The Current - What does stock market chaos mean for your money?

Episode Date: April 8, 2025

Trump’s global tariffs have sparked a stock market meltdown, leaving many Canadians worried about their investments, their pensions — and what it all means for day-to-day cost of living. Guest host Mark Kelley breaks down how this will affect ordinary Canadians with the CBC’s senior business reporter Peter Armstrong and economist Armine Yalnizyan.

I've been covering politics for 20 years and I can't remember a time like now when everything we thought we knew has been thrown in the air. From Trudeau's resignation to Trump's tariffs to a spring election during huge shifts in the polls. There's a lot at stake and power and politics is here to guide you through it. I'm David Cochran and on CBC's only political

daily I speak to the key players in this election. From the candidates to the analysts to the journalists on the campaign trail, you can find power and politics wherever you get your podcasts, including YouTube. This is a CBC Podcast. Hi, it's Mark Kelly here. You might know me from my regular gig as co-host of the CBC's The Fifth Estate.

You'll be hearing more from me when I fill in for Matt as he crosses the country talking to Canadians about the election. I hope you tune in and please enjoy the current podcast. What's going to happen with the market, I can't tell you, but I can tell you our country has gotten a lot stronger. I don't want anything to go down, but sometimes you have to take medicine to fix something. That's what US President Donald Trump's read on the impact his tariffs are having on global markets. Stocks have been swinging sharply down, then up, then down again as Wall Street grapples with the

fallout. Take the S&P 500 for example. Yesterday it closed down 0.2%. That's after a 4.7% drop shortly after the start of trading, all the way to a surge of 3.4%. Again, that would have counted as its best day in years. In a moment, we'll hear about the impact of the past few days and days ahead could have on your personal finances. But first, Peter Armstrong is the CBC senior business reporter. He's in Toronto. Peter, good morning. Good morning, Mark. Well, we saw the Asian markets opening stronger today. So Peter, are we okay? Well, look, I think a lot of that is the Chinese government taking steps to stabilize stocks. They

swoop in and they buy up billions of dollars with the VTFs and that kind of buoys markets when there's concern. The Chinese have gotten to be quite good at that. The Chinese government is also letting the currency depreciate, which will make their exports more attractive, that they can get more money if they get paid in US dollars for stuff. So that is helping as well. And yes, that is certainly buoying markets today.

The concern though, Mark is, you know, the U S pushing back against exactly that kind of, of action specifically on the currency has always acted as a little bit of a guard rail. I think China has always been accused of some bad behavior in terms of currency fixing, but the fact is it's been at least somewhat constrained because it's worried about how the US would react. But now that it's looking at the potential of these massive sweeping escalation of tariffs, it feels like at least the concern about the US reaction has been wiped out.

And so they're taking more dramatic action than we're used to seeing. Yeah. And you talk about the possibility or the threat that Donald Trump has now made for a 50% retaliatory tariff on China that would take effect tomorrow. What would that impact you believe that would have on the markets? Well, I think that like to call it an escalation, as I just did, is a dramatic understatement. We're talking about a 50% increase on top of a 54% tariffs, 104% tariff. It would essentially decouple China from the US,

and that would have these sweeping impacts on everybody, on the entire global economy. Nobody would emerge from that unscathed. And the Chinese government has, you know, you've heard how the Canadian government has responded to the threats of tariffs on Canadian goods. It is not dissimilar to the way the Chinese government, the Chinese people have responded. You know, one Chinese ministry, ministry of commerce spokesperson said, the US threat to escalate tariffs on China is a mistake on top of a mistake. If the US insists on its own

way, China will fight to the end. And they're showing a willingness to do that, that they are certainly not backing down and they are going to match whatever the Americans do tit for tat. And you know, the problem here, Mark, is like, once you start this, you can't unring these bells. And whether it's a schoolyard fight or a shooting war or a trade war, the hard part isn't starting it. It's once those first salvos have been fought of finding an off ramp. And you think back to the 2008 financial crisis, I've spent a lot of time thinking about this over the weekend, that weekend between sort of the Lehman Brothers failure and the government and business response, you had every business on Wall Street

and everybody working in the government hunker down over the weekend trying to find a solution. This past weekend, traders came in to do the futures trading and there was no response from the government. In fact, there had only been escalation and further sort of muddying of the waters in terms of what the Americans actually want.

