A word once let out of the cage cannot be whistled back again.      Horace (65-8 BC)

In every class there is usually the quiet, studious, smart shy individual.  Offsetting that person is the attention getter, the class clown, the show off, the drama king (queen).  Both types have their individual characteristics which are attractive and some which need to be worked on.  If you were applying these delightful descriptions to individuals who are leading the current United States government, the former applies to Federal Reserve Chairman Jay Powell.  I don’t have to tell you who the latter fits.  Over the course of the last week, the mercurial one, his Trumpiness, decided to put his two cents in on the status of a campaign promise, that being tariffs for foreign goods. Specifically, now is the time to implement a 25% penalty on all foreign made steel and 10% levy on aluminum.  Mr. Powell was plain spoken and direct with the loquacious and speech making members of both houses of Congress, clearly something they are not used to.  In sum, market participants heard every word from both leaders and decided they were not impressed, not at all.  So guess what they did?  Yes, indeed, they sold.  Equity markets were down about 3% for the week, although they did recover some losses on Friday.  With nearly every economic indicator in good shape, companies making plenty of dough, and balance sheets flush, domestic investors will probably reconsider things, and over time, realize the nature of the rhetoric and whom it comes from.  What about the rest of the world and our fellow trading partners?

Specifically, the other participants in NAFTA, our friends to the north and south, aren’t too pleased, not at all.  Remember, though, we are in the midst of trying to renegotiate the terms of that agreement.  The mercurial one is wily and most certainly could be attempting to strike a better deal in the new NAFTA.  He even got the Ohio representative from the House, a democrat no less, to agree with his position.  As for Europe, already there are threats of retaliation, and also from China, which as the holder of trillions of our debt, is the most important trading partner to be concerned with.  We also have to pay attention to the effect on currency markets, as exchange rates can fluctuate dramatically in the blink of an eye.  Yes, if the rest of the world wasn’t paying enough attention to someone who clearly demands it, deserved or not, well, you can be sure they are now.

As for the rest of us who have the pleasure and privilege of living in the good old US of A, this weeks speaks to the importance of having a well diversified portfolio which is full of well run, highly profitable companies in a variety of sectors.  Clearly, commodity based ones like steel is not going to be part of the mix.  Oil related ones are, and speaking of the topic, energy suffered over the last few weeks.  Still, with a renewed emphasis on capital efficiency and return on capital, many investors, including myself, remain pretty confident on having exposure to the group.  In other market news, the retail area showed some life with positive earnings reports from Macy’s, Kohl’s, and the Gap, but not so much from Foot Locker.  Next week Target and Costco will weigh in with their figures.  In the media space, Spotify filed its prospectus for an IPO and it is growing fast with nearly 100 million users, but loses a bunch of money.  With Apple Music gaining traction, the Spotify IPO is not for the faint of heart.  Iheartradio will probably be filing for bankruptcy this weekend, and you know who is in the mix as he has reportedly been buying up the debt and even made a late offer to buy the entity.  Stay tuned on that one.
  
In the political realm, as opposed to an era of empty rhetoric by the do nothing crowd in charge (politicians), the private sector came to a decision on the gun issue when Wal Mart, Dicks Sporting Goods, REI, and others decided against automatic rifles and selling to 21 year olds or below.  About time.  It also speaks to the difference between the decisiveness and efficiency of private markets versus the public sector, but clearly that is my opinion as well, so take it with a grain of salt. Sunday, Italy will have an election and the question is whether the outcome will prove anti-Euro, or not.  Most believe the ruling coalition will be put together of people who will want to see Italy in the Euro zone.  Clearly, the last week was also interesting in terms of who was coming and going in Trumpworld.   Why would we expect any different as it has been his modus operand i for the last thirty years.  Regardless, the spoken word merits our attention, which is as true today as it was thousands of years ago.
  
Thank you for reading the blog this week, and if you have any questions about investing, please email me at information@y-hc.com.  Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one's overall financial situation.  The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantees financial returns which exceed those of a market index.