Some of the big economic and headline risks of the last few years are slowly easing. Last week there was a significant breakthrough for the trade deal between the U.S. and its neighbors and this week brought a Phase-One agreement between the U.S. and China. Also, the U.K. elections seemed to create clarity for a roadmap for Brexit. This is not to say that the trade and Brexit issues are now behind us, as we are a long way away from them being firmly in our rearview mirror. But these are positive developments on two very thorny issues and any progress is good for the economy and markets. And if indeed they do pose less risks going forward, it is even more reason for the Federal Reserve to stand pat and keep rates on hold.
To our friends celebrating the Festival of Lights, have a very Happy Hannukah! Have a very enjoyable weekend and thank you for reading The Friday Buzz!
- Government Spending Bill Passes the House: This week the House of Representatives passed a $1.4T spending bill. It is expected to pass the Senate by late Friday and most think the President will sign the bill (most). If it passes, it will fund the government through September 30, 2020 and avert a government shutdown. Lawmakers were quick to laud the compromises that made the bill a reality, but those watching Federal spending lamented the $50B in additional annual costs. Where are the fiscal hawks? WSJ Committee for a Responsible Federal Budget
- Phase-One Trade Deal Between U.S. and China Announced: Coming on the heels of last week's progress on the U.S. Mexico Canada trade agreement, came an announcement of a Phase-One deal with China. The U.S. has agreed to postpone or reduce some tariffs, and China has agreed to buy agricultural goods and curb some business practices such as requiring foreign companies to share technology. The full impact is uncertain as the fine detail has not been released and there are other difficult trade issues requiring negotiation. We view this as positive news and it may signal that impact of tariffs has peaked as the last couple years of difficult trade negotiations start to get resolved. AP CBS South China Morning Post
- Potential Changes Coming to Retirement Accounts: Just like two years ago it appears Congress is ready to make major tax law changes just before the year-end. Though nowhere near as sweeping as the tax bill two years ago, the SECURE Act, if passed, will affect many Americans. The bill as it is currently written would increase the age for Required Minimum Withdrawals from retirement accounts from 70.5 to 72, require IRAs inherited by non-spouse beneficiaries to be paid out in full within ten years, and make it more affordable for small businesses to offer retirement plans, plus many other changes. We will be diligently watching to see if the bill passes and for potential impacts on our clients. Forbes
- More Economic Predictions for 2020: The forecasts are rolling in and pundits are mostly expecting moderate to solid growth in the U.S. next year. The 57 economists participating in the WSJ's December economic survey expect U.S. growth of 1.8% next year. IHS Markit is expecting the U.S. economy to expand 2.1%. It's encouraging that the forecasts are positive, but we all know things can change quickly. But for now it looks like the economy is headed toward solid growth next year. WSJ Business Wire
- Brexit on Firmer Footing: The parliamentary elections in the U.K. solidified Boris Johnson's position as Prime Minister and gave him a strong position to negotiate Brexit by January 31st. There may be an extension to negotiate trade deals but there is finally more clarity on the next steps and how the future may unfold. BBC PIMCO
- A Soviet-Era Economy That is Doing Well: Belarus is a small country in the heart of eastern Europe that hardly evolved after the fall of the Soviet Union. It still has a strong government with centralized planning, big social programs and mostly industrial jobs. And it is doing quite well relative to other countries, including those in the west. That may end soon with high debt, costlier energy, and some other challenges coming to a head. But it is fascinating how stability in Belarus helped it avoid the worst effects of transitioning to capitalism too quickly. Bloomberg
- The Medical Magic of Saunas: I recently stumbled upon a scientifically-based podcast extolling the incredible benefits of hot saunas. Research has shown that sauna "bathing" at appropriate temperatures and time lengths can not only mimic the positive effects of exercise but add other benefits as well. It can help significantly reduce cardiovascular disease, Alzheimer's disease, hypertension, anxiety, depression, insulin sensitivity, inflammation and can increase endurance and muscle growth. I did not even list everything! I have never been much of a sauna person, but I will be looking to start hitting them soon! Foundmyfitness Sauna Report Foundmyfitness Video 1 Foundmyfitness Video 2
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