Joseph G. Witthohn, CFA
VP of Product Development Emerald Asset Management

Good morning.

Many were hoping that we would see a rebound today following Tuesday’s sharp selloff in the U.S. equities market but, unfortunately, news out of Canada seemed to squash early confidence that today would find investors in a buying mood.

Just the opposite, it appears.

First of all, let’s point out that things might not be as bad as what is being portrayed on business news channels … where a goal appears to be, at times, to strike just enough fear that you won’t dare change the channel ( “If it bleeds, it leads!”). Not only was the ISM non-manufacturing index better than expected … but I started to look into the market collapse of the last few days and saw both the Dow and S&P moved all the way down to levels not seen since … since … November 23rd … less than 2 weeks ago!

On Tuesday … and I will might get in trouble for sounding political … the President put out an unfortunate tweet with regard to China, calling himself “Tariff Man!” Traders immediately seemed to push the sell button (also known as “the WTF button”) as it was viewed (in my opinion) as the complete opposite of our one-time stated strategy of “speak softly but carry a big stick.” The new view might be “we have a big stick and aren’t afraid to swing it.”

So what happened in Canada?

A Chinese firm called Huawei is a major player in smartphone shipments and is looking to take a leadership role in 5G. The firm has been accused of violating U.S. sanctions against Iran. An executive of the firm (the CFO who happens to be the daughter of the founder) was arrested … while changing planes … in Canada and faces extradition to the United States … a move Bloomberg classifies as “unprecedented.”

And the reporting on this happened just when the recently-announced negotiations between the U.S. and China reached an boiling point thanks again, in part, to the Tariff Man claim.

Unfortunately, emotions appear to be dictating investment decisions at the moment though … when this happened historically people … in hindsight … often found it better to have a seat belt than a parachute.

My final note for today … I just had to add this … is that early studies are showing an increase in marijuana legalization leads to … more babies! I’m just the messenger on this one … but I could only think of one reason (though I haven’t been asked) why more marijuana use might lead to more kids.

Maybe people are just too stoned to run out to the drug store.

Have a great day,

Joseph G. Witthohn, CFA
Vice President
Emerald Asset Management PA, LLC
610 Freedom Business Center Drive
King of Prussia, PA 19406
Direct: (610) 285-9905
wit@teamemerald.com

… as of 11:11 AM today …

Quick Look at the News

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