Well, we're in this situation right now where countries are choosing one of two options, which is to, to, to retaliate or to negotiate. And that's a big stage right now that's been set. Now there are some signs coming out of the White House that Donald Trump is ready to negotiate with some of the countries that are coming to him, countries like Japan, like India, like Vietnam.

Is Donald Trump actually then getting what he wanted out of this whole tariff policy? I think the problem with that, Marc, is we still at a really basic fundamental level don't know what Donald Trump wanted. And I'll give you a really good example of how kind of weird this is. Take Israel or Vietnam. Both countries on the morning last week before the announcement, they announced an elimination of all tariffs. They're like, that's it, we're done. We're absolutely pre-negotiating this. You're worried about our tariffs, they're gone. Israel still got hit with a 17% tariff. Vietnam got hit with, I think, a 37% tariff. And White House trade advisor, Peter Navarro, who has been pushing all of this, he was on,

I watched him do an interview on CNBC yesterday where he said, it doesn't matter. They can go to zero tariffs. It means nothing were his exact words. What he's talking about is something quite different that he's looking at what he calls their non-tariff cheating measures. And that's everything from currency manipulation to IP theft, like a way deeper, way more complicated problem. And if you recognize it as the problem that Peter Navarro does, even he says, look, fixing that, that's going to take a really long time. And tariffs, fixing tariffs, he said, that's just the very first baby step towards addressing what we want to see get done.

So you have examples of people that have wiped out their tariffs entirely. And Benjamin Netanyahu was in the Oval Office yesterday, and Donald Trump was asked, hey, he's taking his tariffs off the table. Are you going to take the retaliatory tariffs off the table? And he said, no. He said, you know, maybe.

We'll talk about it, but not right now. Before I let you go, Peter, I'm, I'm, I'm fascinated when I'm looking at the, the comments that are coming out from some Wall Street heavy hitters. I was reading one analyst who was saying that quote, the stock market clearly believes this is a disastrous policy. This, this being of course, uh, tariffs and Bill Ackman, who was a billionaire and a Trump supporter himself says, you gotta pause this or else we'll experience a self-induced nuclear winter.

And I'm like, okay, you got my attention with that. These are what the heavy hitters are saying. Does that make any difference for Donald Trump in the White House? It certainly hasn't appeared to. Bill Ackman is the guy who came up with this idea of a 90-day pause in the tariffs to try to allow some negotiations and let markets catch their breath.

And it was the rumor that the Trump administration was actually maybe embracing that, that set off a lot of the roller coaster ride yesterday that at like 10 in the morning, somebody tweeted out saying, 90-day pause is going to be introduced by the government, not everybody except for China. And CNBC ran with it, Reuters ran with it, markets just, they've been down 4 and 5 percent, a thousand points in the Dow, they shot back up, buoyed up into pausing. It was an anonymous tweet from someone called Walter Bloomberg that set this off. It was incredible.

Incredible. And nobody thought to say, well, wait a second, what's the source of this? And when they did realize it wasn't true, the White House dismissed it as fake news and markets plunged back down again. But it was an example of just how, you know, fake news, but a real desire to find some clarity and get a sense because traders still believe Donald Trump doesn't actually isn't going to go through with this in some way. They think it's why would you set the entire global economy on fire and do all of this damage? It just doesn't actually isn't gonna go through with this in some way They think it's why would you set the entire global economy on fire and do all of this damage? It just doesn't make sense So they're keep looking for clues that he's gonna back down and and even Bill Ackman and look Bill Ackman has the president's phone number

He has access to the Oval Office and yet here he is tweeting The these ideas out into the public in the hopes that somebody, I guess, will show it to the president and say, oh, look, Bill Ackman came up with a great idea, sir. Why don't we do this? Keep your seatbelt on, Peter. It's going to be a long day. Indeed.

