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The Best of What They Said and I Read Week Ending 10/25/2020

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 23, 2020 – The Dow Dropped This Past Week.   Why It’s Time to Put Your Worries Away. – Ben Levisohn

  • “…The Dow Jones Industrial Average fell 270.74 points, or 0.9%, to 28,335.57, the S&P 500 index declined 0.5%, to 3465.39, and the Nasdaq Composite dropped 1.1% to 11,548.28, ending a four-week winning streak.  The market was whipsawed by the back-and-forth negotiations over stimulus. Talks seemed to have stalled by the close of trading on Friday, and without more stimulus, the economy—and the stock market—have gotten as good as they can get.”
  •  “…And just as important, the 10-year Treasury yield rose 0.097 percentage point to 0.840% this past week, signifying a possible pickup in economic growth. That’s typically a signal that the economy is getting better and that inflation is starting to rouse.   “The market is starting to price in a reacceleration next year,” says Andrew Slimmon, managing director at Morgan Stanley Investment Management…Fundamentals suggest that bond yields should be much higher. Ed Yardeni, chief investment strategist at Yardeni Research, argues that the current copper-to-gold ratio implies a 10-year Treasury yield near 1.61%. The Citigroup Economic Surprise Index, a measure of whether economic data releases are coming in worse or better than expected, also points to higher yields.”


U.S. Global Investors – October 23, 2020 – Frank Holmes

  • “…Delta and Alaska Airlines will be the only remaining major U.S. carriers that still block the middle seat after Southwest Airlines begins filling the seat on December 1…We continue to see the domestic airline industry recover off the April lows. Last Sunday, the number of people cleared to fly commercial in the U.S. exceeded 1 million for the first time since the pandemic struck.”
  • “…Goldman analysts cited a weaker dollar, inflation and additional monetary and fiscal stimulus as reasons for a potential rally in commodity prices. A 12-month return of 30 percent is forecast for the S&P GSCI, which tracks 24 commodities from all commodity sectors. Industrial metals, including copper, could increase 5.5 percent; precious metals, 18 percent; and energy, more than 42 percent.”
  • "…Existing-home sales rose 9.4 percent in September from August to a seasonally adjusted annual rate of 6.54 million, the highest rate since May 2006, according to the National Association of Realtors. Economists surveyed by The Wall Street Journal expected a 6.2 percent monthly increase in sales of previously owned homes, which make up most of the housing market.”
  • “The economy's travails are evident in the Back-to-Normal index (BNI) developed by Moody's Analytics and CNN Business. The BNI measures how the economy is performing compared to its pre-pandemic normal. Currently, the index is sitting at just over 80 percent. In other words, the economy is operating 20 percent below where it was when the pandemic hit back in March.”
  • “…Although missing estimates, China’s third-quarter GDP rose and shows signs of a broadening recovery. GDP expanded 4.9 percent in the quarter ended September 30 from a year earlier, lower than expectations for a 5.5 percent expansion. The strong number highlights how China is still on track to be the world’s only major growth engine due to its aggressive approach to managing the coronavirus pandemic…U.S. Secretary of State Mike Pompeo is visiting India next week to strengthen strategic ties. This is seen as another effort to bolster allies against Beijing. India is locked in a military standoff with China.”


The Kiplinger Letter – October 23, 2020 

  • …The government’s hands-off era for Big Tech is over. The DOJ says Google engages in anticompetitive, monopolistic activities in two areas: Web search and text search advertising. It has about 90% and 70% of those markets. The agency says exclusive deals and other actions violate the Sherman Act.  Google pays billions of dollars yearly to be the default search engine on Apple devices, for example.  Consumers can freely download or use alternatives, but most don’t.” 
  • “Antitrust cases brought in today’s digital markets are very difficult to win under current law and court precedent. The last two cases: The 1974 AT&T suit, which led to its breakup in 1984, and the 1998 Microsoft suit…settled in 2001. The case could take years to play out as Google mounts a fierce defense, arguing folks choose its service, and consumer benefits far outweigh any downsides. The probing of Google and other Big Tech companies is far from over…Watch for tech giants to step up lobbying while treading more lightly when it comes to behavior that could trigger antitrust and competition concerns.”


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