ASX plunges after US bloodbath

Excerpt below:

The Australian share market has plunged by more than 2 per cent in early trading following a bloodbath on Wall Street overnight. At 10:15am AEDT on Thursday, the ASX200 index was down by 122.5 points to 5,927.5.

It came after Wall Street stocks plunged Wednesday, with major indices losing more than three per cent in a sell-off prompted by the sudden jump in US interest rates and increasing trade worries.

“Fear is rising,” says chief investment officer at Cumberland Advisors David Kotok. “Investors are getting a wake-up call.”

Read the full article at The Queensland Times.




The Fed Isn’t Crazy, Trump’s Trade War Is: David Kotok (Radio)

David Kotok, Chairman & Chief Investment Officer at Cumberland Advisors, on the market selloff, Trump blaming the Fed, and his current economic outlook. Hosted by Pimm Fox and Lisa Abramowicz.

Running time 06:48

LISTEN HERE: https://www.bloomberg.com/news/audio/2018-10-11/the-fed-isn-t-crazy-trump-s-trade-war-is-david-kotok-radio

NOTE: Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.


If you like podcasts, check out this one from 2015 featuring David Kotok talking about his background and Camp Kotok with Barry Ritholtz. They also talk about the history of Cumberland Advisors since its founding, and delve into fundamental principles of investing and valuation.


Links here
https://itunes.apple.com/us/podcast/masters-in-business/id730188152?mt=2

And here
http://www.bloomberg.com/podcasts/masters-in-business/




Dow drops 800 points, led by tech shares, as stock market investors fear higher rates

Cumberland-Advisors-David-Kotok-In-The-News

Excerpt below:

The Dow plunged more than 800 points Wednesday, its worst drop in eight months. Rising bond yields have been drawing investors out of the stock market. The best-performing stocks over the past year took some of the biggest losses.

Growing concerns about the impact of higher borrowing costs on corporate earnings and consumer spending prompted investors to dump shares.

“Fear is rising,” says David Kotok, chief investment officer at Cumberland Advisors in Sarasota, Florida. “Investors are getting a wake-up call.”

Kotok went as far as to predict that a full-fledged market “correction,” or drop of 10 percent, is underway. After its drop of more than 3 percent Wednesday, the broad U.S. market, as measured by the Standard & Poor’s 500, is now 4.9 percent off its Sept. 20 record high.

Read the full article at USA Today.




Trump Trade War & The Keystone Kops

Market Commentary - Cumberland Advisors - Trump Trade War & The Keystone Kops

In his Thoughts from the Frontline letter on Friday, John Mauldin wrapped his own strong remarks on Trump’s trade war with China around a tweet from the vastly experienced and hugely connected Harald Malmgren (https://www.mauldineconomics.com/frontlinethoughts/china-for-the-trade-win):

“Check out this unusually blunt tweet from former trade diplomat Harald Malmgren, who literally wrote the book on US trade policy, serving under presidents starting with JFK. He’s retired now but remains ‘plugged in’ to global finance better than almost anyone I know.”

Mauldin continues, “Now, it may be that the White House team is less talented than they think. Peter Navarro’s continued presence, and the president’s apparent confidence in him, is not reassuring. I said when his name was first mentioned that Navarro understands neither economics nor trade. He has done nothing to change my opinion.

“But another possibility is they have an entirely different strategy than we think. Some of my contacts believe the real goal is to make US businesses pull back from operating in China at all. If that’s the goal, they are off to a good start. But that is not good for US businesses or for the US.”

Then, on Friday evening, the Wall Street Journal chimed in with a news alert titled “China Cancels Trade Talks With U.S. Amid Escalation in Tariff Threats,” which outlined the Chinese response to US pressure:

“China scotched trade talks with the U.S. that were planned for the coming days, according to people briefed on the matter, further dimming prospects for resolving a trade battle between the world’s two largest economies.

“The decision to pull out of the talks follows the latest escalation in trade tensions. On Monday, President Trump announced new tariffs on $200 billion in Chinese imports, prompting Beijing to retaliate with levies on $60 billion in U.S. goods. Mr. Trump then vowed to further ratchet up pressure on China by kicking in tariffs on another $257 billion of Chinese products.

