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The Best of What They Said and I Read Week Ending 12/17/17

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 – December 16, 2017 – New Day for Media Stocks With Disney-Fox Deal – by Alex Eule

  • “Media companies spent years overlooking—and even enabling— Netflix.  Now, streaming TV has become a threat to their survival…The high stakes explain the willingness of Walt Disney to acquire the bulk of 21st Century Fox in a deal worth $70 billion.”
  • “…With Disney already planning to pull its content off Netflix, it seems a safe bet that the combined company will play hardball across the streaming universe, meaning Pixar, Marvel, The Simpsons, and Star Wars will be exclusive to Disney streams. Postmerger, Disney will own a 60% stake in Hulu, once an industrywide response to Netflix. Hulu contributors—including Comcast’s NBC Universal, CBS, and Viacom—could respond to Disney’s control by keeping its programming off Hulu. The future of streaming is likely to include multiple silos of content, with content companies doubling down on their own proprietary streams. That will require even more original content to justify subscriptions, a lesson Netflix learned long ago.” 
  • “The dream of cord-cutting has been content on an a la carte basis. Streaming could get consumers closer to that vision, especially as content providers will be all the more protective of their programming. That could mean subscribing to a Netflix channel for $10 a month. Disney/Fox for $8. ESPN for $12. CBS for $5. How many consumers will want to pay all those separate bills? Look for a neutral platform player like Roku (ROKU), to bundle all those apps together, perhaps for one monthly charge. It could be popular. It would also look an awful lot like cable TV.” 

The Economist – December 9, 2017 – From cash to ash 

  • “Many marijuana growers in northern California…had expected this autumn’s harvest to be the largest ever. After all, recreational marijuana becomes legal in the state in January. Instead, wildfires …burned up half the marijuana…Some reckon the fires set a record not just for burnt pot, but also for the value of banknotes turned to ash.”
  • “Although 29 American states allow sales of marijuana for medical use (or medical and recreational use), federal law still classifies it as a “schedule 1” drug like heroin. Firms handling marijuana proceeds can be prosecuted for money-laundering… a few firms open a bank account under an alternative identity. But banks almost always find out. So cannabis businesses operate almost exclusively in cash. Many pot farmers fled the fires without their banknotes.… One burnt cabinet had held $250,000. Cheryl Dumont, from a Mendocino County cannabis co-operative, says that of about 20 stashes buried by members or neighbours, only one was deep enough to survive. The gold and silver she had interred melted into a dirt-infused blob.”  
  • “…In theory, cryptocurrencies such as bitcoin should be safer from cops, crooks and combustion. On February 28th trading will begin for a new digital currency called PerksCoin. By next summer roughly 5,000 pot dispensaries in America and Canada will accept PerksCoin payment by smartphone, says Daniel Cheine of CannaSOS, the Toronto firm behind it..” 

U.S. Global Investors – December 15, 2017 – Investor Alert – by Frank Holmes

  •  “…The Dow Jones Industrial Average gained 1.33 percent. The S&P 500 Stock Index rose 0.92 percent, while the Nasdaq Composite climbed 1.41 percent. The Russell 2000 small capitalization index gained 0.57 percent this week.”
  • “…Morgan Stanley laid out three things that could slow the sizzling FAANG stocks in 2018: a heavy concentration of broader market gains in those stocks, a reversal of growth stocks beating value stocks, and a historical tendency for outperformers in a given year to underperform the following year. … According to InvestorPlace, the five stocks that are at the most risk from the net neutrality vote are Facebook, Netflix, Twitter, Alphabet and Amazon.”
  • “…The Fed raised rates 25 bps to 1.5 percent, but left its outlook unchanged. It judged the tax cuts to boost the economy next year, but with no lasting benefit, and its estimate of long-run growth stalled at 1.8 percent.”

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