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The Best of What They Said and I Read Week Ending 2/3/19

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 – February 1, 2019 – Dow Gains 327 Points as Powell Powers Market – Ben Levisohn

  • “…At Wednesday’s Federal Open Market Committee meeting, Fed Chairman Jerome Powell and team signaled that they were taking more rate increases off the table and rethinking how fast they would let their balance sheet shrink. Few had expected the Fed to go full dove, and the market responded in a big way.  The Dow gained 326.69 points, or 1.3%, to 25,063.89 last week, while the S&P 500 rose 1.6%, to 2706.53, and the Nasdaq Composite climbed 1.4%, to 7263.87. The Dow gained 7.2% last month, its best January since 1989.”
  • “…“At least as of now, it looks like a perfect soft landing.”  “The market is sure acting like it. Not only is it rising quickly, but also in a very healthy manner. The Institutional View’s Andrew Addison notes that the S&P 500’s cumulative advance/decline line—a measure of the number of stocks trading up versus those trading down—hit a new all-time high last week. The A/D line helped signal the market bottom back in April 2018, and it started to weaken before the market tumbled at the end of last year. Now, it’s suggesting more upside.  “The odds are increasing that the S&P 500 will follow its A/D to new highs eventually,” Addison says.  Like the Fed, we’ll practice patience.”

The Wall Street Journal – February 1, 2019 – Jubilant January:What a difference a Month Makes in Markets – Mike Bird

  • “Global markets have had a strong start to the year, with equities gaining around the world, credit spreads falling on corporate debt, and emerging-market currencies strengthening as expectations fade of further increases in official U.S. interest rates.  Stocks in the U.S. have performed well: A 7.9% rise in the S&P 500 marks the best January in more than 30 years. Developing markets have performed even more strongly.  An 8.7% rise in dollar terms made January the best month for the MSCI Emerging Markets Index since March 2016...”
  • “…A big support has been the U.S. Federal Reserve, which indicated Wednesday that it was done raising interest rates for now. Benchmark 10-year U.S. bond yields had already fallen sharply in December and remained below 2.8% throughout January.  And while U.S.-China trade tensions haunted markets last year, news in the past month has been more positive. On Thursday, President Trump gave an upbeat assessment of trade talks after meeting with Chinese Vice Premier Liu He.”
  • “…A weaker dollar, a less hawkish Federal Reserve and a lull in trade tensions are a “perfect combination” for emerging-markets assets, according to Amundi Asset Management group chief investment officer Pascal Blanqué. He is particularly positive about stocks in Indonesia, India and China, as well as emerging-market debt in local currencies.”

U.S. Global Investors Investor Alert – February 1, 2019 – Frank Holmes

  • “…The U.S. Treasury Department announced on Wednesday that it plans to issue another record-breaking amount of debt, creating growing criticism and questioning of whether President Donald Trump’s tax cuts will pay for themselves. The Treasury is raising its long-term debt issuance at its quarterly refunding auctions to $84 billion, which is $1 billion more than three months ago...”
  • “…November sales of new homes soared 16.9 percent from a month earlier to 657,000, the Commerce Department said Thursday. Economists had expected sales to reach an annual rate of only 571,000. The November report on home sales had been postponed because of the partial shutdown of the federal government…The University of Michigan’s consumer sentiment index plunged to 91.2 in January from 98.3 in December, the worst reading since Donald Trump was elected president. The government shutdown rattled consumers and, unlike previous bouts, the numbers didn’t materially improve even after some 800,000 workers went back to work…”
  • “…The U.S. and China reportedly made “tremendous progress” during this week’s high-stakes talks between President Donald Trump and China’s Vice Premier Liu He…China is slated to pick up “substantially” its purchases of U.S. crops, energy and services, although these purchases may have been the easy money on the table, so to speak. Technology and intellectual property rights remain (presumably) sticking points as the talks migrate to Beijing next later this month. In the meantime, the U.S. and China continue to talk and work toward a resolution. President Trump affirmed that this is not the sort of deal one wants to renegotiate, that the deadline on tariffs as it stands remains intact, and that progress is being made, although “much work remains to be done.” Official Chinese outlets called the talks candid, specific, and fruitful.”

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