CBC's senior business reporter, Peter Armstrong, is in Toronto. Oh Canada, a vast idyllic land filled with beavers, loons, lumberjacks, and polite friendly folks. We have those things for sure but there's a darker side to the Great White North, full of mystery, crime, the paranormal, and dark history. Join me, Mike Brown, and co-host Matthew Stockton every Monday for the Dark Poutine podcast as we tell dark stories from north of the 49th parallel with the odd away game covering more international cases. You can listen to Dark Poutine for free wherever you find your favorite podcasts. Well, the uncertainty in the markets has many Canadians worried about their own investments and how the impact of tariffs will

impact them and their families. Armin Yelnazian is here to break that down for us. She's an economist and the Atkinson Fellow on the Future of Workers. Armin, good morning. Good morning, Marc. When you're listening to this conversation, I mean, how are you seeing the next few weeks or months for the Canadian economy? Well, I said in an article a few days ago that a recession is inevitable. The only question now is how deep and how long. So this isn't just about investments. It's about

whether you'll have a job and whether you'll be paying more in the market. Mr. Trump has said that everything, he doesn't like things to go down. Well, everything in the real economy is down. We've just heard that the stock market is as variable as Mr. Trump's thinking. But in the real economy, everything is down except for inflation and unemployment everywhere. And so that will have huge impacts, knock on impacts on the number of people that are able to hang on to their housing and what will happen to household debt as savings are whittled. Now it's true that savings are now at levels we last saw in 1996. That's partly the turtling effect of people just hanging on for the inevitable and trying to run to stay still and protect their savings. But it's a very, very bad time

and uncertainty about how long it will last makes it even worse. You mentioned jobs. Last month, Canada saw a loss of 33,000 jobs, the largest drop in three years. I mean, what do you see moving forward? Oh, I think that's just the tip of the iceberg. That was what was happening in the middle of March when nobody believed that this was going to actually unfold the way it has been unfolding when stock markets had not reacted in the way that they did, which was signaling

this is a bloodbath for anybody that's got money. And when employers were not sure if their production would be halted or paused or go through. So that kind of uncertainty meant that very few people were laying people off then. There were people. There were companies that were laying people off, but we are going to begin to see these numbers march up in the April print, which we'll get at the beginning of May, and I expect in the next few months, because everybody's talking about what's happening to the trade exposed sectors.

There's about two and a half million jobs in that sector, but when a trade exposed sector loses jobs, the things that those people bought in the service sector, which makes up about 80% of jobs, will also shrink. So it will cascade into the service sector, even though we don't trade in services by and large. So we've got a real accelerating problem on the horizon when it comes to being able to continue to grow economically and grow and just stay stable in terms of what we've got right now. The accelerating problem on the horizon in that sense, but a very immediate problem right now when people are looking at their investments taking a nosedive. But what do you say to people who have that very legitimate fear watching the value of

their investments plummet? Well, that's the whole thing. Nobody knows what to expect, Mark. It's been curveball after curveball, which has become wrecking ball after wrecking ball. Because the reason for all of this is so uncertain. We've been given multiple reasons why this is happening. And the length just keeps extending.

So it's almost impossible to filter out a signal amidst all the noise so you can have a strategy of what to do. And don't forget, while most people do not invest directly in the market, all of us have got pensions. And CPPIB, the Canadian Pension Plan Investment Board, is one of the single biggest pools of capital in the world. So we are all exposed to what is happening on global markets right now.

And it is very difficult to come up with a strategy against this continuing chaos. I'm thinking about people who are getting ready to retire, the impact this will have on the retirement savings, as well as the decline in the housing prices, the value of their homes, which for a lot of people is their retirement savings. So where do you see that going? Well, I guess I would just summarize by saying everybody is scared. If you are looking for your first job, you're scared.

