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The Best of What They Said and I Read Week Ending 10/14/18

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 12, 2018 – Here’s Why More Scares Are Ahead for the Stock Market – by Ben Levisohn

“ Investors had convinced themselves that a strong U.S. economy, juiced by tax cuts and other fiscal stimulus, could offset higher interest rates, the impact of President Donald Trump’s tariffs, and slowing growth elsewhere around the world.  That had allowed the S&P 500 to return 11% during the first nine months of 2018, even as the remainder of the world’s stocks fell more than 5%.”

“All of that came crashing down this past week. The S&P 500 slumped 4.1% to 2767.13, while the Dow Jones Industrial Average tumbled 1107.06 points or 4.2%, to 25,339.99, and the Nasdaq Composite sank 3.7% to 7496.89.”

“…But the yield curve still hasn’t inverted—in fact, it had been steepening until the sudden selloff prompted investors to run for the safety of the 10-year Treasury.  Other leading indicators, including jobless claims and credit spreads, have also held up. “I don’t see this all leading to recession,” says Ed Yardeni, president of Yardeni Research. “And without a recession, I don’t think we get a bear market.”

U.S. Global Investors Investor Alert– October 12, 2018 – Frank Holmes

“…The Fed is indeed tightening…But calling policy “too tight” at the moment might be a stretch. After being hiked yet again last month, the federal funds rate stands at 2.25 percent. That’s up considerably from near-zero—which is where it remained during much of Barack Obama’s two terms as president—but it’s still historically low, not yet having reached the long-term average of 4.82 percent.”

“It must also be said that higher rates are reflective of a strong economy…In the second quarter, U.S. gross domestic product (GDP) grew 4.2 percent, its fastest pace since 2014…Unemployment is currently at a multi-decade low, wage growth hit a nine-year high of 2.9 percent in August and median household income in 2017 climbed to $61,372, the most on record. U.S. consumer confidence, as measured by the Conference Board, reached an 18-year high in September.  The private sector is also seeing healthy expansion. S&P 500 companies are expected to report earnings growth above 20 percent for the third straight quarter.”

“…Suffering its third largest one-day drop in history, the Dow Jones Industrial Average fell 3.15 percent on Wednesday, losing 831 points as traders struggled with concerns about global growth, the trade war and potential additional Federal Reserve interest-rate hikes…Tesla outsold Mercedes-Benz in the United States for the first time, selling 69,925 vehicles during the third quarter and topping the 66,542 vehicles sold by the German luxury carmaker…Sears appears to be preparing to file for bankruptcy.”

Ssa.gov – Cost-of-Living Adjustment (COLA) Information for 2019

“Social Security and Supplemental Security Income (SSI) benefits for more than 67 million Americans will increase 2.8 percent in 2019.  The 2.8 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 62 million Social Security beneficiaries in January 2019…”

“The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $132,900.”

“The earnings limit for workers who are younger than "full" retirement age (age 66 for people born in 1943 through 1954) will increase to $17,640. (We deduct $1 from benefits for each $2 earned over $17,640.)”

“…Information about Medicare changes for 2019, when announced, will be available at www.medicare.gov. For Social Security beneficiaries receiving Medicare, Social Security will not be able to compute their new benefit amount until after the Medicare premium amounts for 2019 are announced. Final 2019 benefit amounts will be communicated to beneficiaries in December through the mailed COLA notice and my Social Security’sMessage Center.”

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