A good quality flexible caulk could be used here. Cedar shakes might
expand/contract, but the caulk can handle it. Also, you can put a
strip of tarpaper under the joint. Put some 30# felt, building paper,
ice and water shield, or window flashing down, put on your trim, and
butt the shakes to the trim. If you detail the tarpaper or whatever
carefully, I feel caulk is optional...in fact some people say the caulk
merely traps moisture.