Almost 25 years after the U.S. began deploying major parts of its national missile defense system, the technology of detecting and intercepting ballistic missiles has come a long way.

Earlier this year, President Trump unveiled the "Golden Dome" missile defense system, which builds on technological developments that greatly enhance the ability to both detect and intercept missiles launched against the U.S.

But inbound missiles aren't the only airborne threat Americans face.

We are of course referring to the mosquito, often considered to be the deadliest animal on Earth, if not also one of the most annoying.

That's why we were excited to learn via Core77 about Bzigo, a company that has taken major steps toward the detection of mosquitoes using technologies one might imagine has only been previously been used for defense against incoming missiles. Their 42-second video introduces their signature product, the Iris mosquito detection system:

While it is capable of tracking flying mosquitoes, it doesn't take them out, leaving that job to you as a vital part of your home's Golden Dome mosquito defense system.

You never saw the market crash coming. When it came, it lasted longer than you would ever have expected. The damage it did seriously dented your retirement savings at the worst possible time for you. Now, your ability to live through your retirement years the way you planned is in jeopardy. What can you do?

Working out how to deal with a worst case scenario like this is among the least fun aspects of financial planning because it casts a gloomy shadow over all that you might have hoped you could do in retirement. Yet if you don't and the worst case scenario for you happens, you'll find out quickly how much more gloomy the experience can be. Thinking about how you might recover from that kind of hit while planning your retirement will at least give you a good sense of what you can do if you need to face that situation. There's comfort in knowing what things you can do.

Previously, we considered a scenario in which the worst case happened, but the two hypothetical investors experiencing it at different points of their retirement years never adapted their retirement spending plans to recover from it.

But what if they did? The analysts at Schwab's Center for Financial Research considered how two different hypothetical investors who started off with the same retirement plan might respond to the worst case scenario of a prolonged market crash at the beginning of their retirement years by changing the rate at which they withdrew money from their retirement accounts while the market recovered. One would withdraw just 2% of their retirement savings per year, while the other would withdraw 4% [1]. The following chart shows the results of this exercise:

Here's what they found:

A rebounding market should help them quickly make up lost ground, right? Unfortunately, not always—those continuing withdrawals can create a strong headwind, with more shares sold to support spending in a down market than would be the case when values are appreciating. But by dialing back his annual withdrawals to 2%, Investor 1 will be back where he started after roughly 11.5 consecutive years of 6% annual gains. With a 4% withdrawal rate, Investor 2 would have to have 28 straight years of 6% gains to fully recover.

Somewhat lost in this discussion is the bigger question of what are each investor's retirement savings for. Is it to preserve and grow the total value of their accumulated retirement savings throughout their entire retirement so that it can be passed on to their heirs? Or is it to provide reasonably sufficient funds to support their living expenses during retirement?

For example, let's say you went from having a million dollars in retirement savings when you started your retirement and dropped to around $650,000 after two years of a market crash. Withdrawing 2% annually could get your retirement account to fully recover after 11.5 years, but would mean pulling just $13,000 to support your retirement in that first year of recovery and similar amounts in future years. You could double that withdrawal rate to 4% and you can have $26,000 in that year, but that would mean an extra 16.5 years before your retirement account might reach $1 million again.

Which outcome matters more for you?

Previously on Political Calculations

• When Is the Worst Time for Your Retirement Savings to Take a Hit?
• What Can You Do If Your Retirement Savings Take a Big Hit?
• Will Your S&P 500 Investment Last In Retirement?
• Cashing Out of the S&P 500
• Can You Afford to Retire?
• How Much Do You Need to Save for Retirement?

Notes

[1] Here is Schwab's hypothetical investing scenario for the two investors recovering from a bit hit to their retirement savings:

The example is hypothetical and provided for illustrative purposes only. It is not intended to represent a specific investment product. Dividends and interest are assumed to have been reinvested, and the example does not reflect the effects of taxes or fees. Both portfolios start with $1,000,000. Both portfolios experience 15% declines in years one and two, while both hypothetical investors also withdraw $50,000 per year. Starting in year three, both portfolios grow 6% per year. Investor 1 withdraws 2% per year. Investor 2 withdraws 4% per year.

