This month’s market rout has been historic by just about any measure as some $10 trillion in market value has been wiped out since President Trump hit the reset button on world tariffs.
“The World is Different Now” read one headline from Bloomberg as equity markets in Asia, Europe and the U.S. plummeted for the fourth, straight day. Investors have not seen a decline of this magnitude since the dark days of Covid-19 when the world and the markets literally shut down. And now pundits, analysts, and economists are worried about a more prolonged, tariff-fueled economic downturn.
The Rout Heard Round the World
The U.S. markets have been in an unrelenting nosedive while the rest of the world has been in free-fall. On Monday alone Hong Kong’s market slide more 13%, for its worst day since 1997. The European markets fell 6%. The German DAX slid more than 7%, marking it’s steepest decline since March of 2020. Italy’s FTSE MIB fell 6.5% and Spain’s IBEX 35 lost 6%. Japan’s Nikkei also fell 8.6% and Shanghai’s Composite dropped 7%.1https://www.euronews.com/business/2025/04/07/bloodbath-for-european-markets-as-stocks-see-worst-fall-since-march-2020
U.S. crude oil also closed below $60 per barrel in a collapse not seen since 2021. Bitcoin cratered to $79,000 and the U.S. dollar index is now 2.9% below its January peak.
Recession Odds are Rising
Not only have fortunes been lost, but warnings about an imminent recession are getting louder. The National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”2https://www.nber.org/research/business-cycle-dating/business-cycle-dating-procedure-frequently-asked-questions
Goldman Sachs has just raised the odds of a U.S. recession to 45% from 35%. JP Morgan raised the odds of recession to 60% from 40% and former Treasury Secretary Lawrence Summers said that it’s “more likely than not” that tariffs will push the U.S. into a recession. And for the first time in 73 years, UCLA’s Anderson School of Management published “Recession Watch” and issued the following warning to America:
“The stated aim of the Trump Administration is to dramatically transform the U.S. economy in its first 100 days and that begs the question: if fully or nearly fully enacted, could these initiatives cause enough sectors of the economy to contract at the same time and trigger a recession? The answer appears to be yes, that a downturn could result over the coming year or two, and that we should now be on a Recession Watch. The administration’s purportedly desired policies would impose, each in their own way, a significant contraction on different sectors of the economy. Weaknesses are beginning to emerge in households’ spending patterns. And the financial sector, with elevated asset valuations and newly introduced areas of risk, is primed to amplify any downturn.”3https://www.anderson.ucla.edu/about/centers/ucla-anderson-forecast/recession-watch-2025
During a recession the economy shrinks, consumer sentiment slides, and unemployment rises. The U.S. Federal Reserve just cut its GDP outlook for 2025 to just 1.7%, down from 2.1% in December. In addition, consumer sentiment collapsed to a two and half year low in March and the employment rate nudged higher to 4.2%.
We are Stock Heavy and Haven Light
According to Gallup, more than 60% of Americans have money in the stock market reflecting stock ownership levels not seen since the Great Recession in 2008.4https://news.gallup.com/poll/645107/stocks-gold-down-americans-best-investment-ratings.aspx This makes the recent market selloff particularly punishing as trillions of dollars held in IRAs, 401ks, and pension plans are at risk.
“A record number of Americans are now in the market, financial professionals say, in part because in recent decades, many companies have done away with traditional pensions and set up 401(k)s or similar investment programs for their employees to fund their retirement. In many cases, employees are automatically enrolled in these programs. But it goes beyond retirement investing, professionals note. Americans have also found their way into buying individual stocks through platforms — Robinhood is a prime example — that make trading both simple and cheap, if not effectively free. Investing has become almost like a sport for some of these traders, especially the younger ones — not unlike betting on professional sports.”5https://www.marketwatch.com/story/americans-are-more-invested-in-the-stock-market-than-ever-and-that-may-be-adding-to-the-recent-turmoil-383417f3?mod=home_lead
US households also own trillions of dollars in U.S. treasury bonds which are generally considered a reliable safe haven — except for now.
“The roughly $28 trillion U.S. Treasury market was supposed to be a safe port to ride out the storm as President Donald Trump’s blanket tariffs send shockwaves through global markets. But over a volatile few days, at least two conflicting messages have emerged in the world’s largest and most liquid debt market to challenge that notion, with potentially painful ramifications for investors. One has been that Trump’s widespread tariffs on goods flowing to the U.S. could drag down the American economy by raising prices and causing households to cut back on spending … The other recent message has been that investors might end up on their own to weather the tariff storm.”6https://www.morningstar.com/news/marketwatch/20250407494/even-safe-haven-trades-like-treasurys-are-falling-on-trumps-tariffs-what-does-that-tell-investors
The Ultimate Safe Haven
During market meltdowns, gold is considered to be the ultimate safe haven and global crisis insurance. Gold prices are up over 30% in the past year and more than 15% since January. Unfortunately, far fewer Americans hold physical gold than paper stocks, leaving millions vulnerable to an unpredictable and unstable market.
Gold has recorded a staggering 19 all-time highs thus far in 2025 and central banks are buying it at the fastest rate in history. And according to Mining.com, some U.S. stock holders are finally getting the message:
“American stock investors have suddenly started buying gold again. After largely ignoring most of gold’s monster up-leg, they just started flocking back fueling big builds in major-gold-ETF holdings. If this stunning shift proves a persistent trend, these capital inflows will drive gold much higher. American stock investors remain radically underinvested in gold, commanding vast pools of capital they can deploy to chase it.”7https://www.mining.com/web/americans-buying-gold
As Trump’s tariff policies continue to stoke fears of a global trade war and recession — stocks will continue to get “obliterated.” Gold, however, has emerged as a critical portfolio diversifier, a powerful wealth protection asset, and a steadfast store of value.
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3 https://www.anderson.ucla.edu/about/centers/ucla-anderson-forecast/recession-watch-2025
4 https://news.gallup.com/poll/645107/stocks-gold-down-americans-best-investment-ratings.aspx
