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  • White House says 'no recession in sight' despite market turmoil
    White House officials pushed back on Sunday against concerns that economic growth may be faltering, saying they saw little risk of recession despite a volatile week on global bond markets, and insisting their trade war with China was doing no damage to the United States.
  • U.S. whiskey exporters struggle after year of EU tariffs
    When Europe's tariffs on U.S. whiskey hit in June 2018, craft distillery Mountain Laurel Spirits LLC lost 10% of its sales overnight as its European distributor simply stopped buying its award-winning Dad's Hat Pennsylvania Rye Whiskey.
  • Ferrari will expand its lineup of road cars, but not too much
    Italian premium sports car maker Ferrari NV will expand sales of easier-driving grand touring cars, but will not try to chase rival Porsche's annual sales volume, Ferrari Chairman John Elkann told an audience of classic car enthusiasts gathered at this storied golf resort on the Pacific coast.

Roller Coaster Stocks
DonEdwards web

After a strong first quarter, global stock markets gave us increased volatility during the second quarter before finishing the quarter with solid gains. Stocks were strong in April, suffered a large sell off in May, and rebounded once again in June. Bonds were much more stable, following up a good first quarter with more gains during the second quarter. Mixed economic data and heightened trade fears left investors unsure of where the economy is headed, which increased volatility.

We talked in our last letter about the yield curve inverting briefly during the first quarter and the possible implications of this. The yield curve inverted again in late May and remains inverted to this day. This happens when yields on short term bonds are higher that they are on longer term bonds. This rarely happens and is often the signal that an economic recession is looming. In fact, the last seven recessions in the U.S. have been preceded by an inverted yield curve. It is worth noting that the bond market is much better at predicting the economic future than the stock market is. There is an old adage on Wall Street that is worth remembering: Never ignore an inverted yield curve.

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