Good morning. Stocks are recovering a bit following yesterday’s downturn … brought on, in large part, over concerns that Fed Chair Jerome Powell could somehow be replaced. While there are many comments surrounding the wisdom of the Fed (remembering past claims of inflation being “transitory” and views that they are, historically, late to make moves) people still like stability and worry that if politicians ever had their mitts on monetary policy … well … actions would move away from being economy-based and more towards being election-based. The IMF chimed in on tariffs this morning, providing the view that “… tariffs will cause ‘significant slowdown’ in the world economy and hamper progress in bringing down inflation.” Additionally, the organization dropped forecasts for both U.S. and global growth, but forecasts for both are still positive and are not (at this time) indicating imminent recession. Still, there is hope the tariffs will not be as severe as mentioned … for if they are … as pointed out by Apollo Slok in the first article below, recession is, in fact, the likely outcome as the group seems to mirror a further IMF comment that “tariffs are a negative supply shock from the economy that imposes them.” I’m sorry, I don’t mean to sound so worried … as I have hope (although it is often pointed out that “hope is not a strategy”) that the U.S. does pull back a bit on their tariff threats. What got me going this morning was a disturbing comment by Societe Generale that “the era of U.S. exceptionalism is over” … and “… can last for years.” What is pointed out with the drop in the dollar … which may continue … portfolios might not want to be fully invested in the U.S., and it is implied that some diversification into European equities might be prudent (as their currency improvement could help). I’ll leave it at this point today other than pointing out an interesting thing that really hit home. I don’t know about you, but I find myself watching TV at night and occasionally missing what seemed like an important comment. My use of “closed caption” is increasing and I was attributing this to advancing age. The last article below makes me feel better as the claim is that almost 50% of TV viewers use closed captions because viewers find it difficult to hear what everyone is saying. That about wraps it up for today … day one of my new diet. I think I’ll try the famous one created by Robert Atkins … a former comedian who gave up that career to become a cardiologist … the famed Atkins Diet … … no bun intended. Have a great day, Joseph G. Witthohn, CFA Have any questions? Please contact info@teamemerald.com
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