In this week’s episode of Retire in Texas, Darryl Lyons, CEO and Co-Founder of PAX Financial Group, offers a timely market update and addresses some of the most common economic questions he’s hearing right now – from inflation and tariffs to taxes and the debt ceiling.
This episode is tied closely to current events, giving listeners a snapshot of what’s driving market movements and how to make sense of the headlines. Darryl breaks down complex topics in a digestible way, sharing real-life examples and practical steps to stay focused during economic uncertainty.
Key highlights of the episode include:
• Why the recent market correction isn’t cause for panic – and what history teaches us about rebounds.
• The role of tariff policy in market volatility and why uncertainty is more damaging than the policies themselves.
• A deeper look at inflation, the Federal Reserve’s strategy, and what it means for your wallet.
• What to know about the upcoming expiration of the 2017 tax bill and how potential extensions could impact planning.
• The significance of the debt ceiling debate – and why the U.S. Treasury market is still holding strong.
• Why emotional investing can be dangerous and how staying diversified may be your best defense.
This episode is your go-to update on the state of the market, delivered in a way that’s easy to understand and act on. If you’re feeling uncertain about what’s next, Darryl offers calm, thoughtful insights to help you navigate what’s happening now – and keep an eye on the long term.
For more insights and to connect with a PAX Financial Group advisor, visit http://www.PAXFinancialGroup.com.
If you found this episode helpful, don’t forget to share it with a friend!
Transcript:
Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group. And you’re listening to Retire in Texas. This information is general in nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information and thank you for listening. The listenership has gone up exponentially lately and it’s because of you.
So, thank you. And part of the reason I think a lot of you guys like this show is I don’t use a lot of numbers, and that’s intentional because I just want you to digest some of these economic and personal financial conversations in a way that’s digestible and easy to, you know, grabbed for 15 minutes just to get updated on what’s going on in the economy, and some specific things that you can do personally to just improve your financial situation both now and your future self and the next generation.
So, thank you for listening. And thank you very much for sharing. So, I want to give kind of a market overview in this particular podcast. So, I like podcasts to be evergreen, meaning that you could listen to a podcast two years from now. This one will not be evergreen. In a few months, it won’t be worth listening to because it’s going to be about what’s going on in the economy now.
So, I’m recording this on March 19th, so it’ll be good for a few weeks. So, let’s talk about the market in general. So, we’ve had a correction in the markets. When I refer to markets, I refer to the stock market. When I refer to the stock market, I’m actually referring to a group of 500 stocks called the S&P 500, the Standard and Poor’s 500, the 500 largest U.S. stocks in the country.
And it went down by 10%. So, when you go down 10%, that’s called a correction. So, we had a correction. just know that’s different than a bear market. A bear market is 20%. And a correction is 10%. And then there’s a third term, a recession is different. That doesn’t have anything to do with the stock market.
That’s when the economy slows for two consecutive quarters. So, correction is one phraseology, bear market, recession. It seems like we use those interchangeably, they actually have specific definitions. But we’re dealing with the correction here, a correction, meaning that we’ve had a 10% drop in the market. They happen all the time historically. So, from where I sit, been doing this for a while and it’s not a big deal.
But I don’t blame me if you’re kind of freaking out. That’s why I have a job and I’m here to walk you through that because there’s a lot of stuff going on that’s kind of scary. And that’s why the market goes down 10%. And the thing about this one, though, it’s one of the fastest ones. So, it happened like really, really fast.
So, if you look historically one of the fastest 10% drops in our history. So, for what it’s worth, but I want to talk about several elements of what’s going on in today’s economic framework that is leading us to these ups and downs in the market. I have got seven questions that I get posed to me quite a bit from my peers and people in the community.
And so I’m going to answer those seven questions. So, let’s start with number one. What is going on with these tariffs? What are your thoughts? So, this is the main reason the market is so volatile right now. The main reason is because we just don’t have clarity on the tariff policies. So that’s the main thing. I think most people are like fine, put some tariffs on.
