They Lied to You About the U.S. Market Recovery in 2025

If you're wondering what the heck is going on in the markets right now, you're not alone. The volatility is insane. Tariffs are back in the headlines. The Dow swung,500 points Monday, April 7th. And the VIX, it's hitting crisis levels and it's remaining elevated.

And everyone's asking the same questions. Is this just another bump in the road? What is the safe play? Are we finally seeing the beginning of a long overdue correction? Is the market about to unravel? Are we in a more prolonged bull market? Is this thing going to be more protracted? Where is the bottom? So many questions and they keep coming.

Stay calm. I'm going to share the real issues and I'm going to answer these questions as we work our way through this video. And there is a lot to unpack. So you're going to need to stay with me until the end. The headlines are telling you it's all because of tariffs and geopolitics. But those are just a catalyst in my opinion. The real reasons, they go much deeper. They've been building for years. So, let's talk some money.

Today's Tuesday, April 8th, 2025, and yesterday gave us one of the wildest sessions we've seen in years. The Dow Jones Industrial Average, as you know, it opened down 12,300 points, reversed into positive territory on fake news about the tariffs being halted, and then sank back into the red where it's been for several days now. It did all of this before closing, and somehow it felt like it was going to mount a charge, but that never happened.

So, that's an intraday move, by the way, of about 8%. When have you seen that kind of day? I've got the answer for you. You haven't. Most major indexes are officially in bear market territory now. That simply means a drop of 20% or more from their recent highs, and we've certainly hit that.

And the VIX, the volatility index or the greed and fear gauge, whatever you want to call it, it was sitting at almost 47 yesterday when the market closed. It bumped over 50. And the worst thing about this VIX is that it seems to be staying there. Although this morning it started coming down. It was around 41 when we started shooting. Last time we saw sustained levels like this was the COVID-19 panic in March of 2020. Let that sink in for a minute.

I think it's important to note this is not just an emotional overreaction. The technicals are breaking down. In fact, they've been presenting some compelling evidence for a few months now. And here's the latest breadth. It's awful. In fact, there's only a handful of stocks that sit above their 20 and 50-day moving averages. Worse, the majority of the S&P 500 stocks are well below their 200 day moving average. That's a huge negative. It's a major concern.

And then there's momentum indicators. They flipped pretty hard. Support levels are being violated across the board. The market is sending what I think is a pretty clear message. The bullish trend that we've been enjoying for a long time has been cracked. Bearish momentum now in control.

Everyone's asking, "What should we do?" Well, hang on. I'm getting there. Going to answer that. Before we talk about the solution, let's dig a little deeper. I think it's important that we better understand why we're here and not simply blame it on tariffs or things that we already knew would take place based on the current president's campaign speeches a year ago.

Let's take a look at this all the way back to 2010. That's when Federal Reserve Chair Ben Bernanke rolled out the first full-scale version of what is today known as quantitative easing. Barack Obama was the president. Now, the justification, well, it was to stimulate growth. But why? Maybe the economy wasn't recovering. Bingo.

Remember, we couldn't buy inflation. You remember that? For years we kept talking about zero inflation. Life was good. Interest rates were low. How could it get any worse? Then those two coined this great phrase. It was called escape velocity. A booming economy that could lift us out of this bad place. It could lift us to new heights. Just a matter of time. Well, how did that work out?

Despite the trillions of dollars in liquidity, near zero interest rates, and constant intervention from the Fed, we never got that so-called economic liftoff or escape velocity. Instead, we inflated asset prices, including stocks, of course, real estate, even collectibles. Everything has been lifted in value.

Then we had this thing called COVID and the Fed, what'd they do? They doubled down. More QE, more stimulus, rates were pushed even lower. And what happened? Asset prices started soaring once again. Parabolic moves that were not justified. Why did it make sense when we were going through more and more and more money printing? Why would it make sense for equities or any asset to continue growing at such rapid paces?

This outsized experiment, it is proof that you cannot borrow your way to growth and debt reduction. In other words, there's no such thing as a free lunch. Never forget that.

Now, let's fast forward to the present. We've created a system that is addicted. And yes, I use the word addicted. We've created a system that is addicted to cheap money and Fed intervention. In fact, I'm hearing it on the news every day. When is the Fed going to step in? That's exactly what we don't need. The markets rallied not on fundamentals, but on Fed's support over the last 10, 15 years. And now that support is unwinding because the Federal Reserve is in a quandary.

Sure, tariffs are making headlines. Of course they are. That's what Donald Trump said he would use as part of his bargaining when he took office. And they are simply the catalyst. It's not the tariffs that are creating the selloff in securities. It isn't the fault necessarily of the tariff. We haven't seen the result of the tariff. That's simply speculation. Those tariffs, however, are the catalyst to something that's been building for more than a decade. But don't be fooled. Tariffs did not cause the mess. As I said, tariffs just lit the fuse. The fuel has been building for years.

