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Trump Blinks, Why There Are More Maine Lobsters, & the Importance of Socializing!

Trade and tariffs were in the news again this week, and investors are caught in a tug of war.  The President is focused on his reelection (as all politicians are) and he ran on an America First platform in which protectionism and using tariffs and trade barriers were cornerstones.  He also needs a strong economy and stock market for voters to feel good about reelecting him.  These can be relatively antagonistic goals.  So, one week the President is focused on increasing pressure on the Chinese with more tariffs, and the next week he's trying to mollify the stock market.  Add to the fact that a Tweet can come out at any moment with a policy change or reversal and you have markets whipsawed as we have seen this week.  Whether you agree with the President's policies or not, that is the world that we live in. 

So we start with the obligatory articles on trade, plus why the lobster harvest has been so strong recently, how other countries are restricting trade, a late summer reading recommendation, Roth IRAs, and why social connections are so important. 

Enjoy this week's The Friday Buzz.  Have a great weekend!    

  • President Trump Must Have Something in His Eye:  Because he blinked.  On Monday, with all the negative trade news, the bond market inverted further, and the stock market dropped sharply.  On Tuesday, the administration announced the new tariffs would be delayed until mid-December to avoid hurting retailers and consumers for the holiday shopping season.  What's surprising is how quickly the President reacted to the market pullback as well as admitting for the first time that tariffs are hurting U.S. consumers and businesses.  I'm sure China will do all they can to leverage the President's sensitivity to market swings.   CNBC  WSJ

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Boiling Pots: Currency and Trade; Climate Change; and Mass Shootings

Several critical fronts are heating up. The U.S. trade war with China has expanded, with the U.S. imposing more tariffs and China “weaponizing” its currency. Our earth is experiencing its warmest months on record. Meanwhile, mass shootings are proliferating in the U.S. Are one or more of these pots about to boil over?

We first offer some excellent background articles on the currency conflict, the major story for the financial markets. Our opinions on climate change and the mass shootings are not necessarily more informed than our readers, so we limit ourselves to a few brief observations on these profoundly concerning topics.

With interest rates falling, mortgage refinancing should be on the planning radar screen. A thoughtful client asked how one of his children should save for college, which led us to share some education funding best practices and strategies. Coffee gets another rave health review. We also hope that you will enjoy two Maine related articles, one on Monhegan Island, one of our favorite places, and the other about what makes Portland a fantastic stop for traveling beer lovers. Lastly, we hear from a psychologist, who claims that we are wired to worry too much about what is going on in the world-needed that!

  • China Devalues Its Currency: China recently permitted its currency to fall below the symbolic 7 renminbi per dollar level. The devaluation makes China’s exports more competitive. It also stimulates demand for its domestic products, as imports are now more costly. (Investopedia) On a strategic level, the devaluation sends a warning to President Trump that China is unafraid to play its cards, including waiting to see what happens in the U.S. 2020 presidential election.

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Fed Cuts, Q2 GDP In, Great Eats in Portsmouth, & Eating Blueberries to Reduce Sunburn!

The Federal Reserve was in the spotlight this week as investors were anticipating a cut in rates.  The Fed has been hinting about cutting rates for the last month and did not disappoint.  Also, the growth number for Q2 GDP turned out to be a little better than expected, but surprisingly the 2018 GDP number was revised downward quite a bit and below 3% (someone in the White House will not like that).  Articles on those topics as well as if Millenials will buy Boomers’ homes, reading economic indicators, eating out in Portsmouth, how blueberries can reduce the chances of skin cancer or even sunburn, a stand-up economist, why chances of a hard Brexit just increased, and why taking vacations may save your life! 

Enjoy this week's The Friday Buzz.  Have a great weekend!    

  • The Federal Reserve Cuts:  For the first time since the Great Recession, the Federal Reserve has cut short-term rates.  This week the Federal Reserve announced a rate cut of .25%.  It will be surprising if the trend stops there.  But Fed officials will be watching the economic data to determine actions at their upcoming meetings in the fall.  By the way, not everyone believes there should be cuts.  WSJ CNBC

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It's Mueller Time, Big Fed Meeting Ahead, Tech and Antitrust (and More!)

As I write this, Robert Mueller has begun testifying before Congress. His testimony may or may not turn out to be political fireworks, but we doubt that it will be a market mover. What might move the financial markets is the decision to be made at the upcoming Federal Reserve rate setting meeting that starts on July 30th. The markets expect a rate cut. Will anything less than 0.50% be a disappointment to investors? A smaller, 0.25% drop, would be the compromise between committee members who want a 0.50% rate cut and those who question why any cut is warranted, given the growing economy and strong employment numbers.

For a policy development that may have major implications over time, see the note on Big Tech and Antitrust. See the note on how to decrease the odds of getting Alzheimer’s through controllable lifestyle interventions. There are also financial planning ideas, including a suggestion for couples, and even a book recommendation for those of you who enjoy the espionage genre.

  • Mueller, Trump and the Constitution: Irate over the Mueller investigation and testimony, President Trump has now begun claiming in speeches that Article II of the Constitution grants him “the right to do whatever I want as president…” Washington Post

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Stocks Hit New Highs, Asia's Economic Slowdown, & the Best Wines for Hot Summer Days!

The week started with stocks hitting all-time highs boosted by the momentum that carried over from last week and the positive comments from Fed Chair Jerome Powell (Reuters.)  Meanwhile the Asian export economies are definitely taking a hit from tariffs and the slowdown in trade.  But the next big political issue will be raising the debt ceiling by early September while Congress is scheduled for a six-week vacation – the scramble will be on.  There are also lighter articles on wine, the shopping mall from Stranger Things, and much more in this week's The Friday Buzz.  By the way, if you are enjoying the weekly emails from RSWA don't keep it a secret and share them with friends and family!  Stay cool this weekend! 