I just need to know what it is so I can know where to put my manufacturing plan or you know, how I’m going to distribute my product. So, the uncertainty with tariffs, the difference between this administration, and the last administration, this is not a political statement. This is real facts. We know that Biden just didn’t get up to the microphone very often, especially in the latter part, very, very little transparency.
This one may, this administration may be overly transparent. And so, there’s good and bad with that because he’s given us like they’re giving us real time information on these tariffs intraday. And the market obviously is having a hard time with this type of approach. And so, part of the market uncertainty is, I don’t know how to like describe it as a percentage wise, but a big chunk I’ll say that way, the professional way, a big chunk of the market volatility that we’re seeing, this not a bear market, not a recession.
But this correction we’ve been experiencing is a direct result of the policy uncertainty with the tariffs. So, once we get past that uncertainty, I think regardless of the outcome, I think we’re going to see some stock market stability. And I’m stating the obvious here. Second question. Hey, my eggs are up still. What’s going on with the inflation?
So, this is political spin at its best. When somebody says, you know, inflation is slowing, it just means that the growth of inflation is growing less. But inflation still exists right now. It is creeping. It is under that 3% number, which is good. But the Federal Reserve, they were on today talking all that Jerome Powell, they have two mandates.
The first mandate is full employment. And the second one is price stability, which is inflation. And so, they’re targeting inflation at 2%. That’s what they figure is good, healthy inflation. There’s debate on that. Some people think health inflation is closer to 3%. We’re at, I think 2.5 – 2.7. Again, sorry to use numbers.
I just told you I wasn’t going to use numbers. But this is the kind of the thing that they’re dealing with. The Federal Reserve is saying we want inflation to be lower than it is today. And it’s not terribly bad, but here’s the problem. It’s been compounding. So, we had this big run up a few years ago, and now we’re building on that big run up.
This is becoming a problem for a lot of people across our country. Housing is becoming unaffordable. Automobile loans. I just saw the loans. People are still buying cars but are using a lot of debt. Servicing credit cards. Health insurance, groceries. Like, it’s really, really hurting the middle class. I was talking to somebody who’s running for mayor of San Antonio just yesterday about this.
And it is just hard, I mean, if you’re, you know if you’re in middle class, if you’re in middle class, you know, it’s hard. And by the way, you’re not alone. It’s everyone. And so, this inflation, it’s the idea of it reversing itself, calling deflation I don’t think that’s on the table. So, we’re just compounding the damage that was done years before.
But we are getting to a place where it’s normal. It’s just, we just, I mean, you just don’t go backwards. You just don’t all of sudden, eggs don’t just go back to where they were years ago. So that’s where we’re at, the Federal Reserve may cut rates. They’re projected to cut rates twice this year.
So, if you’re curious about Federal Reserve cutting rates and they would cut rates, they’d probably cut rates if, they see something and I think this would probably be the way they look at this. If they see that unemployment is creeping up. So, I would imagine that’ll be kind of how they play that out. Okay. Third. You may not be asking this question, but you should.
Is the government going to shut down anytime soon? So, governments shut down when there’s a budget, and that budget is not, let me say it this way. Governments shut down when we don’t have a budget. And so, when we don’t have a budget, sometimes they do something called a continuing resolution. That means it’s not like a real budget yet.
So, it’s typically a short-term spending bill. And that’s what we’re dealing with now, a short-term spending bill until September. And we’ve kind of gotten used to this. I don’t know if you remember a few years ago, I don’t know, 5 or 6 years ago, we had this, like, big pause in government shutdowns over budgets.
And I’ll never forget, it was really headlines and nervousness. The market went down a lot. And now we’ve had these potential government shutdowns periodically. And we’re like, that’s just normal. And so now if you look back, LPL did this research and said, you know, if you go back from 1976 to 2013, the government shutdowns really don’t, they really don’t make a difference when it comes to the stock market.
So just so you know, if you start seeing that coming September government shutdown, government shutdown, if you start seeing that because some guy in the New York Times wants to have a headline, just know that historically it doesn’t have a material impact on the markets. Okay. Fourth one, DOGE. Let’s talk DOGE for a second. I think I like DOGE, I don’t know if I like DOGE, so what is DOGE?
