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The Best of What They Said and I Read Week Ending 10/6/2019

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 4, 2019 – The Dow Was Getting Whacked Until It Wasn’t.  Here’s Why. -   Ben Levisohn

  •  “In a world that seems increasingly black and white, investors need to remember the market exists in shades of gray. Don’t take my word for it. Just look at the returns for the major market indexes this past week. It was a bad one for the Dow Jones Industrial Average, which lost 246.53 points, or 0.9%, to 26,573.72, and a less bad one for the S&P 500, which declined 0.3%, to 2952.01. The Nasdaq Composite, however, finished up 0.5% at 7982.47, ending a two-week losing streak. Talk about shades of gray.”

  • “Nowhere is the propensity to see things in black and white more clear than in the debate about whether a recession is about to start. When the Institute for Supply Management’s purchasing managers index slumped to 47.8 in September, down from 49.2 in August, the market reacted as if a recession had already begun. The Dow dropped more than 832.21 points, or 3.1%, on Tuesday and Wednesday, making it the worst start to a quarter since 2008 and briefly rekindling memories of the financial crisis.  So when the ISM services index was released on Thursday—and it, too, missed expectations—the market responded as if the next crisis had arrived…until it didn’t. Immediately after the release of the index, which dropped to 52.6—well below forecasts for 55.3—the Dow tumbled more than 300 points. But just as we were dusting off our bear-market playbook, the blue-chip benchmark suddenly reversed, finishing up 122.42 points, or 0.5%, on the day.”

Kiplinger’s  Personal Finance Advisor –October, 2019 – Penalty-Free Early Retirement Payouts

  •  “Distributions from traditional IRAs and 401(k)s taken before age 59½ are generally subject to a 10% penalty tax (in addition to the regular income tax). However, there are important exceptions to the 10% fine. For example, early withdrawals from IRAs to help first-time home buyers or to pay for the cost of college are penalty-free. Not so with 401(k)s. To review details on these and other distributions that escape the 10% penalty, such as withdrawals made to cover very large medical expenses or a series of substantially equal payments that run for the longer of five years or until age 59½, visit kiplinger.com/letterlinks/earlydistributions.”

U.S. Global Investors - Investor Alert – October 4, 2019 – Frank Holmes 

  •  “…Major U.S. fund managers have billions of dollars at stake in some of the most popular Chinese stocks, exposing them to potential losses should the White House move to de-list Chinese firms from U.S. exchanges. "The proposed measures would completely undermine the international market and would harm the U.S.'s role as a conduit for international capital," Jefferies equity strategist Sean Darby wrote in a client note.”

  • “…The U.S. unemployment rate fell to its lowest level in 50 years, the Department of Labor said Friday. The unemployment rate, now at 3.5 percent, fell by 0.2 percent from August to September.  The U.S. economy is in a good place though it faces some risks, Federal Reserve Chairman Jerome Powell said Friday. “Unemployment is near a half-century low, and inflation is running close to, but a bit below, our 2 percent objective,” he said in the text of opening remarks to a Fed Listens event in Washington. “Our job is to keep it there as long as possible.”

  • “…A measure of U.S. manufacturing unexpectedly fell deeper into contraction, posting the weakest reading since the end of the last recession as a global slowdown and the U.S.-China trade war increasingly weigh on the sector. The Institute for Supply Management’s factory index slipped to 47.8 in September, the lowest since June 2009, according to data Tuesday. The figure missed all estimates in a Bloomberg survey that had called for an increase from August’s 49.1 reading…The World Trade Organization (WTO) has downgraded its forecast for global trade growth for this year and next as the repercussions of the U.S.-China trade war and a broader economic slowdown continue to play out. On Tuesday, the WTO said world merchandise trade volume is expected to rise 1.2 percent in 2019 — markedly slower than the 2.6 percent forecast in April. The revised projections come less than two weeks after President Trump called China a "threat to the world" and said there was little urgency for an interim trade agreement.”

  •  “…The best performing major commodity for the week was sugar, which gained 10.67 percent on further news that Australian and Thailand sugar production may drop too. Last week sugar was stronger on rains in Brazil impacting the sugar cane harvest…Clean energy-focused ETFs are some of the best performing funds so far this year. The Invesco Solar ETF, known by ticker TAN, has returned a whopping 58 percent so far this year and has outperformed all other unleveraged ETFs in the U.S., according to Bloomberg data. Two other ETFs are in the top 10 performers this year through September 30…Another week, another 52-week high in the U.S. dollar. As noted in the past, this could continue to exert a degree of pressure on emerging markets and may well place increased pressure on central banks for timely and appropriate responses.”

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