  • Debt Ceiling Politics:  If nothing is done, the U.S. government will run out of money sometime in early September.  Political parties are jockeying over negotiations and demands, but Congress may lose part of their coveted summer break to resolve the issue.  Washington Post

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Seven Key Economic Indicators, Getting It Strait, Bon Appetit’s Love Affair With Maine (and More!)

The addition of 224,000 new jobs in June confirmed that the U.S. economy continues to grow. Slowing manufacturing is a concern, with trade conflicts taking a toll. Might President Trump have to choose between continuing to wage tariff wars and being a one-term president? The next Federal Reserve interest rate decision meeting occurs at the end of this month. The markets expect a rate cut of at least 0.25%, but it may not be a given. Expect market tension to build, as we near that meeting.

These Notes include several useful planning and informative lifestyle articles too. Personal favorites include the note on coffee as “superfood” and the article on a “going like gangbusters” Portland/Miami startup led by a former RSWA employee. Read on and enjoy.

  • Seven Economic Indicators: This excellent article summarizes some mixed economic indicators. Four indicators are positive “green lights” (i.e., truck sales, jobless claims, temporary hires, and bank lending). One is a cautionary “yellow flag” (i.e., business spending). One is a “yellow to red flag” (i.e., trucking), and one is a concerning “red flag” (i.e., manufacturing). Washington Post

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Int'l Tensions Seesaw, Social Security Research, Americana Trivia, and Winning Golf!

After this past weekend, President Trump had to be very pleased.  He jump started the stalled trade talks with China at the G-20 summit, and he was the first President to step foot in North Korea, at a meeting that restarted the nuclear negotiations with the isolated nation.  The news about the trip was positive and the stock markets (already close to highs) rallied Monday and the S&P 500 hit a new high with upward momentum continuing through mid-week. 

Yet the weekend had the feeling that we've all been here before, like entering a maze and wandering around for a while, only to discover you were right back where you started.  Though the weekend provided great photo ops and renewed optimism for restarting negotiations around two thorny international issues, we are no further along to resolving them than we were months ago.  And in the background, the Iranians admitted to breaking the terms of their accord for uranium enrichment, and just like that the weekend developments seem so-so.  All three international issues are complex, have some very intractable components, and will take months, if not years, to resolve – if they are resolved.  But we will continue to watch and comment on them for their impact on the markets and economy as we work our way through the maze.

On the lighter side and in honor of the Fourth of July, there are Americana articles and trivia sprinkled throughout this week's edition.  Can you get all the trivia correct (without using Google!)?  Answers are at the end – have fun and let me know how you do!  There are also articles on social security, data showing the U.S. economy is decelerating (but still expanding), and a RSWA winning golf team!  All this and more in this week's The Friday Buzz.  Enjoy and have a very Happy Fourth of July weekend! 

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High Stakes International Poker, Taxing Billionaires, Fed Intrigue (and More!)

One cannot underestimate the immense gravity of the conflicts with China and Iran, so we start with what we believe is an incisive article on those two conflicts. Watching the Fed is starting to feel like a sophisticated financial soap opera, but hey it’s our job! For the first time, we are starting to think that the idea of a wealth tax could get some traction and explain why.

Please click on Read More below so that you don’t miss some of the most interesting notes. “I Got This!” is my favorite, an inspirational story of a young golfer with a can-do attitude. Non-golfers may love it as well. We also touch on other topics like proposals to cancel student debt, important new research about the Mediterranean Diet, the surprising link between coffee and migration, more on Facebook’s proposed cryptocurrency, opportunity zones in Maine, and a concerning article about digital privacy and internet browsers. To the links!

  • Trump Takes on China and Persia: The U.S. is clashing with two ancient civilizations at once with much at stake. Thomas Friedman offers his perspective. His tone may be overly caustic for some, but the piece is well worth reading for the insights. New York Times

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Fed Cuts Soon? Rethinking Retirement, and Traveling to Change Your Life!

The Federal Reserve met this week amid the release of spotty economic numbers this month and hinted at a potential future rate cut.  In the last couple of weeks, the Fed has stated it will act as appropriate to sustain the economic expansion, and all eyes will be on their July meeting.  Meanwhile, tensions are rising with Iran as the U.S. sends more troops to the region.  But for now, the stock market shrugged off those concerns and focused on the positive Fed comments and climbed close to all-time highs.  Also this month, articles on rethinking retirement, mysterious gold, and more in this week's The Friday Buzz.  Enjoy! 

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Weaponizing Tariffs, The Fed and Preemptive Strikes, Best Places (and More!)

The U.S. recently threatened Mexico with new tariffs unless it did more to stem the tide of immigrants coming from Central America. This “weaponizing” of tariffs for policy ends spooked many, including economists, investors and the Republican controlled Senate. Mexico apparently agreed to do something, taking tariffs off the table temporarily. Meanwhile, the Fed is preparing to leap into the breach, signaling its willingness to cut short term rates in an effort to boost the economy. Apart from these weightier topics, we have informative and fun notes on various topics like “best places” to live, breakthroughs in Alzheimer’s research, a travel advisory, craft chocolate and even a diet book (to offset the chocolate article?). The anti-trust and big technology note is wonkier but has important perhaps crucial implications.

  • Weaponizing Tariffs a Risky Game? Using the threat of tariffs to force Mexico to step up its efforts to help manage the immigrant crisis may have succeeded. The details of any commitments have not been disclosed yet. But this type of pressure is potentially and materially disruptive to the economy of the countries involved and makes it difficult, if not impossible, for companies involved with trade to plan.  CNBC

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