“Chinese officials have said such pressure tactics wouldn’t induce them to cooperate. By declining to participate in the talks, the people said, Beijing is following up on its pledge to avoid negotiating under threat.”

With the Trump Trade War escalating and worsening, we sought to convene a serious and civil discussion about where Trump-Navarro trade policy is inclined to take the United States. To that end a seminar was organized with the help of the Keystone Policy Center (KPC) and the Global Interdependence Center (GIC). It was held on September 20th at Keystone, in Summit County, Colorado. (For geographic orientation, since our readers are worldwide, you may think of the Keystone or Breckinridge sky areas or the towns of Keystone, Frisco, Dillon, or Silverthorne.)

The KPC has been around since the mid-1970s, as has the GIC. Both organizations have a history of neutrality and of convening civil discussions.  KPC’s history is more domestic in focus, with agriculture and mining being strong areas of interest. GIC has a history of global focus on monetary and trade issues.

The Trump Trade War has now offered a bridge for policy forums like KPC and GIC to partner as they pursue truth without the intensity of political acrimony. That is what happened on September 20. At the seminar, opinions were diverse and perceptions varied, but considerable learning occurred through the civil exchange of information.

Mike Englund, Megan Greene, and yours truly as a participating moderator populated the seminar panel. Among the invited attendees were Democrats and Republicans, businesses and white-collar professionals, and public guests. The event was open to the general public at no charge.

Participants included IT businesses that work in China and that have experienced intellectual property theft. Representatives of the soybean industry, finance and market agents, and the retired executives of major institutions were also on hand..
Mike Englund of Action Economics opened with slides and a data set. He has graciously allowed them to be publicly released. Here is the link to Mike’s PowerPoint presentation: Action_Economics_Keystone_GIC_Sep_2018.pptx. (Mike Englund is principal director and chief economist for Action Economics, which offers premium intra-day commentary for the fixed-income and currency markets. They feature analysis of a wide range of global bond and FX markets, with a focus on central bank policy and market activity in the G7 countries. You can learn more here: https://www.actioneconomics.com/index.php/.)

Mike’s slides were updated to include the latest Trump escalation and China’s response. They capture what was known as of September 19. They estimate the primary effects. The second derivatives were a subject of our panel discussion. Suffice it to say, this is a negative picture for US growth and US job creation, and the secondary impacts will only make the situation worse.

Megan Greene is the chief global economist at Manulife Asset Management, whose team includes more than 325 investment professionals, located around the world, who manage a full spectrum of asset classes. You see her on TV and can read her column in the FT. She added a global perspective and described how trade-war effects spread internationally, citing many anecdotes of global interactions. If anyone needed convincing that this Navarro-conceived, Trump-directed policy is now on an irreversible course toward failure, they had only to listen to Megan’s rundown and extrapolate to logical outcomes.

I added a few observations to the discussion and will summarize them here.
1. Shrinking the US trade deficit means shrinking the capital account surplus. To do this when the federal deficit is headed above $1 trillion is to invite a financial crisis. We should be expanding the capital account surplus and enhancing the US dollar’s status as the reliable world reserve currency of choice. Instead, this administration is doing the reverse. Trump and Navarro are shooting our country in both feet.

2. Americans don’t want this. A majority (75%–80%) think that free trade is opportunity. Survey sources include Gallup, 2018 (https://news.gallup.com/poll/228317/positive-attitudes-toward-foreign-trade-stay-high.aspx); Chicago Council Survey, 2017 (https://www.thechicagocouncil.org/publication/chicago-council-survey-data); Pew, 2015 (http://www.people-press.org/2015/05/27/free-trade-agreements-seen-as-good-for-u-s-but-concerns-persist/); and WSJ/NBC, 2017 (https://www.wsj.com/articles/americans-back-immigration-and-trade-at-record-levels-1493092861?mod=wsj_streaming_latest-headlines). Thank you to Barclays research for pointing us to some of these polls.

3. The same political views with regard to trade are held by Democrats, Republicans, and independents. The polling data show that disdain for the direction of this Trump-Navarro policy is bipartisan and growing as the anecdotal evidence of negative effects pile up at Trump’s doorstep.

