LifeGoal Investments Weekly Market Insights - 12 May 2025

Powell Holds. Trump Cuts Deals. Stagflation Tightens Its Grip.

Markets got what they expected this week. That might be the problem. No rate cut. No stimulus. And pressure building from all directions. Powell stood firm. Trump struck his first tariff deal. And the data is now screaming stagflation. Here’s what happened and how I’m thinking about it for your money and your next move.

Powell Stands Firm. Trump Applies Pressure.

"Trying to navigate this tricky passage we're in right now." — Jerome Powell

The Federal Reserve wrapped its meeting on Wednesday and, as expected, held steady. No rate cut. No pivot in sight.

Powell admitted that inflation is lingering and unemployment risks are rising, but he’s choosing to stay in wait-and-see mode.

Outside the Fed, pressure is mounting. Trump has been turning up the heat, calling Powell a “total stiff” and demanding rate relief. Powell didn’t just hold firm. He also took a subtle swipe at Trump’s tariff policies, warning they could boost prices and hurt jobs.

This is the kind of tension markets hate. Central bank policy, election-year politics, and inflation risk are now pulling in different directions.

Stagflation Is Not a Forecast. It’s the Baseline Now.

"A year ago, Powell warned about stagflation. Today, it's baseline."

Last year, Powell floated the term “stagflation” carefully. Now, most economists are using it without hesitation. I’ve been saying this since March. It’s here.

Here’s what we’ve seen lately:

• Inflation expectations are creeping back up.

• GDP already contracted this year.

• Consumer spending is softening.

• Labor markets are wobbling.

This is the worst macro cocktail you can get. If the Fed keeps rates high, it will choke off growth. If they cut too soon, inflation will reaccelerate. Either way, there is no easy path. That is why having a portfolio that’s built for real-world uncertainty matters.

The First Trade Deal Just Created New Losers

"Trump strikes his first deal and borrows a page from the Democratic playbook."

Trump just inked his first trade deal since launching the latest wave of tariffs. This one is with the UK. On the surface, it looks like a win. The ten percent tariffs stay on most goods, but UK autos get a carve-out.

That is great for Range Rover and Aston Martin. But it is a punch in the gut for U.S. automakers. Ford, GM, and the UAW are already furious. They see it as a setup that favors foreign brands over American workers.

Trump’s UK trade deal included a 10 percent cap on U.S. tariffs and a sharp cut to UK auto duties. This created new export opportunities for Britain, but sparked backlash from U.S. automakers and unions.

Source: CNBC/Truth Social

I warned this would happen. These one-off deals don’t fix the problem. They shift the pain around. This time, our own manufacturing sector is feeling the heat.

Even more surprisingly, Trump announced a proposal to raise taxes on high-income earners and eliminate the carried interest loophole. That puts hedge fund managers in the crosshairs. It also signals that tax risk is rising, regardless of who is in office.

Powell Should Have Cut. Here’s Why I Said That.

"Yes, tariffs raise prices. But they also kill demand. That’s deflationary."

Earlier in the week, before the Fed decision, I made my case for why Powell should cut rates.

We’ve seen this movie before. Back in 2018, when Trump first hit global trade with tariffs, prices jumped. Then demand collapsed. Inflation cooled. The same thing is setting up now, only this time the tariffs are bigger and broader.

Consumer confidence is fragile. CEO hiring and investment decisions are already slowing. If the Fed waits too long, they are not just fighting inflation. They are accelerating a slowdown.

I don’t say this lightly, but Powell missed an opportunity to get ahead of the curve.

401(k) vs. Roth IRA: The Real Math

"This goes against my business. But it’s the truth."

Let’s settle this. Everyone on the internet has an opinion, but most of them haven’t done the math.

Here’s what I ran. Using a $23,500 annual contribution, a 30-year horizon, and 8% annual returns:

• A Roth IRA, where you pay taxes upfront, grows to about $202,000.

• A 401(k), which grows tax-deferred and is taxed later, ends up around $223,000, even after paying income tax in retirement.

That’s a $21,000 difference in favor of the 401(k). And that assumes no employer match. If you have a match, it’s not even close.

Source: LifeGoal Investments analysis, 2025

Yes, tax laws change. But for most people, tax brackets are lower in retirement than they are today. That makes the 401(k) the better vehicle in the real world, not the idealized one pitched online.

Key Investment Implications

Here’s how I’m thinking about the current environment and what investors might want to keep in mind moving forward:

• Tight policy may extend market volatility: With no Fed cut in sight, liquidity remains constrained. Investors may want to revisit their exposure to rate-sensitive assets.

• Stagflation signals continue to build: Slowing growth paired with rising costs could pressure both consumers and earnings. Allocations that hold up in low-growth, high-cost environments deserve attention.

• Trade uncertainty remains a market variable: One-off tariff deals are shifting winners and losers across sectors. Maintaining diversification across industries and geographies could help reduce unintended concentration risk.

• Tax policy may evolve faster than expected: Proposals targeting high earners and private equity suggest a rising need for tax-aware investment strategies.

• Foundational financial choices still matter: Long-term portfolio efficiency often comes down to structure. Tax-deferred vehicles, employer matching, and compound growth remain core levers for retirement success.

No one can predict exactly how markets will respond in the short term, but staying grounded in fundamentals and strategy is what builds lasting confidence.

What to Watch This Week

Tuesday – Consumer Price Index (CPI):
This is our first read on inflation for April. Did the early-April tariffs show up in the numbers yet? If inflation came in soft, it could open the door for rate cuts sooner rather than later. If not, the “higher for longer” camp will get a boost. All eyes are on this.

Thursday – U.S. Retail Sales:
Consumers drive nearly 70% of our economy. Are they still swiping and spending, or are cracks starting to show? Confidence surveys have been shaky, but actions speak louder than feelings. Let’s see if sentiment and spending finally align.

Thursday – Home Builder Confidence:
Builders have been under pressure from sustained high mortgage rates. This measure gives us a pulse on how they’re feeling about future demand and margins.

Friday – Housing Starts:
Forget optimism. This shows what’s actually happening. How many homes broke ground in April? This is a critical signal for both the housing market and broader economic momentum.

Friday – Building Permits:
This tells us what’s coming. Are builders applying for more projects? It’s one of the cleanest forward-looking indicators in the real estate cycle.

Let’s Talk Strategy Before the Next Policy Move

This week, we saw rate cuts get pushed out, stagflation become the new base case, and trade policy create unexpected winners and losers, all in the span of a few days.

The market is not waiting for you to feel ready. But your financial plan should already be built to absorb this kind of noise.

If you’re sitting on rate-sensitive holdings, unbalanced positions, or haven’t stress-tested your retirement strategy in a while, now is the time to get clear. Uncertainty is not a reason to freeze. It’s a reason to plan.

If you’re not sure whether you’re properly positioned, we can help. This is exactly what we do every day for families and professionals who want confidence in their plan, not just opinions from the news.

🎯 Start with a simple conversation.
Click here to take 2 minutes and introduce yourself.

We’ll show you how to put structure and strategy behind your goals.

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Important Disclosures:

Economic indicators and market expectations discussed are subject to change and should not be considered investment advice.

The views and opinions expressed in this newsletter are those of Taylor Sohns and do not necessarily reflect the official policy or position of LifeGoal Investments. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Economic indicators and market expectations discussed are subject to change and should not be considered investment advice.

Investment Strategy Implications: These strategies are general in nature and may not be appropriate for all investors. Investors should consult with a financial professional to determine the appropriate investment strategy based on their individual circumstances, financial situation, and goals.