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In September, Trump tariffs were imposed on $112 billion more of Chinese imports. Trump now threatens to increase this to $550 billion. As a result, the World Trade Organization has now slashed its forecast for 2019 trade growth to 1.2% from 2.6%. The Chinese, Indian, Japanese, and U.S. economies are slowing. The European economy is slowing dramatically, and is now seen growing at zero in 2019. Germany is slowing because as Chinese companies export less to the U.S., they purchase less German machinery. This, plus the uncertainty of Brexit, has German companies nervous about investing.

In the U.S., the ISM manufacturing index, an important indicator for the health of the economy, contracted in...

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The New York Federal Reserve now sees a risk of recession at 33% in the next twelve months. When this indicator rises above 30%, a recession typically follows, although sometimes with a delay of 12-24 months.

The global economy is slowing nearly everywhere, but the U.S. is perceived by many as being in great shape, particularly if measured by the stock market. However, signs of a slowdown are looming in housing, construction, automobiles, and the industrial sector, in the latter case due to trade tensions between the U.S. and China. Purchasing manager Indicators are slowing, both in services and manufacturing, and the rest of the world is cause for concern, with Chinese, South Korean, Japanes...

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The first quarter of 2019 was the best for stock prices since 1998, to such an extent that some caution may be advised in the short term. While the stock market has been climbing, Wall Street analysts have been lowering earnings estimates for the first quarter. In fact median EPS estimates have fallen by 7.2%, which are some of the largest cuts to S&P 500 earnings estimates in years. This is a source of concern.


It’s often a good exercise to be mindful of “the dark side”, even when the market is rising. Fully 1/4 of all the Russell 3000 index, which represents 98% of all US stocks, operate at a loss. Last year, 83% of all IPOs came to the market with negative earnings. Real ...

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Looking ahead to the fourth quarter, we can focus on three things which will impact the financial markets: the Trump tax plan, corporate earnings, and the Federal Reserve.


Trump’s administration has undergone huge turnover in its first nine months, including his first national-security adviser, the deputy national-security adviser, his original chief of staff, a press secretary, two communications directors, his chief strategist, the director of the FBI, the acting head of the Justice Department., and the head of the Department of Health and Human Services.


These are only the highest level impediments to Trump’s credibility, but the list is long as the reader may be aware. The rele...

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The Dodd-Frank Wall Street Reform and Consumer Protection Act, introduced in 2010 by the Obama administration with the purpose of avoiding another destructive financial crisis like that of 2008, is considered to be one of the most comprehensive financial reform bills in recent history. Approximately 2,300 pages in length, the bill impacted “every firm delivering financial services and every part of the economic and financial fabric of the United States, with billions spent on compliance”[1]. Numerous positive and negative aspects of the bill have come to light since its implementation. Despite the seemingly good intentions of Dodd-Frank, the disadvantages of the bill heavily ou...

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The Sleep of Reason Produces Monsters- Francisco Goya, 1799




Investors enter the fourth quarter with elevated and asymmetrical downside risk until after the elections, likely subsequent interest rate hike, and probable market shakeout. There will be ample opportunity to reinvest at lower levels.



The U.S. election should be seen as binary, as the outcome is still uncertain despite any outrageous recent findings about the candidates. The financial risks of a Trump presidency are large, and Wall Street is underestimating the influence of the anti-establishment sentiment which may not be reflected in the polls. If Trump wins, there be sharp adverse effects on the stock market due to:


• His at...

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(Artist: PepperAna, used with permission)




The economic landscape has become extremely complex, beyond the understanding of even many famous economists, so I will attempt in this letter to keep things very simple and brief.


The Federal Reserve and most other central banks have spurred an unparalleled rise in borrowing since 2009, and the debt has been used for unproductive purposes such as stock buybacks and mergers instead of research, development, and capital expenditures.



This is true in the U.S., Europe, Japan, and China.



As a result of these central bank policies, we have negative real interest rates in much of the developed world, which is without historical precedent, even going back to...

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