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The Best of What they Said and I Read Week Ending 12/3/2017

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

The Wall Street Journal – November 28, 2017 – Stock Markets Around the World Hail 2017

“The vast majority of global stock markets in 2017 have surged either to fresh records or multiyear highs, of the broadest rallies in years that investors say is a result of the increasingly synchronized global economic recovery.”

“…In the U.S. the Dow Jones Industrial Average has logged 60 record closes this year, the most since 1995, with the latest push higher following the House Republicans’ proposed tax-code overhaul.  The Nasdaq Composite has gained 28% this year and set 69 new highs, the most ever in a calendar year.  The S&P 500 cleared 2600 for the first time Friday, marking its second-fastest round-number milestone…”

U.S. Global Investors – December 1, 2017 – Investor Alert – by Frank Holmes

 “…The S&P 500 hasn’t fallen more than 3 percent from a previous high for more than 388 days now, the longest stretch ever for the index. And for the first time in its 120-year history, the Dow Jones Industrial Average has reached four 1,000-point milestones in a single year—with a whole month left to go. It’s possible that excitement over the Senate’s tax bill will be enough to push the Dow above 25,000 sometime before the ball drops in Times Square.”

“…What this means is that, compared to domestic equities, gold is highly undervalued right now. The gold-to-S&P 500 ratio, a time-tested trading indicator, is near 50-year lows. I see this as a strong buy signal, especially now as we await the Federal Reserve’s decision to lift rates this month. If you recall, gold broke out strongly following the December rate hikes in 2015 and 2016.”

“…The major market indices finished mixed this week. The Dow Jones Industrial Average gained 2.86 percent. The S&P 500 Stock Index rose 1.53 percent, while index gained 1.17 percent this week…The 10-year Treasury bond yield rose 2.1 basis the Nasdaq Composite fell 0.60 percent. The Russell 2000 small capitalization points to 2.364 percent.”

“…Sears continued its streak of declining sales in the third quarter, reporting a double-digit drop in comparable sales at its Sears and Kmart chains. Sales at Sears stores open for more than a year fell 17 percent, while comparable sales at Kmart fell 13 percent.

Barron’s – December 2, 2017 – Can Investors Hedge the North Korea Risk – by Alex  Eule

"…Jim Paulsen, chief investment strategist at the Leuthold Group, views the week’s price action as a revealing moment for the aging bull market. “It tells you something about sentiment and how much greed is in prices versus fear,” Paulsen says. “What stands out to me is how much credence we’re willing to give a tax policy that no one really even understands. And then, on the other side of the equation, we have the second coming of the Cuban missile crisis, and no one cares.”

“…Eurasia Group, a geopolitical consultancy, said this week that the risk of military conflict in North Korea hadn’t actually changed following the latest test. “This latest provocation does not increase the probability of military conflict—which we still assess is 20%…But investors, faced with an unknown threat, have shown a willingness to hit the snooze button. During the 13 days of the Cuban missile crisis in 1962, the Dow fell a total of just 3.5%. Nuclear war may be the one thing investors can’t discount.”

“This is the worst type of risk to prepare for,” says Rodger Baker, vice president of strategic analysis at Stratfor, a geopolitical intelligence firm. “It’s low probability with extremely high implications.”  Stratfor is advising corporate clients about potential risks to their employees overseas and how to prepare for supply-chain disruptions—shipping routes could be blocked, for instance, without any actual conflict. Baker notes that South Korea is responsible for 17% of global semiconductor sales, 64% of memory chips, and about 10% of automotive parts. “You’re basically talking about undermining the entire global supply chain in tech,” he says.”

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