C4 Business The Boston Globe TUESDAY, AUGUST 6, 2019
25THEBOSTONGLOBEIndexof publicly tradedcompaniesin MassachusettsThere wasn’t much to smileabout after Monday’s massive
sell-off on Wall Street — the worst drop of 2019 — as inves-
tors becomeincreasingly alarmed about fraying US-China
trade relations. Bright spotswere hard to find in the day-
long scrum. Gold prices, a fear barometer, jumped. The
Japanese yen and Swissfranc, long safe harbors, advanced.
‘‘They are viewed as safe havens when the world falls to
pieces because these countries are politically stable,’’ said
Joachim Fels, chief economic adviser at Pimco. Utilities, an-
othergo-to sector in times of stress, edged into positive
territory before succumbing and turning negative late in
the day. Investors also flocked to the safety of the 10-year
US Treasury bond, evidence of a loss of faith in stocks
altogether. The losers were everywhere. Most stocks. Tech-
nology. Retail. Oil prices, down. Natural gas, down. Stodgy
value stocks like Verizon, Procter & Gamble,PepsiCo, and
Johnson & Johnson were hurting, but not as muchas such
tech stalwarts as Apple, Visa, Facebook, Microsoft, and
Google-parent Alphabet. Technology companies, as a
whole, accounted for a major shareof the day’s losses.
MarketsStocks suffer worst day of 2019
DOW JONES industrialaverage
NASDAQComposite index
S&P 500 index
Globe 25index
SOURCE:BloombergNewsstopped making purchases of US ag-
ricultural goods, which the Trump
administration has beenseeking to
boost.
Then, after the markets closed
Monday, the Treasury Department
ratcheted up the dispute further, la-
beling China a currency manipula-
tor.
Deepinto July, stocks had been
tradingat record highs, thanks to
hopes for a trade deal, which
seemed possible as recently as a
week ago. Now the two sides have
entered a new, more dangerous
phase of the confrontation: curren-
cy warfare.
“The response of the equity mar-
kets over the last several days to the
reignition of protectionist trade pol-
icy by the Trump administration to-
ward China has been incredibly
negative, and not without reason,”
ShannonSaccocia, chief investment
officer at wealth manager Boston
Private Financial, said in an e-mail.
“The economic impact of this poten-
tial next roundof tariffs could be
meaningful, as the goods subject to
the next roundare consumer fo-
cused.”
In March of last year, Trump
tweeted “trade wars are good, and
easy to win.”
That was early in his attempt to
close the trade gap with China and
end unfair tactics such as requiring
transfers of US technology to Chi-
nese partners. While most investors
and economists dismissed the presi-
dent’s tweet as nonsense, they
agreed China’s trade practices were
a problem that neededto be ad-
dressed.
The $200 billion worth of tariffs
Trump ordered in July 2018target-
ed goods mostly used by companies
to make other products. But last
week, after a brief round of talks
yielded no progress, Trump an-
nounced a 10 percent levy on $
billion of Chinese products, every-
thing fromsneakers to cellphones.
He made the movedespite opposi-uEDELMAN
ContinuedfromPageA 1tion fromsome top advisers, accord-
ing to The Wall Street Journal.
The reaction on Wall Street was
overwhelmingly negative. The econ-
omy isn’t growing as fast as it was
when the trade spat started. There
islessroomforerror—afactac-
knowledged by the Federal Reserve
last weekwhen it approved a quar-
ter-point rate cut as insurance
against damage from the trade
fight.
“Tariffs are taxes; it is as simple
as that,” said Luke Tilley, chief econ-
omist at Delaware-based Wilming-
ton Trust. “Raising taxes reduces
economic growth, just as the tax cut
package boosted growthin2018.... First-order impacts of the
tariffs wipeout a substantial por-
tion of the tax stimulus that had
been created.”
So what happened on Monday?
China allowed its tightly man-
aged currency to fall below 7 ren-
minbi to the dollar, a symbolically
important move that could make US
products even less competitive
againstChineserivals.Thepresi-
dent accused China of deliberately
weakening its currency to gain an
edge in export markets. China
blamed Trump for “unilateralism
and trade protectionism.”
Investors just ran for the hills. A
weaker renminbi could prompt oth-
er exports-dependent countries to
devalue their currencies,leading to
a race to the bottom that causes a
global recession.
Stocks fell sharply at the opening
bell — at one point, the Dow was
down more than 960 points. When
the dust settled, the market closed
at 25,718, 6 percent below its recent
record. The broaderStandard &
Poor’s 500 fell 3 percent to 2,845.
Stocks also tumbledin Europe, Ja-
pan, and China.
“The escalation dashes any hopes
of a trade deal any time soon,” said
Milton Ezrati, chief economist at fi-
nancial communications firm Vest-
ed. “It also makes moreimmediate
and severe the damage this dispute
will have on the US economy.”
The yield of the benchmark 10-
year Treasury note to fell to 1.
percent, the lowest since before
Trump’s election and a giant red flag
that bondinvestors see increasing
oddsof a recession. In a switch from
last week, investors are betting the
Fed will cut rates several more times
this year in hopes of avoiding a hard
landing.
Then came the formal US decla-
ration that it considers China a cur-
rency manipulator, a largely sym-
bolic movethat nonetheless escalat-
ed the fight once more. S&P futures
markets slid in early Asian trading
for Tuesday.
There are benefits to falling in-
terest rates: mortgages and credit
card borrowing are cheaper for con-
sumers, and businesses can get
cheaper loans for expansion. And
some investors aren’t convinced a
downturnis inevitable.
