Market Alert September 10th, 2018: The Drums Of War

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  1. For you to have Financial Peace of Mind and
  2. For Your Money to Last As Long As You Do.

Our investment philosophy of Buy, Hold, and SELL! is designed to give us Unlimited Upside with a Tolerable Downside.

  • President Trump Threatens Tariffs on Over $400 Billion in Chinese Goods.
  • Jobs Report May Cause the Federal Reserve to Raise Interest Rates.
  • We Continue to Stand By Our Fearless Forecast of Dow 26,500 by the End of 2018.

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President Trump Threatens Tariffs on Over $400 Billion in Chinese Goods.

President Donald Trump said he’s ready to impose tariffs on an additional $267 billion in Chinese goods on short notice, which is on top of a proposed $200 billion that his administration is putting the final touches on.

The implementation of tariffs on $200 billion of products from China “will take place very soon depending on what happens,” Trump told reporters on Friday, September 7, 2018, on Air Force One. “I hate to do this, but behind that, there is another $267 billion ready to go on short notice if I want.”  Trump’s latest tariff threats would more than cover the value of all goods we buy from China, according to US Census Bureau figures.

Tariffs on all Chinese products would hit almost every aspect of our lifestyle, including the clothes we wear, the foods we eat, the cars we drive, the cell phones we use, and many other products.

The Chinese are trying to establish themselves as a world power, perhaps greater than the United States. For China to give in to President Trump’s demands too quickly would cause them to lose face. Because of this, we believe that a trade war will begin and a truce will be called soon afterward. As we have discussed in previous emails, a full-fledged trade war with the United States would potentially put us into a recession; however, it would put China into a depression, in our view. The Chinese have shown themselves to be very pragmatic when it comes to business over the last 5,000 years. We don’t believe that they will risk everything, and therefore, they will come to the table.

When the photo of President Trump and President Xi shaking hands and celebrating the new deal is released, we believe that the stock market will be catapulted to new highs and beyond.

  • Do you have a plan for what to do when the next market crash comes?
  • Do you know if you have enough money to retire?
  • What are 5 strategies that you can use to reduce your income taxes?
  • How do you plan for your retirement cash flow?
  • What should you do to maximize your Social Security benefits?
  • Are you properly diversified?

We would love to review your entire financial plan, analyze what you have and see if we can help you. If we can, that’s terrific, but if not, that’s fine too. Either way, there is no charge or obligation, and we will part friends!

Over 50? Schedule a free retirement consultation with one of our financial advisors. We will help you to create your personalized retirement plan.

Jobs Report May Cause the Federal Reserve to Raise Interest Rates.

Wages unexpectedly climbed in August, increasing more than at any point since the recession ended in 2009, according to the Labor Department. Hiring also rose by more than forecasted and the unemployment rate is unchanged at 3.9 percent, near the lowest since the 1960s.

The strong wage data will likely keep the Federal Reserve on track to raise interest rates this month and again in December. Our move to Government Bond Cash Equivalents may turn out to be the right decision as rising interest rates tend to depress longer-term bond prices.

We Continue to Stand By Our Fearless Forecast of Dow 26,500 by the End of 2018.

While we reached our fearless forecast of Dow 26,500 for this year in January and retrenched from there, we believe that we will rise to that level again before year end. Given the strong economic data underpinning the stock market, any progress in the trade negotiations with China will get us there, we believe.

According to Ned Davis Research, the average bear market is a drop of 37%. The S&P 500 index fell 49% in the bear market of Y2K and 57% in the bear market of 2008, which would mean the Dow falling 9,848 points from its peak on January 26.

Do not get complacent. Overconfidence is dangerous when it comes to investing.

While this year will most likely not be as good as last year, it is shaping up to be a good year in our view. We will never become complacent, however. We must never let our guard down and never take the market for granted. It is when overconfidence sets in that the market is the most vulnerable.

With the market near all-time highs, this is no time to assume that the market only goes up! The best time to plan ahead for the next market crisis is now!

As you can see in the chart below, the market can turn around very quickly and very unexpectedly. The 2008 bear market wiped out 12 years of gains in just 17 months. Many of you participated in that bear and the one in Y2K.

Clients who followed our lead were out of the Stock market during the great market crash of 2008.

Over 50? Schedule a free retirement consultation with one of our financial advisors. We will help you to create your personalized retirement plan.

Click here to listen to this week’s podcast and hear the following topics:

  1. How Will Midterm Elections Affect The Market?
  2. 18 Risks Faced In Retirement: #2 Inflation
  3. Social Security Spousal Benefits
  4. Buy-Hold Myth #6: You Haven’t Lost Any $ Unless You…
  5. Estate Tip: Aretha Franklin Died Without A Will

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Cheers!

Ken Moraif, CFP®, MBA