So, the Department of Government Efficiency is not a real department. Quasi department. Put it in ChatGPT and see what ChatGPT says about it. It’s kind of interesting. But here’s the thing. You know, we work, all of us work really hard for every single dollar. And when we see, and we all know that the government’s been wasting money, but we didn’t realize to what degree.
I mean, it is insane, the federal employee retirement. So, if you retire as a federal employee, they process that retirement by paper. Using hand in like this old limestone mine in Pennsylvania, 230ft underground. The files are stored in manila envelopes, put in cardboard boxes. It takes months to get it. I mean, it is absolutely insane.
So obviously a lot of people hate Elon Musk. But he is doing a heck of a job. Here’s a lot of the surveys are interesting. They hate Elon Musk, but they actually like the government cut. That’s the surveys. I don’t know which ones. Probably. I think that was NBC. It doesn’t matter. I think, generally speaking people are pretty for finding ways to cut.
I think the debates have been, oh, they could do it better. They started to use like a sledgehammer or a chainsaw. You know, all this stuff. I think the reality is no one’s ever done it before. So finally, somebody is doing it like FEMA, the Federal Emergency Management Agency, they gave 59 million to house illegal immigrants in luxury New York City hotels.
Like what is going on, or 40 million U.S aids, $40 billion budget. And they gave money in Iraq to Sesame Street. Like. And by the way, this is just like a little sample of the nonsense. And so yes, could it be better? Yes. Could we criticize it? The reality is, is we had to do this.
This was not an option. Anybody that has done a budget for business or an enterprise knows that you’ve got to make these difficult decisions, and everyone around you is going to complain that you’re not doing it right, I promise you. But it has to be done. And so I’m thankful. You know, if we get a trillion, that would be amazing.
Last time I heard it was at 700 billion. But DOGE is very important for us to be able to pay our bills for this generation and the next. Speaking of bills, number five, what’s the latest on the taxes? So, 2017, Trump passed this tax bill, and it expires at the end of the year. And so, they’ll probably extend it maybe for 5 or 6 years.
And they have to negotiate some stuff like the taxes on tips and the automobile loan interest deduction. We’re early in the steps of conversation. There’s a lot of steps here. The corporate tax rate. I didn’t know this, but I probably read it. But I didn’t realize that they lowered the corporate tax rate to 21% to be competitive with the other G7 countries.
And that’s permanent. So even though it’s in the tax bill, it’s permanent. So that one doesn’t need to get, I guess it you could kind of cuss and fuss and try to negotiate that, but you’ve got to figure out a way to get businesses here, to get businesses to stay here, to make jobs here.
So that’ll probably be sticky. And you get a better standard deduction, which is really cool. The estate tax would be interesting. So, you know, pay attention to the estate tax. Those that have estates, you know who you are. And you need to start planning accordingly. So, we need to pay attention to that, especially as financial advisors for our clients.
So, we’ll be watching that. But it’ll be probably extended, I’m guessing 5 or 6 years. Next question, 6. Will they raise the debt ceiling? Ooh. Good question. So, they probably going to have to, right? Otherwise, I mean, what are we going to just default? So the debt ceiling is the legislative limit on the amount of national debt that can be incurred by the US Treasury, its credit limit.
Right. A self-imposed credit limit. You know, when I was early in my career and I was just struggling financially, you know, to find clients because the only people I knew were in trailer parks and college kids. So, I didn’t know anybody with money. So, I had our newborn at the time. And my wife, we were married, and we didn’t have money for the mortgage.
So, the visa sent me these checks. Called cashiers, not cashier’s checks where they call them. Yeah, they’re cashier’s checks, cash advance checks. So, I was like, man, I don’t have money for my mortgage. So, I wrote a cash advance check, put in my bank account and had money for my mortgage. Yeah. You can’t do that forever. The government has been doing that forever.
They’ve been printing their own money, and, they just continue to say, I’m going to have to add more and more debt. By the way, I just want you to know I don’t do that anymore. Of course, I was just in survival mode. Different podcast. But the government certainly, certainly has been racking up debt. We all know this.
