Money Rehab with Nicole Lapin - Is This a Recession?

Episode Date: March 11, 2025

Wall Street just had its worst trading day in years by some metrics, and the sell-off was broad and brutal. Today, Nicole explains how bad it really was, why this happened in the first place, what will happen next, and what you should do to protect your money.

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Boosts are available to eligible CHI members enrolled in SpotMe and are subject to monthly limits. Timing depends on submission of payment file. Fees apply at out of network ATMs. I'm Nicole Lapin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Hey money rehabbers, I'm recording this late Monday night because holy mother of God, it has been a day in the markets and the news just keeps rolling in. If you looked at your investment portfolio

today, you probably wish you didn't. Wall Street just had its worst trading day in years by some metrics and the sell-off was broad and it was brutal. So today I really want to explain how bad it really was, why this happened in the first place, what will happen next and what you should do to protect your money. So let's start with what we saw in Wall Street. As you know, there are three main indices that investors use to track the market. The Dow Jones Industrial Average, or just the Dow, the S&P 500, and the Nasdaq Composite. Investors use the Dow and the S&P 500 to gauge how the market as a whole is doing.

The Nasdaq can also give you a vibe check on the market, but it's more tech-focused. Today, none of these indices were happy. The Dow fell 890 points or over 2%. The S&P 500 dropped nearly 3% and briefly hit its lowest level since last September. The NASDAQ, which was hit the hardest, plummeted 4%, the worst single day drop since 2022.

Peter Tuchman, the Einstein of Wall Street, who hosts the MNN podcast Trade Like Einstein, reported from the floor today. And here's what he had to say. You know what? Today was a bit of a bloodbath. And you know me, I rarely will ever say that. But that was a bloodbath. Right. So obviously this drop was widespread. But if you're holding tech stocks, you really, really felt the pain. The tech giants that led the market rally over the past year got absolutely wrecked today.

Tesla plunged 15% the worst day since 2020. The stock has now erased all of its post-election gains. Nvidia, the darling of the AI boom, dropped 5%. Alphabet, Google's parent company, and Meta, Facebook's parent company, each fell more than 4%. Apple, Microsoft, and Amazon all saw declines of around 3% to 5%. Even outside of tech, things were not great.

Bank stocks like JP Morgan Chase and Wells Fargo slid as concerns about slowing economic growth took hold. Goldman Sachs took a particular beating. There are some obvious questions here. The first one is why did this happen? Well, it wasn't just one thing, as is so often the case. It was a perfect storm of economic uncertainty, decreased confidence, policy changes, and recession fears. The recession fears didn't just come out of nowhere. This market bloodbath marks three straight weeks of losses for the market. And it's not just a minor blip. The Nasdaq is officially

in correction territory, which means it has dropped more than 10% from its recent high. But let me be super duper clear here. A correction is not a recession. It's not even a bear market, which is technically when a stock index, like the three I just mentioned, drops 20% or more from its recent high and stays down for a prolonged period. But still, it has not looked good. And the market gets very reactive when bad signals start flaring.

And then the Trump interview happened. Over the weekend, President Trump was asked whether he thinks the US economy could slip into a recession and instead of dismissing the idea with a very Trump-like, hell no, it's great, it's the best, it's huge, which is what the market probably wanted to hear. He said he, quote, hates to predict things like that and that the country was going through a, quote, period of transition. Yeesh.

Again, the markets hate, hate, hate uncertainty and when the President of the United States won't rule out a recession? Markets really hate that. Beyond this one tough soundbite, investors are also worried that Trump's economic policies, including aggressive tariffs and spending cuts, could slow down growth. As you know since you've been following the show, President Trump announced tariffs on imports from Canada and Mexico last month, as well as increased tariffs on imports from China. The tariffs on Canada and Mexico last month, as well as increased tariffs on imports from China. The tariffs on Canada and Mexico were paused and now that pause has been extended through April 2nd.