“We have the power to out-
spend, certainly in the near-term,
any adverse effects fromChina,”
said Jason R. Escamilla, chief execu-
tive of ImpactAdvisor LLC, a San
Francisco-based financial adviser.
“And I am less concerned that the
net effect of all this will be higher
new tariffs over the longer term. It’s
too easy to cut a mutuallybeneficial
deal as this escalates.”
That’s true. If Trump and Chi-
nese President Xi Jinping can step
back from the abyss, they would
take a lot of pressure off their econo-
mies and financial markets. But
that’s a big if.
“What will happenas a strong-
willed US president tries to face
down a small cabal of ‘hard to read’
leaders[in China?]” said Warren
Ward, founder of Warren Ward As-
sociates, a financial advisory firm in
Columbus, Ind. “No one knows.”
Markets hate uncertainty. Expect
more ugly days like Monday until
the trade picture gets a lot clearer.You can reachmeat
[email protected]
followmeon Twitter
@GlobeNewsEd.Currency tiff new front in trade warBut in May 2018, Jacobson
handed the CEO role at Workbar to
Sarah Travers, a formeremployee of
Regus, one of the biggest players in
shared offices. He became a board
member. Plans started to take shape
— often discussed onboard the
Vanish.net.
“I wanted to sail in the Pacific
Ocean,” Jacobson says. “The climate
is changing, and the ocean has been
changing since our 2002trip. It will
change again by the time my kids do
something like this again — if they
do. We talked about doing a bunch
of ‘citizen science’ projects with the
kids along the way,” to learn about
climate change and how it affects
sea creatures.
As for himself, Jacobsonsays he
wasn’t exactly burned out, but after
handing the reins to Travers, it felt
like “a good time to clear my head
and get some world perspective.”
“The kids at somepoint were just
like, ‘Dad, tell me if we’re doing this
or not,’ ” Jacobson says.
He and Bushey looked into how
a yearlong trip would affect their
children’s school progress. (Both at-
tend Boston Latin School.) Bushey
arranged to take a leave from the
firm. Jacobson found a used 2007
boat for sale in Denmark that
looked suitable for the trip.
“It’s a strong, oceangoing boat,
made in Denmark by a company
called X-Yachts,” Jacobson told me
over lunch in the Back Bay last
month, after his trip to Scandinavia
to check on the last-minute prepara-
tions and some upgrades at the
boatyard. Those included new navi-
gational gear and solar- and hydro-
power generators, both renewable
sources of electricity.
He and Bushey rented out their
place in Charlestown, sold the fami-
ly car, and found a caretaker for the
cat, Freckles, who didn’t seem to
love sailing as muchas everyone
else did. (They tried.) The four fami-
ly members arrived in Denmark late
last month and took the boat,
dubbed Verbena, out for a for a few
short shakedown sails.
The plan was to depart from
Haderslev, Denmark this week, but
stay close in case there was a need
to return to the X-Yachts factory.uINNOVATIONECONOMY
ContinuedfromPageCThen, to the Netherlands, England,
Spain, and Portugal.
“What they say about the route is
that you go south until the butter
starts to melt — to Portugal and the
west coast of Africa — and then you
turn right,” to headtoward the Ca-
ribbean, Jacobson explains. From
there, the plan includes a trip
through the Panama Canal, around
January, and visits to the Galapagos
Islands, Tahiti, and Fiji. It concludes
in Mackay, Australia, near the Great
Barrier Reef.
Jacobson hopes to sell the boat in
Australia and have everyone back in
Boston for the start of the 2020
school year.
Like the entrepreneur (and elec-
trical engineer) that he is, Jacobson
has some ideas he wants to develop
while at sea. Among them: “Can we
make a different style of autopilot
for boats that uses the video input
from cameras that look at the shape
of the sail?” It would make course
adjustments the way sailors do,
potentially improving on the accu-
racy of autopilot systems.
And as someone who has built a
network of shared workplaces for
dozens of people who work on dif-
ferent projects, Jacobson is interest-
ed in developing new technology so-
lutions for those heterogeneousworkplace communities.
His daughter and son, 12 and 14,
will be working on a distance-learn-
ing curriculum from a company
called Oak Meadow, as well as
studying ocean plastic levels, zoo-
plankton, and sea water chemistry
by taking surface samples and mea-
surements.
When you’re returning to work
after Labor Day, Jacobson and his
family are likely to be transiting
Germany’s 60-mile Kiel Canal, on
their way to Amsterdam.
Jacobson says he’s still on the
hunt for an experienced sailor or
two to join the family in November,
when they cross the Atlantic, and in
March, on the trip from the Galapa-
gos to the Marquesas Islands in
French Polynesia. Both are at least
two-week passages, so Jacobson
says “it’s unlikely we’ll do it with
someone we don’t already know, but
it may be fun to see what comes out
of the article.”
He’d also be happy to see friends
from the Boston tech community in
the various ports they’re visiting.
You can follow along, or get in
touch, at http://www.sailverbena.com.Scott Kirsner canbe reached at
[email protected]. Followhimon
Twitter @ScottKirsner.Adventure,educationawait onhigh seasBILL JACOBSON‘What willhappen asa strong-willedUSpresidenttriestoface downa smallcabalof‘hardtoread’leaders[inChina?]Nooneknows.’WARREN
WARD,Warren
Ward AssociatesThe route
plannedfor the
Verbenais an
estimated
distanceof
17,000miles.
Bill Jacobson
(above)
hopesto sell
the boat in
Australia after
the voyagesare
overand have
his children
backin Boston
for the start of
the 2020school
year.