4. Trade still ranks low in issue importance when voters are asked. Guns, terrorism, education, and immigration rank much higher; but that picture is changing slowly. Remember, trade-war rhetoric has been around all year, but actual policy implementation is just getting underway, and measurable effects are just beginning to appear. Look at Mike Englund’s forecast slide to get a sense of where this is heading.

5. “The United States federal excise tax on gasoline is 18.3 cents per gallon and 24.3 cents per gallon for diesel fuel” (https://www.eia.gov/tools/faqs/faq.php?id=10&t=10). Every penny change in the price of fuels amounts to about $1.5 billion spent annually in the US. At present, with the announced and threatened tariffs, the total cost imposed on Americans will be the equivalent of nearly one dollar of additional tax per gallon of gasoline and diesel fuel. That reference may help readers understand how serious an economic growth threat may greet our nation by early next year.

My takeaway is that the stock markets and bond/credit markets are only starting to worry. Companies are, however, warning about possible future negative earnings surprises from trade-war effects. Credit spreads are still tight. The pain is seen in emerging markets and foreign debt issues. While the amount of US corporate debt is at a record high and the junk-credit portion is high, we haven’t seen credit spreads widen yet. We are minimizing that risk for clients. When markets are priced for perfection, they are fraught with risk. At Cumberland we won’t take that added risk for our clients.

Last thought. For decades we have focused on monetary issues and numeracy and trends that exhibit linearity and mean reversion. At our September 20 seminar, the professionals in attendance admitted how difficult it is to model trade shocks. Unintended consequences are often larger than the initial actions that precipitate them, and the multipliers are unknown. Trade shocks are sequential cliffs. They are nonlinear. Many are irreversible.

We thank the leadership of the Keystone Policy Center and the Global Interdependence Center for agreeing to this first joint organizational forum. We thank the invited attendees and the public guests for taking a few hours away from the beautiful golden Colorado fall foliage to sit in a meeting room and civilly discuss this critical inflection point in America’s trade policy. Many of our participants expressed the wish that our national political leadership might act as we were doing and cease the bellicose, offensive behavior. That wish applies to both Democrats and Republicans.

I was fortunate to moderate this session and to learn from those who attended. Thank you.

Sixty years before the founding of the GIC and KPC, silent movies were the latest rage. The Keystone Kops may now be little-known, but they were a big hit in their day. (See https://www.britannica.com/topic/Keystone-Kops) We all do well to keep our sense of humor in these trying days, and so we can’t help but wonder whether the Keystone Kops might have been the inspiration for today’s trade war police ensconced in Washington. Here’s a taste of those crazy constables: https://www.youtube.com/watch?v=a8jphxpi1ro.

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




Took Position in Canada, Cumberland Advisors’ Kotok Says

Watch at Bloomberg.com: https://www.bloomberg.com/news/videos/2018-09-04/took-position-in-canada-cumberland-advisors-kotok-says-video


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




Tariffs & Draining the Swamp?

Mr. David Malpass, at the US Treasury, will meet with Chinese Commerce Minister Wang Shouwen in late August. This is excellent news.

Dennis Gartman beat me to this on Thursday morning. I’m in complete agreement with Dennis’ assessment:

“Mr. Malpass, as everyone should remember, is an old Wall Street ‘hand,’ for he was at one time Bear Stearn’s Chief Economist. He served in the Reagan and Bush administrations in various positions of economic authority and has been a close economic advisor to President Trump before being given the position of Under Secretary of the Treasury for International Affairs. His are capable hands.”

Over the years I’ve spoken with David Malpass from time to time. He is and was always gracious. And his skill set is deep. He was a very early economist addition to candidate Trump’s team. He has made thoughtful policy arguments while carefully avoiding the political infighting.

While I personally do not agree with Peter Navarro’s broad tariff approach and believe it has done a disservice to POTUS and to the US, I have to confess some relief and new encouragement at seeing David Malpass now prominently added to the Kudlow and Lighthizer negotiating team which is now led by Treasury Secretary Mnuchin. The outlook is starting to offer hope for a positive turn in the US versus China trade war.

