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The Best of What They Said and I Read Week Ending 10/13/2019

Short excerpts from articles I found interesting.  I may not agree with the author and the following material is not intended as investment advice

Barron’s –October 11, 2019 – The Dow Finished Up Last Week, but the Trade War Ain’t Over Yet -  Ben Levisohn

  •  “The Dow Jones Industrial Average rose 242.87 points, or 0.9%, to 26,816.59, while the S&P 500 index advanced 0.6%, to 2970.27, and the Nasdaq Composite gained 0.9% to 8057.04. The Dow and the S&P 500 snapped three-week losing streaks, while the Nasdaq has now gained for two straight weeks…The deal that was reached, at least what we know about it so far, appears to be a cease-fire, not a true peace. China agreed to buy more U.S. farm goods, while the U.S. will hold off on placing new tariffs on Oct. 15. Trump called this “phase one,” and said “phase two” talks will begin immediately. Most of the thorny issues—including the fate of Huawei Technologies—appear to have been left for later.  “Perhaps that is why the Dow, after charging up as much as 517.30 points on Friday, finished up just 319.92 points on the day. That suggests that the market knows that the trade conflict can heat up again at any moment.”

  • “…It’s that tension—between the possibility of a trade deal and a full-scale trade war, between the prospect of a recession and a return to strong growth—that could keep the market moving sideways for a while longer. The S&P after all, has risen just 3.4% since peaking in January 2018.  And that may ultimately be good news for investors. Thomas Lee, research head at Fundstrat Global Advisors, observes that sideways markets have often presaged strong moves up: Twenty months of going nowhere was followed by rallies in 2015-16, 1983-84, and 1952-54. “This really strengthens our conviction that an upside breakout is coming for the S&P 500,” Lee says.  Trade deal or no trade deal.”

U.S. Global Investors - Investor Alert – October 11, 2019 – Frank Holmes 

  • “…Even as the gold price appears to have stalled, money is still flowing into ETFs backed by the metal. Inflows have increased for 18 sessions in a row, the longest run since 2009…The Federal Reserve announced on Friday that it will begin buying $60 billion of Treasury bills per month to improve its control over the benchmark interest rate it uses to guide monetary policy…"Joker" had the biggest October opening weekend ever, taking in $93.5 million. The record-breaking weekend intake means Warner Bros has already made back the movie's production budget, which was north of $60 million.”

  • “…U.S. producer prices unexpectedly fell in September, leading to the smallest annual increase in nearly three years. The weak producer inflation readings reported by the Labor Department on Tuesday came against the backdrop of a slowing economy amid trade tensions and cooling growth overseas…Optimism among small business owners fell in September largely due to the impact of tariffs and uncertainty about the future state of the economy, according to a survey from the National Federation of Independent Business…About 30% of owners surveyed said they were negatively impacted by tariffs.”

  • “…Nancy Lazard from Cornerstone Macro…said that she believes Eurozone growth is sluggish, but is no longer a drag on global growth. Moreover, she pointed out that growth in the Eurozone has potential to bounce once fiscal policy is implemented, in addition to monetary easing. France cut taxes, Greece cut taxes and if Germany follows suit, the Euro area as a good chance of recovering quickly, assuming there is no hard Brexit.”

  • “…U.S. President Donald Trump announced that the U.S. and China had reached “Phase One” of a trade deal. The partial deal could be signed as soon as next month.  As part of the deal, the Chinese would boost U.S. agricultural purchases, will agree to certain intellectual property measures and will also grant some concessions around the issues of financial services and currency. In return, Secretary Mnuchin announced that the U.S. will not hike tariffs as initially slated for October 15.  The U.S. will also consider lifting the currency manipulation label it has slapped on China.”

Fortune –October, 2019 – Charles Is Still Very Much In Charge – Robert Hackett

  • “Five rules to remember in uncertain times – Here, Schwab lays out his core beliefs.  They can help investors stay focused in bull and bear markets alike.
    1. Companies are built to grow (that is management’s mandate:  perform or get replaced.)
    2. The U.S. and world economies will continue to grow indefinitely, with hiccups along the way. 
    3. The most important factors to put in your favor are diversification, time, and low costs.
    4. Investing doesn’t have to be complicated.  Putting money into index funds is one of the simplest ways to invest, and there are also low-cost managed accounts that take care of all the decisions for you.
    5. Stick with your plan through thick and thin, and don’t panic.  As Schwab writes, “Sometimes I wish I could just tie (investors) to their chairs to help them ride out the temporary storm.”

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