Here we go. So, stocks are overvalued. On average, they were trading at 30 times earnings. Some were way above that. Some still way above that. And you've been told that's perfectly fine in a low interest rate environment. Yet price to earnings, they didn't come down even when interest rates moved higher in 2022. In fact, they moved at such a rapid pace, it was the fastest pace and highest that we've seen in 40 plus years.

Then there's fragile economic growth. Our leading indicators have slowed over the last many months and that foretell of a weakening economy, a weak market participation or breadth. We talked about that, but let's hit it again. This is a technical indicator that is supporting what the fundamentals are telling us. They're simply saying that the weakening fundamentals, that's not something that we're imagining. It's real.

And then there's the explosive debt. Did you know that America has nearly $37 trillion of debt with interest cost exceeding $1 trillion every 12 months? That is right. $37 trillion in national debt and all that stimulus. It didn't fix the system. It just pushed asset prices higher, making the eventual correction even more painful.

So, what is the market telling us? Let me give you a few points. Oil is falling. That's a red flag for the energy sector. When prices go down, it's good for the consumer, is bad for that sector because profits get squeezed and that could mean more layoffs. Now, that is a risk-off signal.

Let's look at gold. It's holding up. No surprise. It thrives on fear. And I believe that when you see this much piling into gold, that is foretelling of a global recession.

Next is bond yields. They've dipped then they reversed and that is suggestive of investors repositioning and they're doing it very quickly. The next point is major indexes are down more than 20%. Officially entering bear markets, not good. Now I'm not telling you this to create more fear. I'm just calling it like I see it with one goal in my mind and that's getting you informed.

Here's what you want to watch for. Continued weakness in things like small caps and cyclicals. I think small caps will eventually do better, but we've got to get interest rates lower so that money will flow to them in a more free way, if you will. Small caps get mired in all of this when rates are high and that is simply because they don't have the ability to go get the money like a large cap does. They're also domestic for the most part. They're not international players. So small caps probably do well eventually, but they are a signal for you right now that things are not in the right direction.

Then failure to recover these key support levels, things like the 20-day, 50-day, and 200 day moving averages, keep an eye on those. And divergences between price action and the momentum indicators, those things can be telling.

And then the next point is paying close attention to yield spreads. I've always believed that yield spreads can tell us just about everything we need to know. If your corporate yields and particularly your junk yields begin to widen from treasuries, you can bet the risk-off environment is going to continue.

And don't forget the markets are oversold on short-term charts and that sets the stage for a counter trend bounce. I think we'll see that probably throughout today. But look at the monthly charts. We're not even close to being oversold. Don't get sucked into living by a daily chart unless you're a swing trader. Otherwise, you need to be looking at longer-term charts with those daily charts so that you can get a better understanding of where we are and how much more downside or upside we might be looking at. These are all signs of a market that is losing its footing and it's been losing it quickly.

So, how do you navigate this? What should you do? Well, here are a few pointers, things that I'm doing. So, the first thing is re-evaluate your risk. That's what I'm doing. What worked during the boom won't protect you in the bust. And if your capacity hasn't changed and your horizon is more than, say, 5 years, you probably need to stay put. If you're still accumulating, meaning you're saving systematically, maybe you're in a 401k plan, just keep dollar cost averaging. That tends to be one of the best ways to work through these types of market calamities.

And then number two, raise cash if needed. Liquidity is power in this kind of market. You've heard the old saying, cash is king, but it's only king if you know how to redeploy that cash. So, if you're just pulling it out to sit on the sidelines never to redeploy the dollars, you're making a big mistake.

Number three, look beyond the headlines. What matters now is positioning, not predictions. And believe me, the headlines, they really stink at predicting.

And number four, stay diversified. Single bets in this situation could ruin your portfolio. Don't try to be a hero by picking one or two stocks that you think are going to hit the stratosphere. It's probably a losing battle.

And number five, use options to hedge and offload some of the risk. If you don't know how to use options, you're not going to learn it overnight. You might need some help with that, but options can be a wonderful hedge to help you through these times.

And then finally, talk to a pro. This may not be the time to DIY your financial future. I'm not saying you can't do it. If you feel comfortable and you've got the right knowledge, do it. But if you're not sure and you want a second opinion, this is a pretty darn good time to get one.

So, before I leave you with one final takeaway, don't forget to leave us a comment. Tell us what you think about what's going on. Subscribe for more content like this. And of course, it's all things money to help you get better educated.

Look, we were promised escape velocity back in 2010. We never got it. We don't have it today, and I don't know that it's coming anytime soon. We were told the Fed could manage a soft landing. That remains to be seen. And the odds of this happening, they're not in our favor. At least not from my perspective. We never believe that garbage.

Now, we're facing the consequences of monetary distortion. This isn't panic. It's reality catching up. We've been overstretched for a long time. Don't let emotions drive your decisions. Stick with us. We'll keep calling it like it is. No sugar coating, just facts, some history, and forward-looking thinking because that is how real investors prepare. I'll see you next time on We're Talking Money.