Why did I list the US first and not alphabetically in the previous sentence? Because we started the war, that’s why. We followed the Navarro script and now we have a mess which the new team must straighten out.

Below is a list of the top 20 countries ranked by GDP. Look at it and count all those involved in protectionism and tariffs that have been expanded or enlarged in 2018. Count the USA first, since we are now involved in tariffs and retaliatory tariffs with most of the globe (if we measure by GDP). Yes, some tariffs and trade barriers have been around for years. But, on the whole, the WTO had accomplished a global reduction. Until 2018.

Here is the chart, courtesy of Brent Donnelly of HSBC.

Chart, courtesy of Brent Donnelly of HSBC

Is the tariff war peaking? We don’t know. Is it starting to show up in anecdotal inflationary evidence? Yes. Is it slowing growth? Yes. Is it exacerbating credit risk? Maybe.

The important thing to know is that the Mnuchin-led team has the skills to see and understand the dangerous effects of growing protectionism, and we may begin to see damage control and a shift away from the harmful direction in which we’ve been headed.

Time will tell, as preparations and negotiations leading to a Trump-Xi November summit unfold.

Let’s move to an insightful post by Xi Sun, entitled “Will US-China trade war reshape global value chains?” We thank Lyric Hughes Hale for making it available via her EconVue site. Lyric is a longtime friend who has contributed economic and political affairs commentary to a broad range of publications and who, with her late husband, David Hale, coauthored the book What’s Next? Unconventional Wisdom on the Future of the World Economy, as well as the influential article “China Takes Off,” published in Foreign Affairs in 2003. She is a member of the Council on Foreign Relations and has served on numerous boards.

Here’s the link to her site: https://www.econvue.com/pulse/will-us-china-trade-war-reshape-global-value-chains.

Tariffs beget tariff exemption applications; and as the following article in the National Review states, “Their proliferation has empowered government bureaucrats ill-suited to the task to pick industry winners and losers.” https://www.nationalreview.com/2018/08/tariffs-bad-government-exemptions-worse/

The backlog of exemption applications has grown to over 20,000, and the swelling Dept. of Commerce bureaucracy must review and decide each one – but without the industry expertise necessary to balance the arguments being made (though they have plenty of input from Washington lawyers and lobbyists). What generally happens is that the players with the deepest pockets and most political clout prevail. The Wall Street Journal has remarked, “Far from draining the swamp, tariffs feed the swamp.”

Thus, the Navarro policy recommendations to POTUS have created an entire new, costly, and nonproductive government intervention into Americans’ businesses and lives. We can only hope the Mnuchin-led Kudlow, Malpass, & Lighthizer team can control and reverse this damage. We will close with a link to another instructive chart on the present and future global economy. Hat tip, Steve Blumenthal. Think about this trajectory and please consider how and where protectionism fits in. Or where it doesn’t. https://twitter.com/sblumenthalcmg/status/1031121108865622017




Something Fishy

Let’s see. An American company with American employees catches fish. It ships the fish to China. China imposes a tariff or retaliatory tariff when the fish arrives from America.

Market-Commentary-Cumberland-Advisors-Trade

A Chinese company processes the fish and creates frozen fish sticks. The company in China is an American investment, and the labor in China is available at low cost. The American company cannot find that labor force in America even if it is willing to pay a much higher wage cost than it pays to employ Chinese workers.

The frozen fish sticks are shipped back to America. The US imposes a tariff or retaliatory tariff.

You go to the supermarket and buy the frozen fish sticks. The price is higher. That is all that has changed in the fish stick business since the trade war began. Note that American fish exports approximate $1 billion a year.

Folks, tariffs and retaliatory tariffs like this amount to a sales tax imposed on the American consumer and a penalty imposed on American companies with American workers.

Peter Navarro, trade war adviser to POTUS, please explain this policy that you are scripting in the name of the national security of the United States.

Readers, ask your congressional representative and your Senator why they have delegated their congressional responsibilities to POTUS. Raising tariffs and taxes is a job that historically belongs to Congress. Letting a POTUS, any POTUS, impose tariffs unilaterally under a dubiously broad definition of “national security” seems a little fishy to me.

