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The Best of What They Said and I Read Week Ending 11/26/2017

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 – November 25, 2017 – Market Notches New Highs and Inspires New Fears – by Ben Levisohn

“…Last week, the Standard & Poor’s 500 index gained 0.9% to 2602.42, an all-time high and its first close above 2,600, while the Nasdaq Composite climbed 1.6% to 6889.16, also a record. The Dow Jones Industrial Average rose 0.9%, to 23,557.99, just 32.84 points away from its all-time high. That’s pretty much what you’d expect from Thanksgiving week, which has historically seen the market finish higher three-quarters of the time.”

“…Interest rates could be the key. Ian Winer, head of equities at Wedbush Securities, attributes the lack of selling pressure to the low level of interest rates. The 10-year Treasury yield settled at 2.34% last week...A deficit-boosting tax-reform package could be a catalyst for higher bond yields—which could also result in a weaker market as investors recalibrate…”

U.S. Global Investors – November 24, 2017 – Investor Alert – by Frank Holmes

 “…The year-over-year percent change in the cost of living has been reasonably low for the past five years, averaging about 1.3 percent on a monthly basis…A helpful way to look at inflation is the changing cost of a typical Thanksgiving dinner for 10 people. For the second straight year, the cost actually declined from the previous year’s holiday, according to the American Farm Bureau Federation (AFBF). This year’s feast, including staples such as turkey, rolls, sweet potatoes and more, fell $0.75 to a five-year low of $49.12. On an inflation-adjusted basis, that’s down more than $10 from 30 years ago…Holiday gasoline prices, however, are on the rise, with the cost per gallon rising to its highest level since 2014. A trip to the pump this Thanksgiving will cost motorists an extra 18 percent compared to last year and nearly 25 percent more compared to 2015.”

“…Retailers are bracing for a blowout holiday shopping season. Earlier this month, Adobe Analytics released its forecast that U.S. sales during the Thanksgiving weekend and Cyber Monday could climb above $107 billion, a year-over-year increase of 13.8 percent. Cyber Monday alone might generate as much as $6.6 billion, 16.5 percent more than last year, making it the largest online sales day in history. Among the most hotly anticipated gift items this year are Apple Air Pods, home assistants (Amazon Echo and Google Home) and Sony PlayStation virtual reality (VR) headsets.

“…Brian Belski of Bank of Montreal Capital Markets sees the S&P 500 finishing 2018 at 2,950, the highest forecast on Wall Street…According to some, there are several strategies for investors to potentially take advantage of the Amazon-induced retail apocalypse: Buy Amazon stock, buy stock in companies that support Amazon, and buy companies in "Amazon-proof" sectors…According to Morgan Stanley, three things could destroy the third-longest market rally of all time: extreme leverage, exuberant sentiment and excessive policy tightening…According to Societe Generale, the market is nearing a crucial turning point that could crush stocks. The firm said a 10-year Treasury yield above 2.5 percent could result in a U.S. equity sell off.

The Kiplinger Letter – November 22, 2017 – Foreign Policy

  • “Fresh off his 12-day sojourn in Asia…What did…or didn’t…the president achieve?  …On trade, President Trump didn’t get far.  He embarked vowing to foster trade deals with countries on the other side of the Pacific Ocean that would benefit U.S. exporters. However, his hosts showed little interest in the sort of terms he proposed.” 
  • “The U.S. risks getting left out of trade pacts in Asia. Trump pressed hard for bilateral agreements between Washington and individual Asian nations.  But Asian leaders want big, multilateral trade deals.  A Pacific free trade zone is in the works…It just won’t include America. The deal…the Trans-Pacific Partnership…would lower barriers to trade among 11 countries in the region. Combined, they account for 15% of global GDP. Trump pulled out of TPP talks in Jan., but the rest of the participants are close to inking a final agreement. As a result...U.S. firms will have a harder time exporting to some of the world’s fastest-growing economies…”

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