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The Best of What They Said and I Read Week Ending 1/19/2020

Short excerpts from articles I found interesting.  I may not agree with the author and the following material is not intended as investment advice

  U.S. Global Investors - Investor Alert – January 17, 2020 – Frank Holmes 

  • “…Morgan Stanley said in a note on Monday that the top five publicly-traded American companies now make up a record 18 percent share of the S&P 500 – higher than the tech bubble.” 
  •  “…The major market indices finished up this week. The Dow Jones Industrial Average gained 1.82 percent. The S&P 500 Stock Index rose 1.97 percent, while the Nasdaq Composite climbed 2.29 percent. The Russell 2000 small capitalization index gained 2.53 percent this week.”
  •  “…This week, the US and China signed off the Phase 1 trade deal, ending two years of escalating trade tensions. The U.S. will roll back only a small part of tariffs implemented since January 2018, but the end to escalation is likely to benefit business and consumer confidence across the world and reduce downside risks to the global economy.”
  •  “…At the heart of President Donald Trump's "monster" trade deal is a commitment by China to $200 billion in additional imports from the U.S. in the next two years. Bloomberg Economics has crunched the numbers on what would be required to make that happen. The targets for goods exports are extremely stretching. For 2020, they imply an 81 percent increase in China’s imports in the target categories, relative to the 2017 baseline that the deal specifies. The deal stipulates a relatively narrow set of goods categories that are expected to generate the increase in Chinese imports. That will make it even harder to hit an already-stretching target.”
  •  “…BlackRock Inc., which has around $7 trillion in assets under management, said this week that climate change will upend global finance sooner than they think. CEO Larry Fink wrote in an annual letter to corporate executives that “climate change has become a defining factor in companies’ long-term prospects” and “I believe we are on the edge of a fundamental reshaping of finance.” The asset manager outlined several changes including: making sustainability integral to portfolio construction and risk management, exiting investments that present a high sustainability-related risk and launching new investment products that screen fossil fuels. BlackRock had been under tremendous pressure to address climate concerns and this is positive news for the green movement.”

 MarketWatch – January 18, 2020 – Social Security’s not keeping up with inflation – here’s what that means for you – Paul Brandus

  • “Oops.  Last fall, the Social Security Administration—overseen by its chief trustee, Treasury Secretary Steven Mnuchin—said benefits for nearly 69 million Americans would increase 1.6% in 2020. The figure, tied to the inflation rate, meant that the average recipient would get $24 more each month, or about $1,503 annually…We determined a 1.6-percent COLA on October 10, 2019,” the Social Security Administration said last Fall, adding, “We will announce the next COLA in October 2020.”
  •  “That was all well and good until Tuesday, when fresh government data showed the cost of living actually went up 2.3%, faster than previously forecast.  Behind the year-end spike: Higher prices for gasoline, health care and rent. This means that Social Security recipients will fall seven-tenths of 1 percentage point behind inflation, at least until the next cost-of-living adjustment (COLA) is made this fall...”

 The Kiplinger Letter – January 17, 2020 

  • “…Inflation figures to be tame this year, with the rate running about 2.2%, after a pickup of 2.3% at the end of 2019. This year, economic growth will be modestly slower, which will prevent inflation pressures from ramping up. We don’t expect big swings in energy costs, which can drive shifts in the inflation rate.  Food prices will be 1.9% higher at year-end. Housing…up 3.0%, versus 3.3% in 2019.” 
  •  “Core inflation…prices minus food and energy…will run a bit higher, at 2.3%. Medical costs will run well ahead of headline inflation. The inflation rate for medical services is likely to be 5.1%, largely because of health insurance costs. Employer health insurance costs are likely to be up 3.6%, to an average per-employee cost of about $12,600 for small employers and $14,000 for large ones.” 

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