The market has not been reacting well to these tariffs, so you'd think that an extension of the pause would be a good thing. But this back and forth on trade policy is complicated for businesses. Tariffs raise costs. They disrupt supply chains and hurt profits, especially for companies that rely on global trade. As a result, Goldman Sachs even cut its U.S. growth forecast, warning that these trade moves could slow down the economy more than expected.

And then for the cherry on top, there was the jobs report. The latest jobs report shows that the U.S. labor market is still growing, but there are warning signs that hiring could slow in the coming months. In February, the economy added 151,000 jobs, which was below the 170,000 jobs economists had expected, but higher than January's gain of $125,000. The unemployment rate ticked up to 4.1% from 4%, which doesn't sound like much, but it does show a slight softening in the labor market. Meanwhile, healthcare and transportation were bright spots, adding 52,000 and 18,000 jobs

respectively, but other industries struggled. Retailers cut 6,000 jobs and restaurants and bars shed 27,500 positions, which some economists attribute to immigration restrictions tightening the supply of available workers. Meanwhile, the federal government lost 10,000 jobs, an unusually steep drop, likely due to the pressure from Doge. Although the White House is interpreting these numbers as a sign of economic resilience, uncertainty over tariffs, federal job cuts, and immigration policy could weigh on hiring in the months ahead. Many businesses understandably are hesitant to expand their workforce when they don't know how supply chains, costs,

and regulations will shift. And while the Federal Reserve is expected to hold interest rates steady at its upcoming meeting, concerns about economic instability could change that outlook if job losses continue. We had been expecting the Fed to continue some rate cuts this year, but Morgan Stanley is now saying that rate cuts could be pushed back even further because of Trump's tariffs, which could cause a temporary spike in inflation. Even beyond the stock market dip today, we see investors' fears elsewhere. When investors get spooked, we often see a rush to so-called safe haven assets like bonds. Investors poured into US treasury bonds, which pushed yields lower. The VIX, which is the go-to index for volatility,

is also known as Wall Street's fear gauge. That spiked to its highest level this year. Even Bitcoin fell below $80,000 as investors pulled money out of riskier assets. Basically, we're seeing investors shift their money out of stocks and into safer investments, which only adds to the market downturn. One of the positive signs I am seeing is that there is so much cash on the sidelines that people are waiting for things to be on sale that it will prop up the stock market from getting even nastier. If you're wondering if this is really as bad as it sounds, well, we're not in recession

territory yet. A recession is typically defined as two consecutive quarters of economic contraction. But the warning signs are flashing. Namely, increased layoffs, low consumer confidence, major banks cutting their growth forecasts, and key data points like the yield curve and Buffett's recession indicator all pointing in the wrong direction. Side note here, if you want to learn more about those recession indicators, I've linked the videos I did about those in the show notes. So this brings us to you.

If you're investing for the long haul, today's sell-off is painful. But it's not necessarily a reason to panic sell. The stock market goes through these cycles, and downturns are just part of the game. That said, it's never a bad time to recession-proof your finances. And for that, I've got you covered. In the coming weeks, I'll do deep-dive episodes into how to protect your money in case a recession does hit. So stay tuned, funny rehabbers. Now is the time to stay smart, stay calm, and make strategic moves to protect your wealth. So please take a deep breath, I'm going to do it with you.

And here's today's tip you can take straight to the bank. If today's market drop has you on edge, now is the time to take control of your financial safety net. Start by locking in lower interest rates on any debt you might have, because if credit tightens in a downturn, refinancing might not be an option. But also remember, headlines can just be a whole lot of noise. And strong companies didn't release any new data to justify this plunge, which means if you have cash on the sidelines as dry powder ready to pounce on high-quality investments, now could be your time. And don't forget to subscribe to the show because in future episodes, I'll walk you

through how to protect your investments, adjust your spending, and find hidden financial opportunities no matter what the economy throws your way. Money Rehab is a production of Money News Network. I'm your host, Nicole Lapin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do.

So email us your money questions, moneyrehabatmoneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at MoneyNews and TikTok at MoneyNewsNetwork for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.