Image credit: Recovery Chalkboard by Nick Youngson. Creative Commons CC BY-SA 3.0 at Picpedia.org.

Imagine you've made it to retirement and all that means. No more day job. The extra time to do the things you previously could only do while you were on vacation. Not that you necessarily would pass all your retirement doing those kinds of things, but if you wanted to, you certainly could do a lot more of them than you could when you were working.

There is a catch. Your retirement savings have to last as long as you do after you stop working. That means they will have to weather through things like the stock market's volatility. Volatility that could potentially deliver a hit to your retirement savings.

There's no telling when such a hit to your financial security in retirement might happen, but if you live long enough, chances are you will experience that kind of drama. If you were to take that kind of hit, when do you think it would be best for you to handle it? Early in your retirement when you might have more time to recover from it? Or later?

In other words, when is the worst time to take a hit to your retirement savings and your plans for how you'll live when you're retired?

Analysts at Charles Schwab's Center for Financial Research took on that question. Their answer is visually presented in the following chart for hypothetical investors who start their retirements with the same amount of savings and the same plan of taking $50,000 annual withdrawals that escalate by 2% a year for inflation all throughout their retirement.

The difference between the two scenarios for Investor 1 and Investor 2 is the timing for when their retirement savings takes a big hit. Investor 1 experiences a -15% annual return during each of the first two years of their retirement, while Investor 2 has to deal with the same magnitude hit in their tenth and eleventh year of retirement. Their investments otherwise perform similarly [1].

As the chart reveals, Investor 1 runs out of money in Year 18 of their retirement. Investor 2 however still has quite a lot of their retirement savings left at the same point of time. It is far worse to experience a major hit early in retirement.

Of course, that assumes that neither hypothetical investors ever changes how much they withdraw each year from their retirement savings after taking the big hits they do, which is a different topic for a different day. For now, the important thing is to know that being able to sustain a big hit to your retirement investments in the first two years of your retirement savings is something for which you can and should plan. Remember, the worst case scenario is your retirement savings get knocked down right after you retire. If you don't experience that kind of event until you're well into retirement, you won't have the same risk of your retirement savings running out of money while you need them.

Schwab's Rob Williams offers a suggestion for how to handle the worst case scenario:

One approach is to maintain a short-term reserve of low-risk liquid investments that you can use to cover your expenses while you avoid tapping your stocks.

Rob recommended keeping a year's worth of expenses after accounting for other income sources including Social Security, if applicable, in cash investments and another two to four years' worth of expenses in high-quality short-term bonds or short-term bond funds. This allocation can be included as part of your retirement portfolio. A portfolio in retirement can include a personalized mix of cash, cash investments, short-term and other types of bonds or bond funds, and stocks. With an allocation to cash, cash investments, and short-term bonds in place, you may feel more comfortable about having a decent chunk of stocks on hand that can generate growth later.

There are a lot of ways allocate funds to function as a relatively safe reserve and there's not by any means a one-size fits all way to do it. Setting up such a stormy weather reserve as part of your retirement plan can give you a better ability to handle a major market downturn by helping you avoid having to otherwise deplete your retirement accounts too quickly to pay your living expenses in retirement.

Notes

[1] Here's the fine print from Schwab's hypothetical investing scenario for the two investors:

The example is hypothetical and provided for illustrative purposes only. It is not intended to represent a specific investment product. Dividends and interest are assumed to have been reinvested, and the example does not reflect the effects of taxes or fees. Both hypothetical investors had a starting balance of $1 million, took an initial withdrawal of $50,000, and increased withdrawals 2% annually to account for inflation. Investor 1's portfolio assumes a negative 15% return for the first two years and a 6% return for years 3 – 18. Investor 2's portfolio assumes a 6% return for the first nine years, a negative 15% return for years 10 and 11, and a 6% return for years 12 – 18.

Image credit: Worst Case Scenario Chalkboard by Nick Youngson. Creative Commons CC BY-SA 3.0 at Picpedia.org.

The rate at which carbon dioxide is accumulating in the Earth's atmosphere slowed in June 2025, reversing a brief uptick in the previous month's data. The change resumes a downward trend that has been in place since the end of 2024.

