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The Best of What They Said and I Read Week Ending 10/18/2020

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 16, 2020 – Make Up Your Mind, Already:   Inside the Stock Market’s Indecisive Week. – Ben Levisohn

  • “If the world feels more mixed up than usual, take comfort in the fact that the stock market is reflecting that confusion—and holding up just fine.  It may not have looked like that on the surface. The Nasdaq Composite gained 0.8%, to 11,671.56, this past week, while the S&P 500 index rose 0.2%, to 3483.81, and the Dow Jones Industrial Average advanced 0.1%, to 28,606.31.  That the market finished the week higher was impressive considering the news. There was a spike in Covid-19 cases in the U.S. and abroad; two Covid-19 trials, Johnson & Johnson (ticker: JNJ) for a vaccine and Eli Lilly (LLY) for a treatment, were paused for safety reasons; jobless claims unexpectedly shot higher; another stimulus plan remains elusive; and there’s an election that’s less than three weeks away.  Any of those on its own could have been a reason to sell, and yet the market held up. “The market is in a bullish mood and wants to stay that way,” says Dave Donabedian, chief investment officer at CIBC Private Wealth Management.”


U.S. Global Investors – October 2, 2020 – Frank Holmes

  • “…For their part, retail sales in the U.S. have shown great resilience, increasing for five months straight. In September, sales grew at a forecast-busting 1.9 percent over the previous month, the fastest such rate since June.  All but one of 13 categories improved, with clothing, sporting goods and automobiles leading the way. Sales at home improvement stores such as Home Depot and Lowe’s were also strong.  If you participated during this year’s Amazon Prime Day, this probably doesn’t come as a shock. The two-day sales event, which concluded on Wednesday, was the biggest ever for small and medium-size businesses, according to the retail giant. “Sellers saw record-breaking sales, surpassing $3.5 billion in total across 19 countries,” Amazon said in a press release.”
  •  “...Air traffic in the U.S. continues to improve from its April low. On October 11, the number of passengers boarding flights in the U.S. hit a post-pandemic high of more than 984,000, exceeding Labor Day travel. That’s a 61 percent decrease from a year ago, but it’s a step in the right direction.”
  •  “…Billionaire investor Howard Marks warned investors in his latest memo to expect the lowest returns in history and said that the market is vulnerable to "negative surprises."  Stock markets are currently pricing in the chance of any COVID-19 vaccine approved this year to only be 50 percent to 60 percent effective, Bloomberg reported Balyasny Asset Management's Dmitry Balyasny saying.  Investors are moving into riskier assets they wouldn't have previously considered as low rates make yield scarce. Low interest rates are causing investors to buy riskier assets than they normally would seek out, according to BlackRock's Isabelle Mateos y Lago.”
  •  “…Once again Brexit trade negotiations passed Thursday’s deadline set by UK Prime Minister Boris Johnson and most likely will continue into next month. France is viewed, especially by Britain, as one of the nations most unwilling to compromise, especially on the issue of French boats’ access to British fishing waters. During the global pandemic it seems that the Brexit worries are no longer the most important.”
  •  “…The total value of all company shares listed on the Shanghai and Shenzen markets hit $10.08 trillion on Wednesday – a new record high. This demonstrates how China has seen a rapid economic recovery from the impact of coronavirus. The prior record high for market capitalization was seen in June 2015 of $10.05 trillion.”


The Kiplinger Letter – October 16, 2020 

  • …Also surprising: Small-business formation has jumped during the crisis, up 18% annually during the pandemic months, based on applications for new tax IDs.  Prior to COVID-19, those applications had been growing at only 2% per year.” 
  •  “…World trade has clawed back about 75% of the losses caused by COVID-19…China’s massive export sector has already returned to prepandemic levels.  Meanwhile, exports from the U.S. are still down about 18%.  Strong demand for COVID-related products has partially offset weakness in other areas, one reason that world trade has held up better than global GDP.  Trade will continue to recover in the fourth quarter. The latest data from Asia, excluding China, show trade volumes just a tad below prepandemic levels.  For the full year, global trade in goods will fall around 9%. By comparison, global merchandise trade fell 12% in 2009 during the height of the financial crisis.” 
  •  “…Weed isn’t just for young people. Older folks are increasingly lighting up, too.  About 5% of Americans 55 and older reported in a 2016-18 survey that they used cannabis (marijuana or hashish) in the past month. Consumption, which is higher among men than women, has likely risen further since then. Why?  New pot education, changing attitudes and the continuing trend of state legalization.   Many seniors are using pot for pain relief and other medicinal purposes.   But older folks should be careful and consult a physician before partaking.” 

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