Good morning.

Swords are typically made of steel, so I figure it appropriate to note that the proposed tariff on steel could cut both ways … as many affected regions are promising retaliation … which could lead to an all-out trade war.  Of course, the result could be a “Pyrrhic Victory” … the history lesson for today … in which the “winner” suffers greatly … along with their opponent.

Such might be the case with tariffs, as rising prices could well cause economic injury … and investors this morning are taking notice.

What also might drive the mood of investors over the next couple of sessions are statements by Fed Chairman Powell, addressing the Senate Banking Committee today (telling them the Fed is in no rush to cut rates) and the House Financial Services Committee tomorrow.  While once focused on reducing rates, the unknown result of the tariffs (on both imports and exports) certainly makes the job of the FOMC more difficult … especially since every few days there seems to be a possible economy-moving surprise announcement.

Sleep for Fed governors cannot come easy.

Meanwhile, if out shopping today … if you happen to be lucky enough to find eggs … know that your purchase might be limited.  The major stores are now starting to control the amount you can buy … and it might only be a matter of time before a trick from the 1970’s is repeated, where you can only make purchase on certain days depending on something like your birthdate. Relax, that was a joke … but I would not be shocked at all if some politician suggests such a move.

One of the most interesting moves, which appears money-saving on its face, is the White House announcing the stoppage of minting pennies … but there is a bit of a problem, as while it costs over three cents to make a penny … it costs well over 13 cents to make a nickel … which some see as a round-up alternative.  Should we get rid of small denomination coins as a whole?  By the way it supposedly costs less than 6 cents to make a dime.

Should we continue to “make” pennies and nickels at far higher costs than their value?

I don’t know a good plan for substitution …

… but what we have been doing up to now …

… just doesn’t make cents.

Have a great day,

Joseph G. Witthohn, CFA

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