This period coincides with slowed output within China's economy. Much of this negative change occurred in response to new and expanded tariffs and trade sanctions imposed by the United States. 2024 had seen elevated carbon dioxide emissions arise out of China as the nation's factories rushed to meet orders for goods to beat the clock on the outgoing Biden administration's final trade restrictions and expanding tariffs expected to take effect in January 2025.

In April 2025, the Trump administration rolled out its global tariff program, which continued the downward pressure on China's industrial sector. Reuters describes several of the factors contributing to the nation's reduction in CO₂ emissions:

The latest tariffs imposed by U.S. president Donald Trump on Chinese products have impacted the demand for China-made goods and caused production lines to slow down across a variety of manufactured items.

The overall energy needs of these industries have been reduced by the slower pace on construction sites and production lines in factories. This has allowed power generation companies to reduce their production.

These dynamics have shown up in the pace at which carbon dioxide accumulates in the Earth's atmosphere because China is, by far and away, the world's largest producer of CO₂ emissions. The following chart shows how the trailing twelve month average of the year-over-year change in the concentration of atmospheric carbon dioxide measured at the remote Mauna Loa Observatory has evolved from January 2000 through June 2025:

Because the industrial sector of China's economy has slowed so much since the end of 2024, the reduction of demand for electrical power is expected to reduce China's CO₂ emissions to a "record low". Here's Reuters again:

China's utilities have been able to achieve record-low emissions in the first half of 2025 by focusing on clean energy supplies.

According to the energy portal, electricitymaps.com, carbon dioxide emissions per Kilowatt Hour (kWh) of Electricity averaged 492 Grams during the first half of 2025.

This was the first time a reading under 500 grams per kWh had been recorded. It is also down from 514g/kWh in the same period of 2024, and 539g/kWh between January and June 2023.

With a large portion of its industries running at reduced capacity, China has been able to use a larger share of its renewable energy sources to provide power, reducing its CO₂ emissions by significant amount. Reuters indicates however that an improvement in fortune for China's industrial sector will reverse that achievement:

China's power requirements will rise if the manufacturing and construction sectors recover. This will lead to a return of fossil fuels that emit pollution.

If China's economy is still slowed by the construction debt and the tariff concerns, then the use of fossil fuels could be further reduced, which would lead to further emissions reductions from the power sector.

Carbon dioxide is not the only kind of emission that is being reduced. The reduction of China's economic output during 2020's Coronavirus Pandemic also reduced emissions of aerosols, which a new study indicates contributed to an acceleration of global warming. Here's the abstract from the recently published paper:

Global surface warming has accelerated since around 2010, relative to the preceding half century¹–³. This has coincided with East Asian efforts to reduce air pollution through restricted atmospheric aerosol and precursor emissions₄–₅. A direct link between the two has, however, not yet been established. Here we show, using a large set of simulations from eight Earth System Models, how a time-evolving 75% reduction in East Asian sulfate emissions partially unmasks greenhouse gas-driven warming and influences the spatial pattern of surface temperature change. We find a rapidly evolving global, annual mean warming of 0.07 ± 0.05 °C, sufficient to be a main driver of the uptick in global warming rate since 2010. We also find North-Pacific warming and a top-of-atmosphere radiative imbalance that are qualitatively consistent with recent observations. East Asian aerosol cleanup is thus likely a key contributor to recent global warming acceleration and to Pacific warming trends.

It's not yet clear how economists and environmentalists feel about the role of tariffs operating as a de facto carbon tax that reduces carbon dioxide emissions along with economic activity or to the reduction of the emissions of aerosol pollutants and the resulting cleaner air contributing to global warming.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Online Data]. Updated 14 July 2025.

Samset, B.H., Wilcox, L.J., Allen, R.J. et al. East Asian aerosol cleanup has likely contributed to the recent acceleration in global warming. Commun Earth Environ 6, 543 (2025). DOI: 10.1038/s43247-025-02527-3.

Image credit: Friedlingstein, Pierre et al. Global Carbon Budget 2024. GtCO2 slidedeck PDF. 14 March 2025.

The S&P 500 (Index: SPX) kept marching on to new heights in the trading week ending on Friday, 18 July 2025. The index hit a new record high of 6,297.36 on Thursday before dipping to 6,296.79 to end the week about 0.6% higher than the previous week's close.

