Stocks traded mixed thanks to pending trade talks between the US and China but closed the day with a loss of 95 points to 26,478 on a 5% decline in trading volume. Early market upside came via White House economic advisor Larry Kudlow saying trade talks with China were set for Oct 10th but then word got out that the Chinese were uneasy about some US demands and the Dow went negative.
Many gurus are looking at negative interest rates and asking the question: What does it all mean? Investor’s Business Daily or IBD wrote an article on it and basically said that while it is intended to stimulate economic activity the evidence is mounting that it is having the opposite effect for several reasons. One is that zero or negative rates could encourage gubment debt because it reduces interest costs associated with added debt. Negative rates also hurt pensions by lowering returns and increasing pension deficits and seems to encourage a high savings rate since people and pensions need to sock more away to offset the loss of interest income. Some retail savers also pull money from bank savings which erodes banking deposits. One winner is home builders since cheap mortgage rates make houses more affordable, but overall there is evidence that negative rates do not always stimulate lending and capital investment by business. We will be tracking unchartered waters of negative rates and keep you updated if it starts to affect the investment arena.
The Scouts had a great time this weekend. Unfortunately, the weather was perfect! We had hoped for rain, but it was sunny and crisp. Roughly 35 scouts partook of shooting, rock climbing, rappelling and archery. They did patrol cooking and held a big campfire with skits followed by dutch oven cobbler. The girls did great as it was the first time they had been on a rifle range or rappelled down a cliff. Scout leadership kept the lunkheads in line and no one did anything stupid. A beautiful old ponderosa pine tree had fallen sometime during the summer next to where we camp and some scouts counted rings and figured the tree was 287 years old. See the Facebook page for pictures.