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The Best of What They Said and I Read Week Ending 1/14/2018

Short excerpts from articles I found interesting.

I may not agree with the author and the following material is not intended as investment advice.

U.S. Global Investors – January 12, 2018 – Investor Alert – by Frank Holmes

“…The major market indices finished up this week. The Dow Jones Industrial Average gained 2.01 percent. The S&P 500 Stock Index rose 1.57 percent, while the Nasdaq Composite climbed 1.74 percent. The Russell 2000 small capitalization index gained 2.05 percent this week…The 10-year Treasury bond yield rose 7 basis points to 2.55 percent.”

“…JP Morgan’s Jamie Dimon, who previously called bitcoin a “fraud,” has reversed his stance on the digital currency space, reports CNBC. Dimon says he regrets his statement and told Fox Business this week that he believes in the technology behind bitcoin, stating that “the blockchain is real.”

“…Speaking to CNBC this week, billionaire investor Warren Buffett said that he believed cryptocurrencies “will come to a bad ending,” adding that Berkshire Hathaway will “never have a position in them,” including shorts. Buffett has famously avoided asset classes and sectors he does not personally understand, and his attitude toward digital currencies is no exception. “Why in the world should I take a long or short position in something I don’t know anything about?” he said.”

“…Swiss investment bank Credit Suisse found that wealth in bitcoin is highly concentrated, meaning “few players in the game can have a massive influence” on the markets. Ninety-seven percent—nearly 100 percent—of all bitcoins are held by only 4 percent of addresses…”

Barron’s – January 13, 2018 – Bright Outlook for the Economy and Stocks – by Lauren R. Rublin

“…Henry Ellenbogen: Since 2010, the Faang stocks [Facebook, Apple, Amazon.com, Netflix [NFLX)], and Google parent Alphabet [GOOGL] have contributed 20% of the S&P 500’s aggregate revenue growth…There is a reason why five of the top seven equities in the world are those of the dominant platform technology companies—plus the two in China [Alibaba Group Holding and Tencent].”

“…First, these global platforms have massive deflationary power. Normally, if we were talking about global growth, we would discuss the likelihood of inflation getting out of control. Instead, the Amazon effect on pricing is deflationary in consumer products and enterprise technology. Second, social media and Google foster global information transparency. Then there is the dispersion of technological change across multiple industries—not only in media but retail, transportation, hospitality, financial services, and more. Amazon’s purchase of Whole Foods Market in 2017 will reorder local commerce. From food to food delivery to car purchases to local commercial real estate, everything is being affected by global platforms with deflationary power.”

“…Ellenbogen: Yes. There are structural arguments for inflation to be lower, but cyclical reasons for it to be strong. There is another issue related to technology. Uber and Lyft collectively have about 1.3 million drivers in the U.S., and are on the way to being the largest “employer” in the nation. Within two years, more people will work for these two platforms than Walmart, currently the largest U.S. employer. You can make about $17 an hour driving for Uber or Lyft. If you own a store or a restaurant and pay hourly wages, you’re not focused on an increase in the minimum wage. You’re focused on the Uber effect.”

The Kiplinger Letter – January 12, 2018

“The Federal Reserve is promising to deliver three interest rate hikes in 2018.  But when, exactly, in 2018? The timing of those increases affects everything from yields on savings accounts to the interest rates that borrowers can expect to pay. The most likely times for the central bank to act: March, June and Dec., which mirrors the timing of 2017’s rate increases. There is a Fed meeting scheduled for each of those months, along with press conferences following the meetings. The Fed likes to raise rates at meetings that have a press conference scheduled so it can explain the reason behind the change without calling a special conference, which can spook financial markets. (Note that there is also a press conference on tap for the Sept. meeting, but that’s too close to the midterm elections in Nov.)”


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