That's despite the ongoing debate among Federal Reserve officials on how to set interest rates. Inflation data released during the week continues to defy the belief of some Fed officials that tariffs will someday cause widespread inflation, which would push the Fed to keep rates higher, while others are growing concerned by the slowing growth of the U.S. economy, which would prompt the Fed to lower interest rates.

Speaking of slowing growth, the Atlanta Fed's GDPNow tool projection of real GDP growth in the U.S. during the current quarter of 2025-Q2 declined to +2.4% from the +2.6% level it forecast a week earlier. The forecast for growth in the current quarter has been slowing throughout the quarter.

With the Fed's Open Market Committee meeting next week, the CME Group's FedWatch Tool is projecting the Fed will continue to hold the Federal Funds Rate in a target range of 4.25-4.50% until its 17 September (2025-Q3) meeting when it is expected to cut the rate by a quarter percent. Beyond that date, the FedWatch tool anticipates additional quarter point rate cuts at 12-week intervals on 10 December (2025-Q4), 18 March (2026-Q1), and 17 June (2026-Q2).

For the alternative futures-based model, the growing attention on what the Fed will be doing with interest rates appears to have prompted a shift in the forward-looking focus of investors from 2026-Q2 toward the nearer-term future quarter of 2026-Q1.

Here are the market-moving headlines, such as they were, on the trading week ending on Friday, 18 July 2025.

Monday, 14 July 2025

• Signs and portents for the U.S. economy:
• Trump intensifies trade war with threat of 30% tariffs on EU, Mexico
• Trump demands more concessions as EU holds off on US tariff countermeasures
• Trump tariffs would lift US factory jobs, cut overall income, San Francisco Fed says
• Oil falls 1% as Trump gives Russia 50 days to avoid new sanctions
• Fed minion says they see no reason to cut interest rates now:
• Fed's Hammack sees no urgent reason to lower rates - Fox Business
• Bigger trouble, stimulus developing in China:
• China's exporters rush to beat Trump's next big tariff deadline
• Eurozone minions looking for US trade deal, ECB minions expected to pause rate cuts:
• EU to push for deal with U.S, to avoid prohibitive tariff
• EU ready to hit US with 21-bln-euro tariff list, Italy foreign minister says
• Don't panic: Europe Inc cautions calm as bloc tries to avert 30% US tariffs
• Exclusive: Tariff threat complicates ECB's July decision but won't derail pause to rate cuts, sources say
• Wall Street closed slightly higher as investors now brace for inflation and earnings data
• Wall Street ends with modest gains as investors await earnings, economic data

Tuesday, 15 July 2025

• Signs and portents for the U.S. economy:
• US consumer prices pick up in June; underlying inflation still tame
• CPI rises 0.3% M/M as expected in June; core CPI rises slightly less than consensus
• Oil holds steady as Trump's 50-day deadline for Russia eases supply fears
• Chief Fed minion's job in jeopardy, other minions starting to think tariffs won't cause much inflation:
• US Treasury Secretary Bessent says ‘formal process’ for Powell successor has started, Bloomberg News reports
• Fed's Powell asks for watchdog review of project criticized by Trump officials
• Investors seek protection from risk of Fed chief's ouster
• Fed's Collins urges patience on rates, says tariff hit may be more modest
• Fed's Logan sees holding rates steady a while longer
• Bigger trouble, stimulus developing in China:
• China's economy slows as consumers tighten belts, US tariff risks mount
• VIEW China's Q2 GDP grows 5.2% y/y, above market forecast
• China home prices fall at fastest pace in 8 months, stimulus calls rise
• ECB minions wish they had a 'steady hand':
• ECB's Nagel calls for 'steady hand' amid tariff turmoil
• Wall Street closed mixed as the latest inflation and bank earnings data arrived
• Traders stick to bets on September Fed rate cut after inflation report

