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The Best of What They Said and I Read week ending 2/26/2017

Short excerpts from articles I found interesting.

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


Barron’s – Eight Years a Bull – February 25, 2017 by Kopin Tan

  • “Last week, the Standard & Poor’s 500 index snagged its 11th record close of 2017. And the Dow industrials’ 11 straight record closes have become its longest streak since early 1987…Stocks are making serial new highs, but the yield on 10-year Treasuries is retreating and hasn’t made a new high since Dec. 15. The VIX volatility index hasn’t relaxed to new lows in four weeks. For 48 straight sessions (and counting), the S&P 500 has crouched within a tight daily range of less than 1%—the longest in more than 40 years. Bulls hail this as an absence of willing sellers, while bears point to a lack of new buyers, and neither camp is entirely wrong.”
  • “Abroad, concerns about “Nexit,” “Frexit,” and “Grexit” surface ahead of elections in Netherlands, France, and possibly in Greece. Still, David Kelly, chief global strategist at J.P. Morgan Asset Management, thinks that European stocks deserve consideration: Price/earnings valuation near 15 times is just 3% above the 25-year average, and while profit growth of 11% in 2017 looks hopeful, the average dividend yield in the MSCI Europe Index is 3.6%, versus 2% for the S&P 500. Also, “the euro zone is still earlier in its economic expansion than the U.S.,” Kelly writes. Unemployment peaked there at 12.1% only in mid-2013, and while it is now near 9.6%, room for unemployment to fall further can still fuel growth for years to come.”

U.S. Global Investors – Investor Alert – February 24, 2017 – by Frank Holmes

  • “…The major market indices finished mixed this week.  The Dow Jones Industrial Average gained 0.96 percent. The S&P 500 Stock Index rose 0.69 percent, while the Nasdaq Composite climbed 0.12 percent. The Russell 2000 small capitalization index lost 0.38 percent this week.”
  • “Existing-home sales jumped to a 10-year high. Sales of existing condos, co-ops, townhomes, and single-family houses increased by 3.3 percent, at a seasonally adjusted annual rate of 5.69 million, the highest since February 2007, according to the National Association of Realtors.”
  • “The 2017 Business Leaders Outlook found that business executives from small and mid-sized firms across the U.S. are more optimistic about the global and national economies and think that the Trump administration will be a positive for the country. JPMorgan surveyed roughly 1,400 executives, and 80 percent said they were optimistic about the national economy. That's up nearly 41 points from the 2016 edition of the survey.”
  • “Russia overtook Saudi Arabia as the world’s largest crude producer in December. Russia pumped 10.49 million barrels a day in December, down 29,000 barrels per day from November, while Saudi Arabia’s output declined to 10.46 million barrels a day from 10.72 million barrels in November.”

 The Kiplinger Letter – Forecasts for Executives and Investors – February 24, 2017

  • Budget Pressure - In time, tough choices for Social Security and Medicare will be unavoidable…Reduced benefits for future retirees, delayed eligibility or a combination.  If Congress does nothing, current projections suggest benefits will be reduced by 29% across the board in 2030 so that payments to retirees are covered by incoming taxes.  Medicare’s tipping point is even closer:  2028, when the program’s trust fund runs dry.  (The Social Security wage base will continue to be raised, no matter what else occurs.)”
  • "Congress will step in....eventually.  Letting big reductions in benefits happen in either program would amount to political suicide.  But raising the eligibility age and the taxable wage base will also invite pushback from voters.  It’s a tough call.  Lawmakers will wait as long as possible.  It’s a grand Washington tradition.”

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