NO TIME TO FINISH THE DIVORCE
The Dow Jones Index started April at 42,000. Then the administration invoked its long promised tariffs and by Friday the DJIA was down 6,000 points. This afternoon, it was announced the tariffs would be suspended for 90 days (except China) and in the next 8 minutes the Dow rose by 1,600 points. What happened? The bond market started to crumble and when that happens the world’s currency, the U.S. dollar started to quake. So the administration backed off.
There is no sign this uncertainty will end soon. And if you are trying to negotiate a divorce, it is time to get someone in the investment world to join the team. Realize that even those people are keeping their heads down because much as on the Mediterranean and Black Seas, the storms are blowing without any clear direction. In these markets, when dividing assets you need to measure each asset’s risk against the overall equitable distribution and alimony pot.
I was chatting with a friend today whose father spent his life in the retail automotive business. Let’s assume her dad was concluding his divorce. And for simplicity’s sake let’s say that based on year end 2024 values, the dealership was worth $2 million; the home equity $1 million and there was another million in paper investments (stocks/bonds). On December 31, 2024 we might have contrived a deal where husband kept the dealership and wife got the rest.
Let’s assume the dealership was Jaguar or Land Rover. On Friday it was announced that car deliveries were being suspended because of the new tariffs. Then there is the fact that when the supply chain resumes, the tariff on British cars will be 10%. In a bull economy, that might not be so bad. But if your other investments including your retirement are declining at the rate of 1% per week, chances are strong that a trip to look at new F-Type or Defender is being lowered on your to-do list. This is an existential threat to the dealership. Meanwhile, the non-dealer spouse is staring at account statements for retirement and after tax moneys and noting they are not $1 million but $160,000 shy of what she was expecting when everyone shook hands in late December. And while today (4/9) it looks like she has recovered half the losses of last week, today’s announcement just kicked the policy ball down the road to July.
And, it’s bigger than that. The administration is touting its “big beautiful” tax bill. While doing so it keeps tempting taxpayers with (a) no taxes on tips or overtime (b) no taxes on incomes less than $150,000 (c) eventually no income taxes at all as tariffs balance our budget and make life happy again. Suffice to say that’s a lot of promises for a country $36 trillion in the hole. And, as we learned this morning, the bond market that keeps all of our spending afloat is starting to develop some indigestion.
So, what can you do? Much as it would be nice to say, “Sit back for 90 days and let the air clear” there is no evidence that this storm will have moved on or even subsided in 90 days. In our divorce case, the husband doesn’t want to take a dealership where he can’t get cars or find anyone to buy those he gets. And, if the tariff wars do resolve in 90 days but the stock market keeps tumbling, wife doesn’t want to absorb all the risk of the stock and retirement portfolios. If the economy quakes or interest rates rise, even that million in home equity may be adversely affected.
The answer is not a pleasant one because divorcing couples should not own businesses together. But for now, it may make sense to explore a division of both assets as a means of leveling the risk. This needs to be documented by a writing that divides assets in kind including the dealership but then insists that the matter be addressed again in 2026 based on the 2025 year end numbers of the business and the accounts. It sounds like wasted energy but depending on where they fit in the tariff world, there are many U.S. businesses which are unsustainable in the near term if these tariffs become permanent.
The current situation has parallels with what occurred in Fall, 2008. But there the market started to climb out of its hole by the second quarter of 2009. It was painful but it was quick. But some of us recall market corrections in the 1970s and 1980s where stagnation endured for years and not merely a couple quarters. Divorcing couples need to be prepared to share the risk of these uneasy times.