look Up and pay attention to the economic landscape - that's brilliant. Now don't look away. Tariffs are just one piece of a much larger, stranger economic puzzle - I’ll outline a few more for you below.

⚡First the headlines

• Market are Volatile: We’ve said before. Markets hate uncertainty and these Tariffs are not exactly written in stone.
• US loses its ‘safe haven’ status (for now): The decline in Treasury Bond prices (US debt) and the stock market at the same time is unusual and suggests a broader loss of confidence in US financial assets
• Magnificent 7 stocks still down but also still premium : The top 7 tech stocks are still down from their December ‘24 highs. The assumption is they simply bounce back, but could it be time for a rebalance on their high value vs earnings premium?
• Quote: "The army of millions and millions of human beings screwing in little screws to make iPhones — that kind of thing is going to come to America."Commerce Secretary Howard Lutnick (Get me to that job now, sounds awesome!)

What are the forces to be aware of - and why should you care?

Let’s start with the ‘why you should care’ so you are more likely to stick with me. Here are a few tasters to whet your appetite/horrify you:

Did you know…

The Fed “printed” over $3.3 trillion in 2020 alone - equivalent to one‑fifth of all U.S. dollars in circulation - to backstop the economy during the pandemic.

The explosion in money supply has quietly eroded your dollar’s purchasing power by about 8 percent annually - on top of official inflation—forcing savers to seek returns north of 12 percent just to stand still?

Because the U.S. dollar is the world’s primary reserve currency, every dollar the Fed “prints” tends to weaken other currencies - raising import bills for essentials like fuel and food?

The U.S. Treasury must refinance approximately $7.6 trillion of maturing debt over the next year - they do this by selling Treasury bonds which just went down in value (which means a higher interest rate for them to pay)

GDP includes everything from luxury cars to black market drug sales? It’s the go-to measure of a country’s economic health — even if that health includes some shady business.

Now lets dig into a few of these. There is no need to seek to be an economic expert but there are some key levers and terms to get familiar with. I highly recommend spending time with ChatGPT or Claude to ask questions and increase your understanding on these topics - this is the output of my own questioning and trying to get it to talk in a way I actually understand. A good tip can be to ‘explain it to me like I’m 5’ then it tends to use metaphors as part of its explanation.

Quantitative Easing (QE) - a non‑traditional monetary policy tool used by central banks to inject liquidity into the financial system when standard interest‑rate cuts are insufficient to stimulate growth. The most notable examples of this (but by no means the first) was during the pandemic when the central banks of USA, UK, European and Japan used it as a way to stimulate the economy. Did someone say ‘Crypto bubble’?

Currency Debasement - Honestly this one is not talked about nearly enough and I think that is definitely intentional. The fact the ‘lets print money’ system is devaluing our savings by 8% annually (before inflation) means everyone is getting poorer and could explain why ‘everyone is getting angrier’ too? The only way to beat this personally is ensure your investments are earning at least 12% p.a. - and that is actually just to stay neutral.

The US debt cycle - The United States carries over $31 trillion in outstanding federal debt, with roughly $7 trillion maturing annually and needing to be refinanced or rolled over. This is done via Treasury Bonds which are sold to both private entities and other nations. This is traditionally a cheap form of debt for the US due to its stable economy, but if anything changes that stability the interest rate goes up creating even more debt to be serviced. Japan is the the largest foreign holder, with approximately $1.1 trillion of Bonds. The ‘system’ has worked for a long time, but each time the rollover is required it exposes the world’s largest economy to the market rates and relies on the dominance of the US dollar as the world’s reserve currency.

Everyone in this administration, everyone in Congress, they’re all incentivised to bail out the system once again. [Because they have pension plans, real estate etc all tied up in the system continuing to work].
Andreas Steno Larsen, from the Raoul Pal podcast below

Other important aspects of ensuring the Global economy functions which you could explore with these prompts:

• Explain what impact the global supply chain has on the global economy
• Why is GDP used as the measure of economic health vs trade balance
• How might technology impact productivity and GDP in the future

Hopefully you can see that while Tariffs absolutely mess with the global system which has been created, that same system has been ‘messed’ with in other ways also - in turn ‘messing’ with how much our hard earned investments and savings will be worth at the time when you most need them!

I can’t stress enough how much I want us all to step up and understand these unseen forces which affect us all. It is a new muscle for most of us, but in the words of Glennon Doyle ‘We can do hard things’- and similarly we can ‘learn hard things’.

🧐 Global Macro Learning

📲 Kyla Scanlon is a great Instagram follow. She is author of ‘In this Economy’ which is a book I can’t recommend enough for understanding all that I’ve mentioned here.

🎧"The Prof G Markets" with Scott Galloway - Clear explanations of market trends in accessible language. If you did one of these a week I think you’d feel quickly more informed. It does not matter that they largely talk US markets as the inform all others, and the same dynamics apply (eg. such as understanding how stocks are valued).

🎧 Raoul Pal, The Journey Man: The Macro playbook - This is a great discussion around what is happening on a global economy level between two Macro experts. If you have neve heard any of the terms before then some of it may be a little inaccessible, but the more you listen to discussion around the above concepts of debasement, quantitative easing, the need for the US deb to just keep rolling over the more understanding you will have of the ‘soup we are all swimming in’.

Another interesting take away from this one is the thought that while the narrative is that tariffs will be inflationary - and no doubt they will be on physical products - the expanding role of AI in services might actually push us toward deflation. Lawyers and accountancy fees seem the obvious first cabs off the rank - case in point I’ve decided ChatGPT and I can do my own Annual accounts this year, saving me over $3000 in fees.

Next issue, we'll be back with the latest in tech - and no there will be no AI ‘dolls in boxes’ in my newsletter. In the meantime, keep Looking Up.

Sally.

Please note: Look Up is for information and educational purposes only and nothing written is intended to be financial advice.