And So The Pendulum Swings

In order to find neutral ground, we are going to witness tests of the extremes. The human experience in the age of internet demands a more rapid response time for our need of instant gratification. Unfortunately it leads to errors in judgement when long-term goals are interrupted by short-term desires.

Populist protectionist strategies fall into that category. Whether it is just a negotiating strategy or a misguided belief for economic betterment, the perpetrators will likely not be around for the final results. That means that our children and grandchildren will bear the brunt of the eventual fallout.

Lower productivity, reducing economic potential and higher prices for goods and services will create a new era of stagflation as interest rates are raised to fight inflation in a world where debt levels are concerningly high.

Regardless of the current economic picture, which is in the very late stages of the cycle (low unemployment levels, high consumer confidence), akin to extra innings in a baseball game and appears on the surface to be safe, it is nothing like that: one more "swing and a miss" and the game could be over. The latest on the trade front could be the catalyst.

If you don't remember the 1930's, specifically the words "Smoot-Hawley", have a peak.

Hopefully, it is all just bluster and negotiating tactics, in which case some quick resolution will follow. However, our mantra at High Rock is "hope for the best, prepare for the worst".

Over exposure to cash (or cash "equivalent") and longer dated maturity AAA government bonds are probably the best way to be protected.

Are you protected?