For details on the tariff impacts on the fish industry, see “Fish Caught in America, Processed in China Get Trapped by Trade Dispute” (https://www.wsj.com/articles/u-s-seafood-industry-vulnerable-to-tariffs-aimed-at-china-1533812400). The whole story of tariff impacts on food production and on consumers is, of course, much broader. As China Daily recently tweeted, “US farm sector will suffer greatly due to the loss of the huge Chinese market.” (See tweet and attached video report: https://twitter.com/chinadailyusa/status/1028090398160314368?s=11.

Trump is, of course, zapping the world with tariffs like a sorcerer’s apprentice, drawing upon powers he believed to be vested in him by the sorcerer’s hat of Section 232 of the Trade and Expansion Act of 1962. Section 232 “allows the president to adjust imports without a vote by Congress should the Department of Commerce find evidence of a national-security threat from foreign shipments.” (See https://www.bloomberg.com/news/articles/2018-05-24/trade-as-national-security-issue-here-s-the-u-s-law-quicktake.) Defining all sorts of things as matters of “national security” broadens the president’s powers far beyond the likely intentions of those who enacted the act in 1962, and it supplants the role of Congress.

There is at least one substantive effort afoot to ensure congressional oversight of the president’s use of Section 232: https://www.rollcall.com/news/politics/corker-unveils-plan-give-congress-power-stop-trump-trade-actions.

As the Trump–Navarro trade war heats up and its impacts widen, Bloomberg reports trouble on a different front: “Walt Disney confirms that its Winnie the Pooh movie Christopher Robin has been denied release in the world’s second-biggest film market” (https://bloom.bg/2MhiX1e). We leave it to readers to decide whether the banning of the film has to do with the trade war or perhaps with memes likening President Xi to Winnie the Pooh.

My point is that trade war has many dimensions. It is hurting American business and costing American jobs and raising America’s consumer prices. It is a failed policy crafted by POTUS’s trade adviser Peter Navarro, who is seen by many as a fringe and extreme economic professional. His early forecast and his promises for this Trump policy are being proven wrong by outcomes, as we now have the US facing growing dislocations.

But will Navarro have his way? Bloomberg reported that Mnuchin and Kudlow and Lighthizer were in the last negotiation with Chinese, and Navarro was not in the room. He was huffing loudly outside:

“Tired of the confusion, China asked the U.S. for one person with whom to negotiate economic matters. Trump designated Mnuchin to be the point person, which, according to multiple sources, was fine with Chinese officials, who preferred dealing with the moderate Treasury secretary. But in May, when Mnuchin traveled to Beijing for negotiations, Trump also dispatched Ross, Lighthizer, Navarro, and Kudlow to accompany him. (A Treasury spokesman says Mnuchin asked Ross and Lighthizer to join.) Predictably, there were tensions within the U.S. delegation. A White House official says Mnuchin and Navarro argued repeatedly, including in rooms where the Chinese could hear them.

“Their dispute, two sources say, escalated when Mnuchin insisted on meeting one-on-one with Chinese Vice Premier Liu He, President Xi Jinping’s chief economic adviser. Navarro wandered around outside sulking.” (https://www.bloomberg.com/news/features/2018-08-09/how-to-be-trump-s-treasury-secretary-starring-steven-mnuchin)

One senior official characterized the conflict between Mnuchin and Navarro over US trade policy with China as “a terrible mess,” according to a May report in Politico: https://www.politico.com/newsletters/morning-money/2018/05/17/navarro-situation-a-terrible-mess-221249.

These reports suggest that Navarro could soon prove a casualty of his own failed policy, and that Trump will soon alter the trade war bellicosity as he realizes that the collateral damage threatens the Republicans in the midterm elections. Meanwhile, trade war effects continue daily and will show up soon in macro numbers. Our hunch is that US GDP, profits and earnings growth rates peaked in Q2. We have a cash reserve in US ETF and US core ETF portfolios.

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




Whack a Mole

In the latest on US trade policy, we are now starting to see the economic consequences of starting a tariff war. Farmers have been complaining that they are being hurt irreparably by the imposition of tariffs in retaliation for the tariffs being imposed on China and our allies. The Trump administration is now proposing to employ $12 billion in emergency funds from the Department of Agriculture to subsidize losses of US farmers resulting from the imposition of retaliatory tariffs, specifically on soybeans, pork, sorghum, corn, wheat, cotton and dairy products, just to name a few.

