• Why is the market up when we’ve got bad GDP?
• The labor market is cooling.
• Consumer confidence is falling significantly.
• Even the Federal Reserve is saying they’re not going to lower interest rates because they’re worried about inflation and a slowing economy, and we’ve got the tariffs.
• Let’s start with the GDP.
• GDP stands for gross domestic product. It’s about what we produce, what we buy, what we sell.
• A lot of companies are worried about tariffs and so they bought up manufacturing goods to get ahead of that.
• Well, imports count as a subtraction against GDP because we do not produce it and buy it from somebody else.
• The labor market is also cooling down, but the reality is that over the last couple years we’ve had max employment.
• At some point, the market knows it’s going to tick up, so the question becomes: how bad is this going to tick up?
• And then consumer confidence fell significantly, but retail sales didn’t, so it seems people are not acting scared, even if they think they are.
• The Fed said they aren’t going to do anything with interest rates because there is too much uncertainty with tariffs and everything else.
• And yet the market is still saying that the odds are that by the end of this year, one to two rate cuts are still in the cards.
• The Fed has a very tough job right now with their two mandates: keeping inflation under control and jobs healthy.
• Their main concern is inflation, and they want to hold tight and wait for the data to come through to see the impact of tariffs on inflation.
• The reality is that, regarding the tariffs, it could get ugly.
• Of course, the market liked that we saw the trade deal with England.
• But really, the big one is China.
• Right now 65% of ships are sitting in China and not coming over here.
• In an interview, the director of the Los Angeles Port Authority said we could start seeing empty shelves in the United States if this drags on for another three weeks.
• An impact like that could change everybody’s opinion.
• The good news is that our Treasury Secretary is going to meet in Geneva with some sort of Chinese authority over the weekend.
• No side is going to act like they’re really on the table because they don’t want to look like the weak one, but even with the hemming and hawing, it is good that some authorities are coming to the table to open talks.
• We don’t know what that will lead to, but it seems the market is looking to it as a good sign.
• Right now, the market seems to be looking through everything and saying, it’s okay, we are going to get to the other side.
• But it is possible that egos get in the way, we don’t get a deal, and all of a sudden, we have empty shelves and increases in prices because of the tariffs.
• If that happens, the fear is that manufacturers and suppliers start raising prices, and people stop spending money because they’re getting squeezed.
• If people stop spending money, that’s going to hit earnings.
• If earnings start getting compressed, then the market has to rethink, and we may see a sell-down back to the lows.
• So, we aren’t necessarily out of the woods, even though the market seems to have been resilient for now.
• The market seems to have had time to process the surprises we had earlier in the month.
• It could be surprised again if we see a ratcheting down on spending, or a prolonged discussion with China, or empty shelves.
• What we’ve seen throughout history is that the market tends to go down significantly when it is surprised.
• We continue to be glad that we took the stance that we took.
• We’re in a very defensive position, but we’ve seen our portfolios rising here as the market has risen, and so we’re in a better place than we would have been had we sold 100%.
• Our strategy has helped us quite a bit, and should continue to do so as we go forward because we are in a good position to deal with multiple scenarios.

Ken Moraif: Hello everyone, and welcome to our weekly Market Alert video for today, which is May 9, 2025 and we have a lot to get into with you, not the least of which is, why is the market up when we’ve got bad GDP? The labor market is cooling. Consumer confidence is falling significantly. Even the Federal Reserve is saying they’re not going to lower interest rates because they’re worried about inflation and a slowing economy, and we’ve got the tariffs. What the heck? So we’re going to dive into all of that. And if you’re wondering about our backdrop, we are in the beautiful US territory of Puerto Rico, where they have the very Rico rum. And have to, have to admit, we have tasted it for you, just to make sure it’s good, we’re getting the rum for you so that you don’t have to, as we always do everything like that. So we have a lot to cover. So thank you for watching. I’ve got Jordan here with me, our Chief Investment Officer, and Jordan, what is up with that. Let’s start with the GDP. The GDP was down a lot, right? First time in four years or something, and yet, the market went down on that news, but the second half of the day was up. What happened there?
