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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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Topics to Consider While Markets Tread Water Pending Trade Deals 

The financial markets have been quiet, with political news dominating the headlines. In the short term, we look for future trade developments involving China and NAFTA to be the primary market movers. The Mueller investigation continues to be a wildcard, but it’s unclear if anything short of a news bombshell will be perceived by the financial markets as significant.

  • U.S. and Mexico Near Trade Deal: We are closing in on a NAFTA replacement deal with Mexico. David Ignatius, an astute observer of international politics, gives the agreement "two cheers." Ignatius notes that one plus of renegotiating NAFTA with Mexico, and eventually Canada, is that the focus will shift to China with whom we have major differences and there is bi-partisan support for taking a tougher negotiation stance.

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The Nation Says Goodbye to John McCain, New NAFTA is Taking Shape, and Moxie is Sold

The passing of John McCain was the week's biggest news item. Senator McCain was a strong and larger than life figure in DC for decades. Not everyone agreed with his policies, directness, or the campaigns he ran for President, but few can deny his commitment to America, sense of honor, sense of humor, and his willingness to go his own way. This week's edition of The Friday Buzz has a few articles on the Senator, but there were a lot of other big and interesting stories this week as well. Enjoy this week's edition and have a great Labor Day Weekend.

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Company Stock in a 401k?  Consider Net Unrealized Appreciation (NUA)

When leaving a job for whatever reason, one of the biggest decisions you will face is what to do with your 401(k).  If your plan includes shares of your company's stock, NUA is something to consider during this process.

The Basics of NUA:

  • Net Unrealized Appreciation (NUA) can provide a significant tax break for those holding low-basis employer stock in their retirement plan.
  • There are strict rules that must be followed to take advantage of the NUA option.
  • NUA can provide an additional level of planning flexibility.

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Longest Bull Market, Legal and Political Woes, and Trade (and More!)

The big investment question is whether the President’s suddenly mounting political and legal woes will impede what may be the longest running bull market in U.S. stock market history. From an investment point of view only, is this dramatic political theater “noise” or a “signal” with more fundamental financial and economic implications?

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

  • Six Big Political Questions: What happens next in the aftermath of the plea agreement by the President’s former attorney and the conviction of his former campaign chairman? This article identifies the forward looking major questions to be answered.

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Turkey, More Good Earnings, and Tesla

Turkish-U.S. relations were the main story for the global economy as U.S. company earnings continued to roll on in the background. Enjoy this week's edition of The Friday Buzz.

  • The Economy of Turkey is Struggling: The Turkish economy was in distress this summer as a result of international markets losing confidence in the economic policies implemented by President Erdogan's administration. He's appointed his son-in-law to lead the Finance Ministry, wants to personally appoint key officials at the central bank, and refuses to raise interest rates to curb inflation and support a weakening Turkish Lira currency. Five years ago, two Turkish Lira could be exchanged for one U.S. dollar. This week it took seven Turkish Lira to receive a U.S. dollar in exchange.

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