Like many, watching the Notre Dame fire raging was both mesmerizing and deeply sad. If nothing else, it feels as if it warrants acknowledgment. Fortunately, no lives were lost. We are also aware that the Mueller report will be released after these Notes are drafted but before they are published. We could be proven wrong but expect that the report will not impact the financial markets in the short term.
Current news that comes with heavy emotional overtones almost always overshadows developments that may have great implications for future policy decisions and markets. This week we identify some developments that are likely to continue shaping markets: one potential shift in economic thinking (i.e., whether recessions are inevitable); the importance of 5G in connection with China, and where Maine stands in the rapid rise of the cannabis industry. We also offer some lifestyle-oriented notes on various topics that we think you will enjoy.
- Are Recessions Inevitable? Economic theory teaches that economies go through cycles of growth and contraction and that recessions are natural and unavoidable. But consider that Australia has not experienced a recession in close to 27 years. It has been called the "Australian Economic Miracle". What can we learn from Australia? If you accept, as some do, that either miscalculations by central banks (i.e., the Federal Reserve in the U.S.) or government regulatory failures are the proximate causes of almost all recessions in modern times, then you might still say that recessions are inevitable but only because of the likelihood of policy failures over long periods of time. Banker Jamie Dimon, for one, thinks the US economic expansion "could go on for years".
- 5G and China: By way of explanation, 5G is shorthand for the next generation of high-speed internet. The country that dominates 5G will have a major competitive advantage in many industries. This competition is massively important. The bad news? China developed it first. One writer goes so far as to announce that "Game over the Chinese have won". President Trump appears to understand what is at stake and just announced 5G initiatives to narrow the gap in a race "America Must Win". Another take on the new 5G initiatives comes from the Washington Post.
- Maine and Recreational Marijuana: The cannabis industry is exploding with the legalization of hemp at the federal level and an increasingly benign regulatory environment for marijuana at the state and possibly federal level. Putting aside any personal opinions on the wisdom of legalization, our view is that too much money is involved, including the potential source of state tax revenue, to stop this juggernaut. This is and will be a huge growth industry, notwithstanding the massive regulatory confusion. Meanwhile, Maine is on track to roll out recreational marijuana in 2019.
- Best Places to Live and Retire: Portland and New Hampshire continue to garner favorable publicity. The U.S. News and World Report recently ranked Portland as the 23rd best place to live in the U.S. For our Florida friends, Sarasota came in at 18. Not to be outdone, New Hampshire ranked a lofty 4th out of the 12 best states for retirement by ThinkAdvisor.
- EV Tax Credits: For those interested in buying an electric vehicle (“EV”), be aware that there is a bi-partisan push in Congress to expand the federal tax credits for purchasers of EVs. Elon Musk and Tesla are happy about this.
- Tiger Woods and Golf Wackadoodles: Whether an admirer of Tiger Woods or not, most would acknowledge that his Masters triumph capped an extraordinarily tenacious personal comeback by someone who refused to give up after the massive negative publicity about his behavior and the excruciating back surgeries and pain. Tiger Woods, golf prodigal, returns with a roar. Speaking of the Masters, I also enjoyed this pre-Masters article about the eccentricities of many great golfers called "Wackadoodles, weirdos and obsessives: Welcome inside the ropes at the Masters."
- Israel Has Lowest Diet Related Deaths: We have another comprehensive analysis of global dietary data. Israel came out on top as having the best diet relative to mortality. Additional top countries included France, Italy and other northern Mediterranean countries. To reduce mortality from what you eat be careful about salt, and eat more vegetables, fruits and whole grains. For more, see the Global diet study.
- Focus as An Antidote: Most of us want to do more than we can. I know that my list of things I would like to do is almost endless. Leo Babauta, who writes a blog called Zen Habits, prescribes the practice of focus. I recommend and introduce him to you as a blogger to follow. Not everything Leo writes resonates with me, but at times he seems like he has this special gift to see through the noise of life and get down to true and wise basics.
Feel free to send us feedback on any topic or make a request or to forward the notes on to anyone who might be interested.