Good morning.
This has been a difficult month with high levels of uncertainty.
The concurrent declines in the U.S. dollar and S&P 500 are part of a trend that has swept markets since the broad and steep tariffs were announced.
The most recent pullback was particularly broad, with just a few stocks in the S&P 500 up and not a single member of the Dow Jones Industrial Average moving up.
The U.S. dollar has fallen roughly 5% against the euro since April 2, as well as against the yen, while gold prices have surged.
Treasury interest rates are rising, and inflationary pressures still alive, so the Fed is unlikely to cut benchmark rates despite or because of pressure from the White House.
In short, to protect gains and capital, we should continue to raise cash and rebalance towards Europe, international stocks and bonds, as well as hard assets, dividend and resource stocks while remaining alert to trading opportunities.
We will get through this by becoming more conservative, value-oriented, and international investors.
Washington needs to reset, focusing on protecting its brand of “dynamic stability,” fiscal discipline, and anchoring strategy and tactics on the U.S.-China rivalry.
I look forward to discussing all this and more in person in August at the Cabot Wealth Summit.
Best regards,
Carl
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