We are now in the longest economic expansion in history though … according to some … there may be storm clouds on the horizon.
To begin, I read an interesting comment this morning by Sam Stovall of CFRA Research who smartly classified the Trump-Xi weekend agreement as a “temporary truce.” That’s right … temporary … for the weekend’s result was simply a delay in instituting new tariffs … while negotiations continue … and yesterday’s market action may just have been investors breathing a collective sigh of relief.
It seems the U.S. has come to the stark realization that tariffs can be used as a weapon … able to be launched with the only a statement or a tweet … and this morning the fuse may have been relit … as a tariff against the EU is threatened as we do not like the way aircraft subsidies are being handled. And if that is resolved we can use the tariff threat again and again … as there are many countries out there whose economies we can certainly affect.
The problem with all this is that global trade is not strong and anything (such as a trade war) that weakens it even to a slight degree greatly increases risk of recession. Even U.S. factory numbers are beginning to show signs of a slowdown. This banter certainly doesn’t help … and puts us in the unfortunate position that we may need to look toward the Fed to come to our rescue.
It is unfortunate that so much of our economy seems to depend on such political banter … and one misread tweet (or correctly-read tweet, for that matter) could immediately knock or add hundreds of points to the Dow.
So I will close today with one interesting motto – which so many people seem to live by – that I read online last night … which seem to sum up much of social media to a tee:
“Life is short … so we should spend as much time as possible on the internet arguing with strangers about politics.”
Have a great day,
Joseph G. Witthohn, CFA
Emerald Asset Management PA, LLC
610 Freedom Business Center Drive
King of Prussia, PA 19406
Direct: (610) 285-9905
… as of 11:07 AM today …
Quick Look at the News
Break out the champagne! We are now in the longest economic expansion in history ... though it has been a bit tamer than others (CNBC)https://www.cnbc.com/2019/07/02/this-is-now-the-longest-us-economic-expansion-in-history.html
... and some see it, soon, coming to an end. A famed gloom-and-doom economist feels a global recession is coming ... and the trade war is the cause (CNBC)https://www.cnbc.com/2019/07/02/dr-doom-economist-nouriel-roubini-sees-trade-war-tipping-global-economy-into-recession.html
You will look at the economy and assume that jobs are plentiful. Well ... they are ... but some need two jobs just to make ends meet (PewResearch)https://www.pewresearch.org/fact-tank/2019/07/01/about-one-in-six-u-s-teachers-work-second-jobs-and-not-just-in-the-summer/
... and one of the reasons people might need more than one job is to pay back loans ... with student loans a burden to many. Jamie Dimon actually implies they are evil (Forbes)https://www.forbes.com/sites/zackfriedman/2019/07/01/jpmorgan-ceo-jamie-dimon-student-loans-are-irrational/#3ec89ed775bc
... for one of the problems with student loans ... even for those who are able to pay them back ... is it takes away from savings, investing and net worth ... especially troubling for millennials (USAToday)https://www.usatoday.com/story/money/2019/07/02/net-worth-average-millenial-shockingly-low/39625181/
Do you remember those days when smog engulfed Los Angeles? In comparison, today seems pretty mild ... but the bad, choking, air ... is filtering its way back (Patch)https://patch.com/california/los-angeles/las-battle-smog-sputters-death-toll-bad-air-climbs