If you have a job but you think you might lose it, you're scared. If you lost your job and you're not sure you're going to get another one, you're scared. If you lost your job and you're not sure you're going to get another one, you're scared. If you were approaching retirement and wondering, is this the wrong time to retire, you're scared. And if you're retired, you're scared that your fixed income won't cut it in whatever is about to happen to global prices. So it isn't just housing values because some people will look at that and say, oh, there's some deals to be had. And that's actually a cautionary statement because the deep pockets are going to be owning more and more of what is being sold at fire sale prices.

It's not you and me, by and large, that is going to make money in this scenario. It rarely is. So by and large, most people are going to lose money and then they're absolutely, they're going to get richer. And that's a really problematic situation because we saw during the pandemic that when people control too much of the market, they can jack up prices even more, even when it's not justified by underlying cost increases. So it's a real problem. And I mean, I'm wondering too, for people who can hold on to their houses, if you're lucky enough to own a house, hundreds of thousands of mortgages are coming up from renewal this

year. So what will this situation mean for those who are left to renegotiate their rates? Well, I think this is the worst time on the planet to be a central banker because we've got two fires going on in the house. One's in the bedroom, one's in the kitchen. The fire in the bedroom is rising prices. The one in the kitchen is losing jobs. So they have one tool to deal with both fires. Which one are they going to go after first to prevent the house from burning down? We don't know if the job loss is gonna be the thing

that captures central bankers' attention, and consequently they lower rates, or the escalating prices will be what grabs their attention foremost, because their job is price stability, and they jack up rates. So I can't even tell you if it's gonna get harder or easier to re-mortgage.

But the fact that more people will be losing their jobs, and we are not recession ready. We've got already in March, we had 1 and 1 1 You're making close to six figures with your regular job. The most you can get out of EI right now, because of the old rules that we have had in place for decades, is about $36,000. People are going to lose their homes. Forget about the price of home and refinancing it. They won't be able to hang on to their homes. And that isn't even talking about the people that don't own a home.

They are going to be kicked out of their rental accommodation and there's no place cheaper to go to. We are really in a terrible situation. But any personal advice I would give you, I just want to be really clear. What's good for the individual right now could be suicide for an entire economy. If I decide to just sip at, I don't spend, I try and save, I'm going to be squeezing out small businesses. And that's just going to be a really difficult thing to navigate. And that's why all of this unfolding during a federal election is so critically important,

who we choose to guide us through this absolute, like blooming economic storm. We're just in the headwinds now. When that storm hits, you want to have a steady hand on the tiller. Well, you mentioned before, and I think this is an important point I want to drill down on where you said we're not recession ready. Well, we're 20 days from an election, the parties are out campaigning. Is there something you want to hear that can help us, reassure us, get recession ready in the time that we have?

Yeah, we have the ability for them to say more about how they would fix EI so more people are covered. If only 35% of your population is covered and even those who are covered can't hang on to their homes, that defeats the spirit and purpose of EI that has been in place since 1941. And the second thing would be a really clear industrial strategy. Tax cuts are not an industrial strategy. They might incentivize more businesses to invest, particularly those with American dollars because we're available at fire sale prices for the moment. You know, one dollar

American buys a dollar 40, more than a dollar forty in Canadian priced assets. I want to hear how my next federal government is going to protect me from getting owned by the Americans and turning us into a 51st state economically wrapped in a Canadian flag. That can't happen. And are you hearing any of that, Armin? Not yet. I'm hearing very vague ideas, concepts of a plan on what industrial strategy could look like after the election.

What I'm hearing consistently is tax cuts. Tax cuts at a time when we're already running a deficit means we're borrowing money to pay for this largesse. It's absolute folly at a time when you know revenues will drop because of looming recessions. I'm not seeing a huge amount of understanding the moment we are in, but we still have almost three weeks to get our ducks in order and tell Canadians, what are you going to do as this storm descends on us? Okay, deep breath, everybody.

We got to get through this together. Armin, thanks so much for your time. Thank you. Armin Yelazian is an economist and the Atkinson Fellow on the Future of Workers.