Jordan Roach: Yeah, I think it’s when you look inside the numbers that make GDP. So you have a print that comes out and it looks bad, and you dive into what is GDP. It’s gross domestic product. It’s about what we produce, what we buy, what we sell. Well, the interesting thing is, as we’ve talked about tariffs in these last videos, you know, a lot of companies are worried about it too, and so what they’re doing to get ahead of, you know, Liberation Day is they’re buying up goods, buying up manufacturing goods, buying up product early. Well, that’s actually subtraction against GDP.
KM: So companies buying a lot of stuff and bringing it all ahead of the tariffs, lowered our GDP. That’s right. And that amazing. That’s bizarre, why?
JR: It is so import’s a negative. We do not produce it, so it counts against we have to buy it from somebody else.
KM: That’s right. So it’s actually a good thing, not a bad thing. The market was okay. So now the labor market is cooling, right? We got some we got the labor jobs numbers and unemployment, all of that numbers are getting lower. Market goes up. But that what’s up with that?
JR: Well, I think it’s a couple things. I think one thing is, you know, the market’s always looking at, is it bad in of itself, or relative to what it thought. And, you know, the reality is, over the last couple years, we’ve had pretty max on, you know, MAX Employment, you know, fully engaged. And so the longer MAX Employment, the longer we are in that state. I think the market knows at some point it’s going to tick up. So it’s more about how bad is this going to tick up? So we have a little softness there, but I don’t think the market saw anything there that it was concerned about.
KM: Okay? So now we go to consumer confidence fell significantly, but yet retail sales didn’t right? So people are people are saying, I’m scared the sky is falling, but, and because of that, I need some some retail therapy. I’m gonna go buy some stuff.
JR: That’s right. They’re still spending US dollars, right? So that’s a what do we think? What do we save? Or so, what are we doing? And still, and what we’re doing is we’re not acting like we’re scared, even though we’re thinking maybe we are.
KM: Yeah, so it’s funny consumers. Okay, so now let’s talk about the Fed, the 800 pound gorilla in the room. They came out, they said, No, we’re not going to do anything with interest rates, because, you know, we don’t know too much uncertainty with tariffs and everything else. We’re going to sit in our hands. But yet the market is still saying, you know, the odds are that by the end of this year, one two rate cuts are still in the cards, right?
JR: I think you know that the feds that it still has a very tough job if they have two mandates, which is, effectively, you know, keep inflation under control. The second being, keep jobs healthy, you know, keep growth. And it was clear from kind of what Paul is saying is right now, before we really know the impacts of tariffs, their main concern is inflation, and if inflation still a little bit higher than they like with the maybe expectation that it could bump up depending on all tariff negotiations. They’re saying we’re holding tight and we’re going to wait for data to come through.
KM: And you know, the reality is it could get ugly here, right? I mean, we saw the trade deal with England. Of course, the market liked that looks like we’re getting, we’re getting some trade deals. But really, the big one with regard to the tariffs, is China, right? Because right now, 65% of all those ships are sitting in China. They’re not even coming over here. That’s right. And, you know, I saw an interview with the director of the Los Angeles Port Authority, and he said, If this thing drags on for another three weeks, we’re going to start seeing empty shelves in the United States. And that could change everybody’s opinion.
JR: I think that could. I mean, that’s the one is, how long does that drag out? Now, the good news is, we’re seeing, you know, as our Treasury Secretary looks like over the weekend, is going to meet in Geneva with some sort of Chinese authority, and they’re always gonna not really act like either one is really the table, because they don’t want to look like the weak one.
KM: Yeah, I didn’t go first. You did. That’s right, that’s right, that’s right. We care. Who cares who goes first just make a deal and get it over with.
JR: So they got a hem and haw over that. But the good news is it looks like in some way, some US authority, some Chinese authorities, are coming to the. Table to open talks. Now, what that leads to, we don’t know, but I think the market’s looking at it as a good sign.
