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The Best of What They Said and I Read Week Ending 10/20/2019

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 19, 2019 – How to Pretend to Understand Brexit -   Jack Hough

  •  “... Brexit is a portmanteau, or mushing together of words, like bromance, turducken, and Chunnel. It means British exit, in this case from the European Union, a trade bloc whose members are united in everything except language, culture, politics, wealth, fiscal viability, historic harmony, contiguous geography, and in some cases, currency.”

  • “…Much of the discussion has seemed like an egg-centered debate: soft or hard, but it won’t be over easy. A soft Brexit means staying closely aligned with the EU on trade, and is favored by Britons who oppose leaving. Hard means a clean break, and that could cost an estimated 9% of GDP cumulatively, along with 450,000 jobs.…Anyhow, the new deal tries to solve the issue of the “Irish backstop,” which has nothing to do with offshore tax loopholes, or leaving parties without saying goodbye, and everything to do with avoiding new checks or infrastructure between Ireland, which is in the EU, and Northern Ireland, which is part of the U.K. This part of Brexit is the most sensitive, and acceptance of the new deal is not assured.”

  • “...If you end up trapped in a Brexit conversation and can’t remember those companies, British names are easy to invent by combining syllables that sound vaguely profane, but aren’t. Just tell people you bought some Bottomsworth & Wiggles, and are thinking about writing the puts on A.J. Fufferton.”

The Wall Street Journal –October 19, 2019 – Why Are Markets Rising Despite a Trade War, Brexit and Impeachment Threats  -  Ira Iosebashvili and Akane Otani

  • “…The world seems more tumultuous than it has in years. Congress is weighing impeachment, the U.K. is on the verge of a momentous vote regarding its role in Europe, and the U.S. and China are still mired in a trade war.Yet the S&P 500 is within about 2% of its all-time high. What’s going on with Wall Street?”

  • “For many money managers, the answer has a lot to do with the Federal Reserve. The central bank has already lowered interest rates twice this year and is widely expected to do so at least once more in 2019 to help support a slowing economy.  Bets that the Fed will step in if markets become too volatile or economic data continues to decline are helping many investors shrug off what they say are increasingly dire signals. Their rationale: If interest rates are lower, borrowing costs for businesses and consumers will drop, potentially giving the economic expansion more room to run even if trade policy and foreign affairs seem murky.”

  •  “…Overall, the S&P 500 has moved an average of 0.8% each day going back to its July high, according to Dow Jones Market Data. The index is up 19% for 2019 but less than 5% from January 2018…last fall’s selloff sent the S&P 500 down nearly 20% in less than three months. That has made the market’s double-digit percentage gains in 2019 look more like a game of catch-up, rather than an unfounded rally.”

U.S. Global Investors - Investor Alert – October 18, 2019 – Frank Holmes 

  • “…The reason for my bullishness is simple: Bad news is good news. Policymakers and heads of states see the threat of a slowdown and are more likely to enact stimulus measures to prevent a full-blown recession. This is especially the case in nations with upcoming federal elections—the biggest one being the U.S. presidential election.  President Donald Trump is under pressure from a series of House investigations, not to mention an impeachment inquiry that’s near guaranteed to result in official articles of impeachment. Be that as it may, Trump is the only U.S. president that I’m aware of who sees the market as a barometer of his policies’ success. Every morning, after he wakes up and coifs his hair in the mirror, he wonders what his administration can do to drive stocks higher. We’ve already seen aggressive corporate tax cuts and a wave of deregulation, and we may expect to see more as Trump seeks reelection. So even though you may not like the man’s governing style or his Twitter activity, he always has investors’ interests in mind.”

  • “…The major market indices finished mostly up this week. The Dow Jones Industrial Average lost 0.17 percent. The S&P 500 Stock Index rose 0.54 percent, while the Nasdaq Composite climbed 0.40 percent. The Russell 2000 small capitalization index gained 1.56 percent this week…The 10-year Treasury bond yield rose 2 basis points to 1.755 percent.”

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