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Unsettling Midterm Election Aftermath, Potential China Trade Talks; Amazon Decides; Talks (and More!)

As most know we firmly believe that economic fundamentals and policy matter more to the markets than politics. But this week has been unsettling from a political and national leadership standpoint. Some key elections are still bitterly contested. News has leaked that more Mueller indictments are coming. The Trump administration appears to be beset with infighting and turmoil. We continue to have chilly relationships with historical European allies. And then there are the horrific California fires.

To the extent that this sense of national unease is widely shared, one wonders if it is casting a chill on the U.S. equity markets, notwithstanding solid fundamentals. Nevertheless, we remind ourselves that the historical pattern of the U.S. stock market has been to perform well after midterm elections through year end.

  • China Trade Talks Revived: Trade conflicts with China are probably the biggest cloud over equity markets now, so news of revived talks is welcomed. This CNN article has some useful details around the issues. Clashes among Trump's economic advisors are an important subplot in this important national issue. What advisors will ultimately have the President’s ear when it comes to making a deal?

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Midterm Election Aftermath; Jobs; Trade (and More!)

Regardless of the results, everyone I know is happy to have the midterm elections over. It gets so nasty that you might wonder if all the political hot air contributes to global warming. Guess not but still…. In these notes we share a few post-election observations, along with noting some other topics, including an expert viewpoint on how trade issues may impact Maine and New Hampshire.

  • Divided Government and Markets: Partisan gridlock is here with Republicans controlling the Senate and Democrats controlling the House. Our take is that the U.S. financial markets, which care more about economic fundamentals and policy, will be ok with this standoff. Trump will have difficulty getting any significant legislation passed but retains his veto power which he will use to protect the tax cuts and deregulation moves.
  • More Women Headed to Congress: Actually, it's a record. I don’t see anything but upside to greater gender balance in our national leadership. 

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Stocks Were Down and Then Up, GDP and Earnings are Up, and Time to Vote

Enjoy this week's edition of The Friday Buzz.  I hope it's worthy of a few minutes of your time to wrap up your week and kick off the weekend. 

  • Stocks Recover Mid-Week:  The volatility continued in stocks this week.  On Monday all three major stock indexes were up strongly before reversing and ending the day down.  During trading Monday, all three major indexes, the Dow, NASDAQ, and S&P were in correction territory, which is defined as being 10% below their peak.  By Wednesday the S&P had finished up two consecutive days in a row for the first time for October. 

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Stock Volatility Continues, The ECB Ending QE, and a Historical Find

Enjoy this week's edition of The Friday Buzz.  I hope it's worthy of a few minutes of your time to wrap up your week and kick off the weekend. 

  • Stock Volatility Continues:  It was another volatile week on Wall Street.  The DJIA dropped just over 600 points on Wednesday.  The underlying fundamentals of the economy and reported company earnings are still sound.  What seems to have changed is investor sentiment and uneasiness despite the good numbers, as pointed out in this Bloomberg article.  Thursday, the markets were bouncing back by midday.  At times like this it is important for investors to remember stock volatility and pullbacks are normal, the big picture of the world economy still looks sound, and to stay focused on the long-term.

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The Elephants in the Room - U.S. Deficit & Climate Crisis (and More!)

With the U.S. stock market recovering from its late unpleasantness and the U.S. midterm elections and Mueller investigation outcome looming on the horizon, we focus on some other  topics, some of which have enormous implications.  We hope that you find these notes informative, interesting and worth a few minutes of your time.

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The Stock Market Takes a Hit, Bond Yields Move Up, and Inflation Moderates

There was significant financial news this week with the big drop in stocks on Wednesday, bond yields moving up, and the CPI reading coming in below expectations. In other news, once again, another major hurricane makes landfall. We hope everyone is safe in the Southeast, and our thoughts are with you. Enjoy this week's edition of The Friday Buzz. I hope it's worthy of a few minutes of your time to wrap up your week and kick off the weekend.

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Powell on Economy, Amazon, NAFTA 2.0, China Insights (and More!)

It has been an eventful week. While the Kavanaugh confirmation hearing understandably dominates the news cycle, we are tracking several substantive storylines and hope these notes are worthy of a few minutes of your time.

  • Powell Praises Economy: Jerome Powell, the Federal Reserve Chair, said this week that the U.S. economy is in the midst of a “remarkably positive” period. This article provides an excellent synopsis on how the Fed currently views the U.S. economy.

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Supreme Court Hearing, Federal Reserve Meeting, & Instant Wine Cellars

Once again, political storylines dominated the news this week though there were some significant investment stories as well.  Enjoy this week's edition of The Friday Buzz.  I hope it's worthy of a few minutes of your time to wrap up your week and kick off the weekend. 

  • Senate Hearings:  As this week's notes are being finalized, all eyes are on the high stakes Senate hearing between Judge Kavanaugh and Christine Blasey Ford.  Rarely have so many storylines intersected for a hearing with politics, gender, the MeToo movement, memories of Anita Hill, and the balance of the Supreme Court hanging in the balance.  The judge's nomination is on public trial and the implications may tower over the upcoming November election. 

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Florence, China Trade Conflict, the Mueller Investigation (and more!)

As Hurricane Florence continues to create devastating human suffering and economic damage, the trade war with China has again surged into the financial headlines. The U.S.-China conflict may well prove to be the defining issue for the markets into 2019 or beyond. Meanwhile, the Mueller investigation enters a new phase.

We hope that you find these notes informative, interesting and worth a few minutes of your time.

  • Hurricane Florence Economic Impact: There is no way to put a price tag on the immense human suffering caused by Florence, but we know that the economic impact will be substantial. Here are some estimates.

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Florence Roars Ashore, Trade Talk Progress, and a New 9/11 Memorial

Hurricane Florence should be bearing down on the Carolinas about the time you are receiving The Friday Buzz.  The storm could be one of the largest to ever hit the East Coast.  Our thoughts are with friends and family in the areas and we wish them safe.

  • Disaster Preparedness:  Hurricane Florence reminds us to be prepared for emergencies.  It's not just hurricanes, but fires (like in California), tornadoes, and ice storms.  Along with emergency supplies, everyone should prepare a financial emergency kit.  It should include cash (ATMs may not work), safety deposit keys, passports, and important paperwork like estate plans and personal inventory lists for insurance.  Here is a short list of things to consider for the kit and another list from FEMA.  For those who are comfortable with technology, an offsite secure cloud storage provider can store important documents.

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