Letter to My Clients - Tariffs and "Liberation Day"

To My Clients,

You’ve probably noticed the after-hours craziness in the stock market related to

tariffs. Heading into the election, markets were optimistic, reflecting strong

returns. Yet, now markets seem overly negative, despite corporate earnings

remaining high, consumer spending staying solid, and household savings still

robust.

What's changed?

Right now, the main issue is uncertainty. You may have heard me say before:

markets react mainly to two things - corporate earnings and surprises. Currently,

investors and businesses aren't clear on what to expect. Businesses just want clear

rules so they can plan, protect, invest, and grow reliably. When uncertainty

prevails, it’s hard for investors and businesses to stay confident.

On what President Trump has labeled "Liberation Day," tariffs officially kicked in,

and the market reaction has been severe. After-hours trading saw sharp drops: the

S&P 500 down nearly 3%, NASDAQ down 4%, and the Dow down 2% (as of this

writing). While the President campaigned promising an "Economic Golden Age"

AND tariffs, the market seemed to underestimate how disruptive tariffs could

actually be. More than tariffs themselves, it’s the inconsistent messaging that's

driving confusion and volatility.

Despite the current stress, I remain cautiously optimistic - and here's why:

1. Tariff Fairness: Previously, the tariffs other countries placed on the U.S.

were higher than what we imposed in return. Now, that imbalance is

shrinking, leveling the playing field.

2. Consistency Brings Stability: If the administration maintains clear and

consistent messaging, markets can adapt and stabilize. Corporate earnings

are strong; the missing piece is predictability.

3. Self-inflicted Pain Can Heal: The turmoil we're experiencing now is

largely self-induced, like touching a hot stove. This pain can quickly ease -

provided political pride doesn't delay needed adjustments and cause deeper

harm.

To be clear, I haven’t always agreed with every policy or approach of any

administration, past or present. However, I genuinely hope the administration

succeeds in their plan of bringing manufacturing back to America, lowering the

cost of imported goods, reducing taxes, and improving the standard of living for all

Americans. It can be hard to see the plan or the sense but sometimes we just need

to trust it’ll work out.

But the real question remains: How long will our hand stay on the hot stove?

Here's the good news for you, my clients: most of you hold moderate to

conservative investment portfolios. This means you have significant investments in

bonds and fixed income. While stocks face volatility, bond markets remain stable

and even positive right now - doing exactly what they’re designed to do (unlike in

2022).

My key advice today: Don't let scary headlines steal your happiness. If you're

feeling anxious or uncertain, let's review your plan and investments together to

make informed, rational decisions.

Don't let the evening news derail the careful planning we've put into place.

Stay confident, stay informed, and let’s talk soon if you have concerns.

Regards,

Jose Alvarez

Founding Advisor

Harvest Horizon Wealth Strategies

The information presented in this blog is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services are offered through Harvest Horizon Wealth Strategies LLC, an investment adviser registered with the state of Wisconsin.