Market-Commentary-Cumberland-Advisors-Trade

What is clear is that the expenditures are not subject to congressional approval. The administration is employing the Depression-era facility called the Commodity Credit Corporation (CCC) established to fund payments to farmers as part of a three-part program that includes direct assistance, the purchase of surplus agricultural products (1), and trade promotion of agricultural products. Two things are missing so far from the discussion of the bailout program. First, there is no mention of when payments will be made or the process by which these payments will be apportioned and paid. Second, since the funding authority under the CCC is capped at $30 billion, we don’t know if this is just the first tranche of future draws.

Not only should Congressional approval be sought for such a program; but also this is only the tip of the iceberg, because the administration has imposed tariffs on many other products, like steel, autos, and electronics, whose producers will also be hurt. Will a life raft be given to Harley-Davidson? Where will the additional emergency funds to help those firms come from – if they come at all?
We now see that not only will taxpayers pay for the misguided approach to adjusting trade barriers in the form of higher prices of goods at home, but this use of taxpayer funds to rescue farmers evidences the administration’s willingness to divert funds from other priorities to fund its trade war. To be sure, the payments to farmers smell of pure politics, since those hardest hit live in states that supported the president in 2016. Does this imply that help will only be extended through the mid-term elections?

Given that only emergency funds are being used on what the administration claims to be a one-time expense, the political claims of others who are being or will be hurt can’t be far behind. And because funds are limited, the administration will be picking winners and losers as it subsidizes some products but not others that have been targeted for retaliatory tariffs. Will funds to support Detroit automakers and US steel producers be available on the same terms and in as timely a fashion?

A more measured strategy to rationalizing trade relationships, one that permits affected parties to adjust, would seemingly involve first working with allies to resolve differences there and then turn to identifying and addressing critical issues, such as the restrictions that China has imposed that have transferred US intellectual property to their domestic industries. The meeting President Trump had yesterday with European Commission president Jean-Claude Juncker and the kind of process and organization that appears to have been agreed upon as a path forward is exactly the kind of baby step that should be taken first. Negotiations that are coordinated with and supported by our allies are sure to be more powerful and less disruptive than attacking both allies and abusers alike and then backfilling with bailouts. We can only hope that this most recent turn represents a more considered strategy going forward.

Robert Eisenbeis, Ph.D.
Vice Chairman & Chief Monetary Economist
Email | Bio


(1) For background on the CCC see https://fas.org/sgp/crs/misc/R44606.pdf


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




Bloomberg Radio Interview: David Kotok Discusses Trade, Business with China, Potential for an Inverted Yield Curve, & Outlook for Growth

David Kotok  joined Bryan Curtis and Rishaad Salamat to discuss trade and recent company moves to downplay levels of business with China. He moves onto the potential for an inverted yield curve and the outlook for growth.

Excerpt: “The Chinese have a very firm position and it appears, will not bend. We started this and they will match us toe to toe.”

LISTEN HERE: https://www.bloomberg.com/news/audio/2018-07-19/secondary-effects-of-trade-war-only-just-surfacing

NOTE: Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.


If you like podcasts, check out this one from 2015 featuring David Kotok talking about his background and Camp Kotok with Barry Ritholtz. They also talk about the history of Cumberland Advisors since its founding, and delve into fundamental principles of investing and valuation.


Links here
https://itunes.apple.com/us/podcast/masters-in-business/id730188152?mt=2

And here
http://www.bloomberg.com/podcasts/masters-in-business/




Financial Adviser Outlines Uncertainties About the Direction of the Economy

Financial Adviser Outlines Uncertainties About the Direction of the Economy

David Kotok, the chairman and chief investment officer at Sarasota’s Cumberland Advisors, recently shared his insights into the global economy.

Excerpt below:

According to business leaders Kotok spoke to, many endorse the Trump administration’s policies on taxes and deregulation, but are concerned about the possibility of future trade wars.

Read the short blurb at Sarasota Magazine or read the recent commentary they link to here: www.cumber.com/western-trip-part-1/