Wednesday, 16 July 2025

• Signs and portents for the U.S. economy:
• US producer prices unchanged; tariffs raise goods costs
• 'Cool' US Producer Prices Blow Up Tariff-Flation Narrative
• Oil eases 1% as US fuel stock builds put focus on demand
• US manufacturing output edges up in June
• Chief Fed minion's job in jeopardy, or not; another Fed minion claims inflation rising, but Fed's survey of businesses doesn't see it:
• Trump says he is not planning to fire Fed's Powell
• Trump indicated to Republican lawmakers he will fire Fed's Powell, CBS reports
• Fed's Bostic: Recent data show price pressures may be building
• Beige Book Spells Trouble For Powell: Mentions Of "Inflation" Tumble To 4 Year Low, As Growth Concerns Mount
• US economic activity rises but outlook pessimistic, Fed says
• Bigger trouble, stimulus developing in China:
• Beneath China's resilient economy, a life of pay cuts and side hustles
• Wall Street ends higher after brief slump on Powell firing confusion
• Wall Street closed in the green as Trump targets Powell and softer PPI data arrived

Thursday, 17 July 2025

• Signs and portents for the U.S. economy:
• US retail sales growth, steady job market bolster Fed's rate-cut delay
• Oil jumps after further drone attacks on Iraq oil fields
• US import prices rise marginally in June
• Fed minions still planning to hold rates steady this month, still claiming tariffs will cause significant inflation, but thinking about cutting rates in months ahead and need better way of doing business:
• Fed's Kugler: No rate cut for some time as tariffs pass through to prices
• Fed's Williams says tariff economic impact is only just starting
• Fed's Williams won't comment on Trump attacks on central bank
• Fed's Bostic: Recent data show price pressures may be building -Fox Business
• Fed's Daly says 'reasonable' to expect two rate cuts before end of 2025
• Ex-Fed Governor Warsh says new accord between Treasury, central bank needed
• Bigger CO2 emissions developing in China:
• China's record-breaking heat pushes power demand to new high
• BOJ minions get reason to stop rate hikes, JapanGov minions negotiating tariffs with US:
• Japan's exports drop as US tariffs hit automobiles, pressure set to intensify
• Japan exports drop 0.5% y/y in June
• Japan holds US tariff talks with Lutnick, eyes meeting with Bessent
• Trump says US will stick to 25% tariff on Japan, may have deal with India soon
• Eurozone minions see lurking gloom from US tariffs, ECB minions think economy looks steady:
• US tariffs would eat up German growth this year and next, Bundesbank chief says
• Euro zone economy, ECB outlook steady despite US tariff threats: Reuters poll
• S&P 500, Nasdaq notch record closes as retail sales and earnings fuel rally
• Wall Street lifted as data, corporate earnings show consumer strength

Friday, 18 July 2025

• Signs and portents for the U.S. economy:
• US single-family homebuilding hits 11-month low; building permits slump
• Trump signs stablecoin law as crypto industry aims for mainstream adoption
• Trump pushes for 15-20% minimum tariff on all EU goods, FT reports
• Oil steadies as mixed US economic and tariff news offset new Russia sanctions
• US drillers add oil/gas rigs for first time in 12 weeks, Baker Hughes says
• Potential replacement Chief Fed minion pushes for rate cut, other Fed minion signals will use new tariff announcement as rationale opposing rate cut:
• Fed’s Waller pushes for July rate cut
• Waller says he's willing to lead Fed if Trump asks, but no contact so far
• Fed's Goolsbee: new tariff announcements may delay rate cuts
• Fed's rate-cut delay intact as inflation fears override Trump pressure
• https://www.reuters.com/world/us/feds-powell-responds-white-house-fed-headquarters-renovation-2025-07-17/
• Bigger trouble, stimulus developing in China:
• China says successful US trade talks make return to tariff war unnecessary
• China moves to encourage foreign reinvestment as FDI slumps
• China expected to keep lending rates steady, focus turns to Politburo meet
• Chinese automakers should pursue 'rational competition' in EV industry, official says
• Stocks retreat from recent highs to end mixed as more Trump tariffs weigh on markets
• S&P, Nasdaq end on subdued note after brief dip on latest Trump tariff rumbling

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of two Federal Reserve officials having an animated discussion about whether to cut US interest rates. One is pointing to a chart that says 'SLOWING ECONOMY' the other is pointing to a chart that says 'TARIFFS MAY CAUSE INFLATION SOMEDAY'."