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The Best of What They Said and I Read Week Ending 1/26/2020

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


 Barron’s – January 24, 2019 – The Stock Market Finally Finds a Reason to Fall.  What Comes Next? – Ben Levisohn

  • “ …In our previous column, as the major indexes started the year off with a bang, we mused about the possibility of the Dow Jones Industrial Average hitting 30,000. The spread of coronavirus—a respiratory virus most of us weren’t familiar with until this past week—in China and abroad put that celebration on hold. The Dow dropped 358.37 points, or 1.2%, to 28,989.73, while the S&P 500 index fell 1%, to 3295.47, and the Nasdaq Composite declined 0.8%, to 9314.91. It was the biggest one-week drop for the S&P and the Dow since August.”
  • “…When the yield on the 10-year is over 3%, an all-stock portfolio has outperformed an all-bond portfolio by 2.3 percentage points annually. When the 10-year is below 3%, stocks offer more than six times the return. “Rather than raise anxieties, perhaps equity investors should simply embrace amazingly low yields, which historically have made ‘risk less risky, Paulsen writes.”
  • “But that doesn’t mean the stock market is suddenly risk-free. As we suggested last week, the market was ready for a pullback—and one may finally be on its way. Most metrics suggest the market was overbought following its recent melt-up. The S&P 500, for instance, has gone 71 days without a 1% move in either direction, the longest such streak since Oct. 9, 2018. The Nasdaq, meanwhile, has closed at a record high 28 times since the beginning of November, the most in a three-month stretch since February 2000—you know, right before the dot-com bubble popped.”

 The Kiplinger Letter – January 24, 2020 

  • “…Though the U.S. successfully inked a “phase one” trade deal with China…The trade war is far from over.  It’s just on hiatus.  There will still be plenty of issues to discuss in round two.   For example, President Trump hopes to get China to agree to comprehensive economic reforms…something that still looks unlikely.   Note that tariffs on over $300 billion worth of gods will remain in place, from both nations.  China is issuing tariff exemptions for products it pledged to buy.  Roughly two thirds of U.S. imports from China will still be subject to duties.”  
  • “Many questions remain on the agreement.  Will China follow through, for instance on its commitment to purchase an additional $200 billion of U.S. goods and services over the next two years?  Beijing also promised to strengthen protections for intellectual property, end forced tech transfers as a condition for doing business in China, and make it easier for U.S. banks to enter China’s growing financial market.  Beijing hasn’t lived up to past commitments.  Many analysts are skeptical that it can increase imports from the U.S. as much and as quickly as promised.” 

 U.S. Global Investors - Investor Alert – January 24, 2020 – Frank Holmes 

  • “…This week Tesla Inc.’s market value climbed above Volkswagen AG’s for the first time – hitting $100 billion. Shares rose as much a 5.9 percent on Wednesday and are up 31 percent since the start of the year. The carmaker has a massive lithium-ion battery that is close to operation in South Australia, where it will support a steady flow of power from a wind farm, reports Bloomberg. Rolls-Royce is also jumping into renewables and batteries. The carmaker acquired a majority stake in a German battery storage developer Qinous.”
  • “…In 2018, President Trump threatened a 25 percent import tariff on every car from the European auto industry. This threat was put on hold while the U.S. focused on negotiating a trade deal with China. Following Trumps’ recent trade agreement with China, talks about additional tariffs on European goods may intensify.”
  • “...U.S. Senator John Cornyn (R-TX) released a letter to his fellow Texans in honor of the Vietnamese Lunar New Year celebration (Tet Nguyen Dan), noting that in the great state of Texas, Vietnamese is actually the third most spoken language, after English and Spanish!”


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