KM: Okay, but, you know, so right now, the market seems to be looking through all this stuff and saying, It’s okay, we’re gonna get to the other side. It’s gonna be okay, but it’s possible that we do have empty shelves. It’s possible that egos or whatever get in the way. We don’t get a deal, and all of a sudden, you know, I have a friend who was going to buy, had to buy some appliances today, yeah, as a matter of fact, was scrambling, because they’re renovating their house, and if they waited two more days, there’s gonna be a 25% increase on these plot, these faucets and whatever, and it’s because of the tariffs. So that’s so it’s real, it’s not like it’s gonna so that it’s possible, then that what could happen? What?
JR: Well, a couple things. I mean, that that would be the fear is that one, you know, tariffs start coming through, manufacturers, suppliers start raising prices. If they raise prices, how is that gonna affect buyers? Are people gonna stop spending money because they’re getting squeezed. If they get squeezed, stop spending money, and we’re a, you know, spending economy, that’s going to hit earnings. And then you’ve talked about this forever, if earnings start getting compressed, that’s what the market has to really has to rethink. Is it fairly priced, and that’s where we could see a sell down back to the lows.
KM: So we aren’t necessarily out of the woods here, even though the market seems to have been so resilient, it all, you know, I went to the whole litany, and it looks like the market doesn’t care. It goes up regardless. But it’s certainly possible it could just as easily say, oh my gosh, yeah, you know, maybe, maybe we overestimate all this stuff, and maybe it is going to get bad, and suddenly we could see it go all the way back down to where it was after liberation day.
JR: I think there were. I think you know where the market is right now, which is roughly where it’s been over the last 200 days. It’s kind of flirting with that average is it’s reversing out any of the surprises that we kind of had earlier in the month. So right now, I think the market has had time to discount all this, and we’re at a place where the market’s not surprised by anything. Where it could be surprised is that if we do see a ratcheting down spending, if we see this prolonged discussion with the Chinese and we both dig in stuff does not come to our shelves, that is probably, you know, that’s where the market might have to retest the lows.
KM: And what we’ve seen throughout history is what causes the market to really go down significantly is a surprise. Yes, it’s not the thing that everybody expected. No matter how bad it was, if it was expected, it doesn’t create the big bad down. It’s the sudden surprise, like when suddenly they realized, oh my gosh, Lehman’s going out of business, the biggest bank, whatever. And then, you know, when Trump announced these tariffs, everybody expected them, but boy, they were way higher. That’s it. And that’s those kind of shocks to the system. And if we start seeing empty shelves, and we start seeing all those things, it’s, it’s possible That’s right. I mean, it’s so we could see the market go down quite a bit.
JR: It absolutely is. You get, you get a supply shock, which will lead to spending shocks that could cause the market to go down to the lows, may even go through them. So we’re not out of the woods. It’s, we have some good signs here. The market is rallying despite all this, because I think we’re the market knew this was coming to some degree.
KM: So for now, you know, we continue to be glad that we took the stance that we took, yes, where we have half of our equities, that we’ve been what we did before. We’re in a very defensive position, but we’ve seen our portfolios rising here as the market has risen, and so we’re in a better place than we would have been had we sold 100% that’s right, so that strategy has helped us quite a bit, and should continue to do so as we go forward, right?
JR: We’re at a good hedge position to be able to deal with multiple scenarios. We’re glad if the decision we made, but we’re not out of anything yet.
KM: So ladies and gentlemen, that’s why we get the gray hairs for you. And right after we’re done with this video, this conversation stressed me out so much that I think I’m gonna go have a pina colada to get over it. What do you think, Jordan? You think you might join me on I most certainly will. Yeah, somebody has to do it, ladies and gentlemen, and so we’re gonna worry about all this for you, but rest assured that if anything happens that we are minding the store despite what we’re joking about, we take it very seriously. We’re doing it today for you, right here in the middle of whatever that is. Hopefully it’s not a Chinese aircraft carrier coming in. So thanks for watching, and make sure you like and subscribe to the video, and also make sure you share it with your friends. Bring them our way. You know, they’re probably worried right now. And anybody we can help, we would love to do that, and you’d be doing them a favor, I think, by introducing them to us. So please do and we, as we always say, We hope this video finds you healthy, wealthy and wise, and we’ll talk soon.

Please note: transcript has been modified after the time of recording. 

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023