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The Best of What They Said and I Read Week Ending 2/4/2018

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 – February 2 - 3, 2018 –  Dow Drops More Than 650 Points on Worries About Inflation– by Corrie Driebusch, Riva Gold, and Daniel Kruger

  • “… A rare burst of volatility jolted financial markets and sent stocks and bonds tumbling Friday, a sharp shift from the tranquility that has characterized much of the nearly nine-year bull-market run.  The Dow Jones Industrial Average dropped 2.5%, its biggest one-day decline since the U.K.’s surprise vote to leave the European Union in June 2016. Meanwhile, the yield on the benchmark 10-year Treasury note climbed to 2.852%, its highest level since January 2014.”
  • “…Now, the fear is that the past week’s selloff—the Dow posted a 4.1% decline, its biggest weekly drop since January 2016—could mark the start of a more tumultuous period in markets…Still, many investors and analysts embraced the newfound volatility, calling it healthy after the swift—and likely unsustainable—stock-market rise that ushered in the New Year. The Dow rose 5.8% in January as strong economic and corporate-earnings growth invigorated investors, who poured $100 billion into equity funds in January, their biggest monthly inflow on record, according to fund-tracker EPFR Global.”
  • “…The Dow fell 665.75 points to 25520.96 Friday, its biggest one-day point drop since December 2008. For the week, the blue-chip index fell nearly 1100 points, the most since the throes of the financial crisis in October 2008…All three indexes remain higher in 2018, with the Dow and S&P 500 up more than 3% and the Nasdaq up 4.9%.

Barron’s – February 3, 2018 – Dow’s Worst Week in Two Years Stuns Investors – by Ben Levisohn

  • “…The Dow Jones Industrial Average tumbled 1,095.75 points, or 4.1%, to 25,520.96 last week, its largest percentage decline in more than two years. The Standard & Poor’s 500 index dropped 3.9%, to 2762.13, while the Nasdaq Composite fell 3.5%, to 7240.95.
  • “…Based on recent trends, the market was desperately in need of a rest. The S&P 500 had gained 7.5% in just 18 trading days in 2018, putting it on pace to gain 158% this year. The index had gone 99 days without a drop of 0.6% or more before falling 0.7% on Tuesday. “This kind of thing was long overdue,” says Michael Darda, chief economist at MKM Partners.”
  • “…Even after this past week’s decline, the S&P 500 has gone 404 days without a 5% pullback from its all-time high, says Chris Verrone, technical strategist at Strategas Research Partners. Such a drop would only put the index near its 50-day moving average at 2715.15. A 12% drop from the high would put the S&P 500 near its 200-day moving average, at 2532.41.”

U.S. Global Investors – February 2, 2018 – Investor Alert – by Frank Holmes 

  • “…The 10-year Treasury bond yield rose 17 basis points to 2.84 percent…Walmart is reportedly in talks to acquire a stake in Flipkart, Amazon's biggest rival in India…Harley-Davidson is working on an electric motorcycle for 2019. The announcement came alongside the company's disappointing fourth-quarter earnings. Entering the growing electric vehicle market is an opportunity to grab market share…An analyst from BMO Capital Markets downgraded Apple and said that the iPhone has hit a plateau.”
  • “…Total U.S. employee compensation rose in the fourth quarter and matched the biggest 12-month gain since 2008, as private-sector pay picked up, according to the Labor Department. Several industry groups registered wage increases of 3 percent or higher, including transportation and services such as leisure.”
  • “…Productivity in the U.S. unexpectedly fell for the first time since early 2016 as working hours slightly outpaced output in the fourth quarter, highlighting a sluggish pace of efficiency gains during this expansion, a Labor Department report showed. “

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