Weekly Update 6/28/2019 G20 Meeting this Weekend

Weekly Update: G20 Meeting This Weekend

Last week, the market action was dominated by the Federal Reserve’s signal that they are ready to cut interests rates as needed to support the economy.  This week the market has been in a holding pattern awaiting the meeting between President Trump and President Xi at the G20 meeting in Osaka, Japan on Saturday. 

Ahead of the meeting, Mr. Trump recently proposed an additional 25% tariffs on $300 billion in Chinese goods as a negotiating tactic.  Nearly all the analyst employed by the major US banks expect a cease fire, whereby Mr. Trump will signal that he does not plan to impose these additional tariffs while maintaining the existing tariffs on $200 billion in Chinese imports.  China on the other hand, has signaled that they will not make significant concessions unless the US removes its restrictions on Huawei, China’s largest technology conglomerate.  This is a high stakes meeting from a market reaction perspective so stay tuned.

The domestic chorus against Mr. Trump’s proposal to increase tariffs has grown loader. This week hundreds of US executes argued against the tariffs at a public hearing.  US businesses are warning that the increased tariffs will create direct and collateral damage to their operations.  For example, the Wall Street journal reported yesterday that a company that assembles TV sets in South Carolina might have to move operations to Mexico if the tariffs extend to LCD screens and circuit boards it imports from China.  Additionally, many US companies import critical components as part of their manufacturing processes.

With some irony, Apple Inc announced today that it is going to manufacture its new Mac Pro computer in China. The Mac Pro was the only major device assemble by the company in the US.  The company had invested $100 million to manufacture the device in Austin, TX in 2013.  I would expect a related Trump tweet to follow this decision.

Happy 4^th of July next week! 

Thanks for reading,

Zach and Dave

Calibrate Wealth
515-371-5316  

https://www.calibratewm.com/blog-01

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