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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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Tariffs Taking Hold, Who is Alex?, and How to Host a Wine Party

The U.S. and world economy has been shrugging off the effects of tariffs for over a year.  But no more. This week's first three economic articles highlight the fact that tariffs, and trade barriers are finally having a significant impact on economic growth.  Economies are still growing.  They just feel like they are bogging down.  Articles on that and more in this week's The Friday Buzz.  Enjoy! 

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A New Cold War, Huawei, “The Secure Act”, Fine Dining in Portland (and More!)

Some pundits have begun claiming that we are in a cold war with China. Terminology aside, it is an open, high stakes competition for global economic dominance. In this context, it is worth taking the time to learn about why Huawei, the Chinese telecom company, matters so much. We also have an update about important retirement plan legislation (the so-called “Secure Act”). If time permits, I encourage readers to sample some of the Notes that touch on topics that speak to well-being and quality of life. My personal favorite? That would have to be the article about Frances Arnold, the scientist extraordinaire!

  • Walling Off Huawei? Huawei is now the world’s second-largest cell-phone maker after Samsung. It, and other Chinese telecom companies, control roughly half of the networks for global internet traffic. This control gives it immense clout to spy on global communications or even to shut important communications down completely. President Trump wants to “wall it off” and, in effect, create two Internets. NYT

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Foreign Policy, Budget Talks, and Americans are Moving to Mexico in Droves!

The beat goes on with U.S. – China tariffs with high stakes moves to prod concessions, but foreign policy issues are now crowding the headlines.  As tensions with Iran go back and forth, there's a belief the foreign hotspots are here to stay as top news.  All those articles and more!

Also, it's Memorial Day weekend, a time to pause and remember those who died in active service to our country.  And it is the unofficial start of summer, so hopefully there will be plenty of sun for everyone.

Enjoy The Friday Buzz and please forward to anyone who may have interest.  Have a great Memorial Day weekend!

  • The White House Preparing More Pressure on China:  President Trump aims to keep the heat on China and create trade concessions.  After blacklisting high profile Chinese company Huawei from U.S. trade due to security concerns the administration is looking at targeting other Chinese companies.  Despite periodic reports and Tweets to the contrary, there are no signs of the trade war abating.  Making a deal makes the most sense for both sides, but China has to realize the days of cheating and stealing of technology are over, as pointed out in this opinion piece by Thomas Friedman.

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Time to Get “Real” About China, Iran, CBD, Longevity and Happiness Insights

Barring the unexpected, a trade deal with China is not imminent. Investors should prepare for escalating tariffs and heightened stock market volatility, as the market re-prices the risks to the currently strong U.S. economy. We advise ignoring tweets, anonymous reports, rumors and speculative news stories with a short- term focus. The context of the tariff conflict is that of a geopolitical high stakes struggle between the U.S. and China, making it challenging to find acceptable common ground.

Meanwhile, the Middle East is heating up to a near boiling point. Military skirmishes, if not all out war, involving Iran, the U.S. and our respective regional allies, are real possibilities. We also came across some fascinating articles on various topics relating to health, longevity and happiness. The long article on the medicinal potential of CBD is the best I have read. Lastly, please let us know if you have any specific areas of interest. A client asked about leasing vs buying a car, and we discovered an article that might benefit many clients and friends. Delighted to oblige.

  • A Long and Painful Trade War? Perspective on the China trade conflict has been in short supply. This article by Neil Irwin, one of my go-to writers on complex economic topics, does an excellent job explaining why there is no easy fix. New York Times Ray Dalio, the legendary hedge fund investor, explains that it is an ideological war. LinkedIn

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China Trade Conflict Takes Center Stage (and More!)

On the financial front, the buzz is all about China. Rumors are swirling that China has attempted a major retreat in the negotiation process, causing President Trump to threaten to impose large tariff increases, effective this Friday, coincident with the arrival of a China trade delegation. The markets are flip flopping (most flopping) on every China trade headline and gamesmanship ploy. We will pick up on the China trade story in next week’s Coffee Notes.

Please read on for more notes on the economy, the Fed and some terrific success stories about a small high school in Maine and a local Maine brewery that has won national recognition. 

  • China Trade Deal Near? High stakes negotiating tactics may ultimately work, but it’s “agita” for the stock market. Trump claimed this morning that China’s vice-premier is coming to the U.S. to make a deal. (CNBC) This comes on the heels of a report that China is attempting to re-negotiate previous positions. (CNBC)

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Economy Shows Strength, Preparing for College, & Tree-Firing Drones!

There has been a lot of economic data released the last week, almost all of it constructive for the economy and company earnings.  The U.S. economy keeps chugging along briskly, Europe is not as strong, but growing, and inflation remains tame.  Some would call that a "Goldilocks" scenario for the economy and stocks.  All that, and more in this week's articles.

Enjoy this week's The Friday Buzz, and have a great weekend!

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Stocks are Back, The Great Green Wall of Africa is Going Up, and Proposed Changes for 401(k)s!

The hiccup late last year in the stock market is fully over as stocks are back to new highs.  Job data continues to come in quite impressively, and GDP expectations for first quarter have improved.  Plus there's good news on electric cars and the African forests.

Enjoy this week's The Friday Buzz, and have a great weekend!

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A Possible Paradigm Shift in Economic Thinking; China and 5G; Cannabis in Maine (and More!)

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".

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Taxapalooza, Indecisive Yield Curve, and the RSWA NCAA Winner!

No one likes taxes, but it's something we all have to deal with this time of year.  So this week's Friday Buzz includes both practical and interesting tax articles, as well as some funny tax quotes and comics – because sometimes you just have to laugh… 😊

Enjoy this week's The Friday Buzz, and get those tax returns in!

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