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Trade War Heats Up
The Market Bull 2018

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As was widely expected Trump ratcheted up the trade war with China dramatically with an additional 200 billion in goods subject to tariffs. China responded with another 60 billion in tariffs. Trump had previously threatened to slap tariffs on the balance of Chinese goods or 267 billion if the Chinese retaliated, as they have. That said the tariffs at 10% are far below the 25% expected, though that rate will be applied beginning January 1, 2019. The immediate effect will be higher consumer prices, followed by less economic growth and some employment loss. Not to mention the unintended consequences which could prove substantial.

Lost in all the cheerleading about the great recovery. A recovery I’ll note that was predicated on the assumption of even more debt to solve the problems caused by too much debt in the first place. 20-years ago before the dot-Com bust global debt was 40 trillion Dollars today it is 250 trillion as once again we have conjured up prosperity on a mountain of debt. I certainly hope that it’s different this time, because the last 2 debt bubbles in 2000 and 2008 didn’t end well.

State and local government tax collections increased notably again in the 2nd quarter with a 7.8% advance. Gains were broad based and led by severance, corporate and individual taxes. A 3rd consecutive quarter of solid growth. Tax collections are on track to materially exceed the 5% growth seen in 2017.

This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 or call me toll free at 888-RICH PIG / 888-742-4744.

You can catch me on the radio at noon each business day as well on California’s central coast. KPIG 107.5 FM in the Monterey Bay or KPYG 94.9 FM in San Luis Obispo.

Rebroadcasts, additional writings, and other entries are also available on my Blog at www.clinvestments.com

Advisory services offered through Caleb Lawrence Registered Investment Adviser Inc.


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