And the idea of this debt ceiling is to create some restraints, but then they always lift it up. Here’s the main thing I want you to know. There is still an appetite for the United States debt. People are still saying, oh, I’m betting on the United States to pay me back.
And as long as people are buying that, that’s all the Treasury auctions, then we’re in pretty good shape. That’s like saying that, you know, when I was struggling that Visa or Mastercard, American Express kept saying, you know what? I think Darryl’s going to be good at financial services. I’m going to keep lending money because I just really believe he’s good.
At a certain point, they said, that’s too much money, or I’m nervous about Darryl being able to make money. Sooner or later, the Treasury auctions look at the United States and say, Now I’m nervous about whether or not you can pay me back. I’ve just talked with people that know more about this than I do because it’s a very complex mechanism.
But the Treasury auction is healthy, and people are still very willing, very, very, very willing to lend the United States money. But we still have to reduce that debt, when you can only reduce the debt by cutting spending, making more money. Paying down debt. But by the way, the cutting spending is certainly being done by DOGE, but you’re going to have to do something about Medicare and Social Security.
And that’s a political challenge because, you know, you heard the phrase, I think you might have heard Elon Musk say it’s a Ponzi scheme, and a Ponzi scheme is basically when you don’t have enough money, to pay out to others. And so, you go find a new investor. And that’s pretty much what Social Security will be, I think in 2034.
In other words, there won’t be enough money coming in. So, they’ll have to get new investors. So, it really kind of will be officially a Ponzi scheme in about 2034. So, he’s not far off from that. And so, you’ll definitely have to make some adjustments, for those that are listening that are getting Social Security and Medicare right now.
I don’t think it’ll be cut for you guys, but I think the next generation, it’ll have to be adjusted. It’s just not sustainable. And that’s the biggest thing that we’ve got in terms of expenses. So, number 7, as I wrap this up, what do I do now? So, you know, we want to know what’s going to going to happen in the future.
We want to read the tea leaves, you know, tea leaves or when fortune tellers would read the patterns of the leaves at the bottom of the cups. And, you know, we don’t do that anymore. You can’t even see at the bottom of a Bill Miller Cup. But what we can do is kind of just look at, you know, what’s going on around us.
Businesses are still hiring, so that’s good. And teenagers are still buying at Sephora’s, so that’s good. They have the National Federation of Independent Business Owners Optimism Index; that’s kind of going down. Consumer sentiments going down, CEO confidence is going down. But it’s not extreme. And it will go down in the midst of uncertainty. And that’s what we have right now, a lot of fog in the market namely with the tariffs.
And so, once we get through that hopefully we will have some stability. But just know I think if you’re anything like me, you’ve planned for this like you looked at your financial plan, said I can weather ups and downs. The last thing I want you to do is be emotional in all this. If you have money that you want to invest, you could dollar cost averaging, maybe put a chunk in, but not all of it.
And then put some in each month. The one thing I want to make sure you don’t do is have your emotions get, you know, co-mingled with your money. It’s like orange juice and toothpaste. It just doesn’t work right now. There’s a lot of people making emotional decisions. I saw a report on 401ks, and people are doing a lot of trading, and they’re trading out of stocks and into cash.
Foolishness to me. So, I don’t want you to do that. I just want you to hang in there, stay diversified. You be surprised. The international parts of your portfolio and the bonds are probably holding up pretty okay. So just don’t mess with it. Stay diversified. Long term focus. Pay attention a little bit, but not too much because I don’t want you to get worried and then check with people that are, kind of, you know, a financial advisor or somebody that that can walk alongside of you.
This is always a challenging time. There’s always uncertainty. And, if you think long term, you will be rewarded. I’m confident in that. I obviously, I can’t guarantee that. But based on historical evidence, we’ll weather through this. So, thank you again for listening today, and I hope you have a wonderful day. Remember, you think different when you think long term.
Resources:
https://www.foxnews.com/category/us/immigration
Do Government Shutdowns Affect the Stock Market?
The debt ceiling is back on the table for 2025. Here’s what happens next.
https://apnews.com/article/stocks-markets-rates-tariffs-trump-669605bbde01213a2d43ea80ed8af103
Listen on:
