Good morning. Well, the week started off on a positive note … but that was before sharp auto tariffs were announced, our neighbor to the north broadcast that the U.S. could no longer be seen as a reliable partner, the President mentioned that “we have to have” Greenland … not ruling out military force, and furor increased over military plans discussed in a group-chat that made its way to an unintended target. Even so, there could be a small bit of light appearing through the clouds as Bloomberg reports the EU is identifying concessions which might bring down tariffs scheduled to be implemented next week … leaving some to wonder if threats made to trading partners actually do help level the playing field. An inflation number came out this morning which was higher than expected … causing immediate market decline … as it is seen as the Fed’s “preferred inflation gauge.” I don’t know … the Fed has a problem … as cutting rates could drive up inflation, but the economy does not seem to be in the best shape right now and economists are starting to call for contraction during this quarter … which, by itself, could lead to a rate cut. I’m so confused. And tariffs? I don’t care what some politicians claim … these are basically akin to taxes and not entirely absorbed by the exporting country … taxes that add cost to items that have already seen prices spike. But at least eggs prices are lower. One report this morning shows retirees digging deeper into retirement funds, and the present situation does cause a bit of alarm. It is often said that a 4% withdrawal is “safe.” But let’s say a retiree, focused on this, starts off January with $1 million … and draws down $40,000 a year (4%). If the portfolio drops by 10% and their “nest egg” reduces by the same amount …then they will either need to withdraw 4.44% (thwarting their plan) or reduce the amount taken out to $36,000 … and with rising prices, good luck with that. And with discussion of a possible future cut in payout … well … I myself am starting to wonder if I can work until the age of 90. That about wraps it up for me today … as I am heading next door to comfort a neighbor whose cat died. They asked if … like dogs … all cat’s go to heaven … and I told them not immediately … as they most likely make a stop in … … purr-gatory. Have a great day, Joseph G. Witthohn, CFA Have any questions? Please contact info@teamemerald.com
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