With near term US economic recession fears receding, the financial markets are relatively calm. The impeachment hearings will dominate the headlines but not move the markets, which are most sensitive to Fed policy and China trade negotiation news. The Fed has reiterated that it is in a wait and see mode, so investors should not expect additional rate cuts soon.
- Fed Taking a Pause: Fed Chairman Powell confirmed this week that the Fed was unlikely to adjust rates downward, if the US economy continues to expand. Quoting him directly, “Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2 percent objective as most likely…” (CNBC) (Wall Street Journal)
- President Trump Wants Negative Rates: Unhappy with the Fed’s pause, President Trump wants negative interest rates for the US. This means investors would pay banks to hold their money. While negative rates might stimulate economic growth, fixed income investors would suffer, particularly retirees who understandably tend to become more risk averse relative to owning stocks as they age. (CNBC)
- Longevity Breakthrough? David Sinclair Ph.D., a Harvard scientist and renowned longevity expert, recently published Lifespan: Why We Age-and Why We Don’t Have To. (Lifespan) In Lifespan, Sinclair boldly claims that we now understand why we age and that aging is preventable. Sinclair is both brilliant and controversial and has his skeptics. Not all are convinced that he has discovered the “fountain of youth”. (Boston Magazine) But what if Sinclair is on the right track? The life and financial planning implications for all clients and investors are immense.
- Stock Market Supply and Demand: Theories attempting to explain and predict the stock market abound. My observation is that we are glossing over the most basic explanation of any price-supply and demand. This study notes that the number of publicly traded companies has fallen by half over the past 20 years. (Bloomberg) Other studies have noted the powerful tailwinds created by corporate stock buybacks, which reduce the number of shares in supply. (MarketWatch)
- Understanding Wealth Taxes: As elections grow closer, we are seeing more proposals for implementing so-called wealth taxes to create the revenue needed to fund various policy initiatives. At the present we think the probability of a wealth tax becoming law is low, but we still recommend reading this NYT article to understand how such taxes might function and what might be their long-term consequences. (New York Times)
- Factfulness (Book Recommendation): Suddenly, it has seemed like there are recommendations everywhere to read Hans Rosling’s Factfulness. Insightful long-time clients (and friends) enthusiastically endorsed it to me last week. The full book title describes it best: Factfulness: Ten Reasons We’re Wrong About the World — and Why Things Are Better Than You Think. Bill Gates calls it one of the most important books he has ever read. I call it an antidote to the tendency to assume all is “gloom and doom”. (Time)
- Disney Streaming is Here: Streaming services are the future. Sports and an occasional news program aside, Anne and I get 90% of our content from Netflix and Amazon Prime and know that we are not unique. Now the much-ballyhooed Disney+ streaming service has arrived, albeit with some technical glitches. We’ve come a long way from bulky black and white televisions with rabbit ears! (Washington Post)
- Spilling the Beans: Understanding that I’m unable to pass up a good coffee article reference, we have more evidence that coffee is truly beneficial for you. In some cases, the evidence is strong (i.e., “Coffee lowers the risk of endometrial cancer, gallstones, nonalcoholic fatty liver disease, liver fibrosis, cirrhosis, and liver cancer, oral cancers and Type 2 diabetes”). For other medical conditions, the evidence is moderate or limited to date. Read the article for an excellent synopsis. (Washington Post)
- A Quote I Like: “Make every shot anew.” Awa Kenzo
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