One of Waren Buffett's classic investing principles is 'be greedy when others are fearful, and be fearful when others are greedy.' I continue to be fearful of a stock market that seems to be increasingly disconnected from slowing global economic growth.

President Trump has announced significant tariffs on the automotive industry, and has planned even more tariffs for 'Liberation Day,' April 2nd, next week. Most economists are projecting inflation to have a modest rise, perhaps 1% to 1.5%, as a result.

In the previous three recessions in the United States, the stock market crashed by approximately 30%, 40% and 50% (2020, 2007-08, and 2000-01). The chart below shows historical recessions in the U.S. (the gray horizontal bars), juxtaposed with the Fed Funds Rate (this is the rate everyone is talking about when the Fed 'raises' or 'lowers' rates).

President Trump has announced significant tariffs on the automotive industry, and has planned even more tariffs for 'Liberation Day,' April 2nd, next week.  Most economists are projecting inflation to have a modest rise, perhaps 1% to 1.5%, as a result.  Meanwhile the Federal Reserve is talking about heightened 'uncertainty.'  Will inflation or deflation carry the day?  Why is the Fed nervous, and why do 20% and 25% tariffs result in only small changes to inflation?  Let's look at some numbers.  Here are the official ingredients of the Consumer Price Index (CPI), one of the inflation barometers used by the Fed.