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The Best of What They Said and I Read Week Ending 3/4/18

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 – March 3, 2018 – Dow Drops 3% for the Week – and It Isn’t Just Tariffs – by Ben Levisohn

  • “Whenever the market drops, everyone looks for a reason. This week had many—which means maybe it didn’t actually need one to fall this week. The Dow Jones Industrial Average plummeted 771.93 points, or 3%, to 24,538.06 this week, while the Standard & Poor’s 500 index fell 2%, to 2691.25. The Nasdaq Composite declined 1.1%, to 7257.87.”
  •  “If you had tuned in only this past Thursday, when the Dow dropped 420.22 points, you would have thought the drubbing was due to President Donald Trump’s decision to place tariffs on imported steel and aluminum. But Tuesday’s 299.24-point decline was ostensibly about Federal Reserve Chairman Jerome Powell’s hint in his testimony before Congress that perhaps the U.S. economy is strong enough to require four rate hikes instead of three. And Wednesday’s 380.83-point stumble? There were murmurs it was caused by reports that the Senate wouldn’t pass an infrastructure plan this year. Note we haven’t mentioned higher bond yields or rising wages, the two factors said to be responsible for the market correction that occurred last month. As we said, reasons.”
  • “And there are good reasons to be concerned about all of them. Tariffs, though sold as a way to protect U.S. interests, are in essence a tax, one that could ultimately cause prices of goods that use steel and aluminum to rise—something that could offset the recent tax cut that many Americans received. There’s also the possibility—or likelihood—that U.S. trading partners will retaliate with tariffs of their own.  “It isn’t the opening salvo that does the greatest damage,” explains Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets. “It’s what follows that will ultimately reshape the economic landscape.”

The Economist – February 24, 2018 – A Future Perfect

  • Enlightenment Now: The Case for Reason, Science, Humanism and Progress. By Steven Pinker. Viking; 576 pages; $35. Allen Lane; £25."

    To anyone who reads a newspaper, this can seem a miserable world…To discern the true state of the world, he says, we should use numbers…The world is about 100 times wealthier than 200 years ago and, contrary to popular belief, its wealth is more evenly distributed. The share of people killed annually in wars is less than a quarter of that in the 1980s and half a percent of the toll in the second world war.”

  • “…For this he credits the values of the 18th-century Enlightenment…By applying reason to problems, people can solve them…Trade and technology spread good ideas, allowing rich countries to grow richer and poor ones to catch up…The vast majority of poor Americans enjoy luxuries unavailable to the Vanderbilts and Astors of 150 years ago, such as electricity, air-conditioning and colour televisions…It is not just that better medicine and sanitation allow people to live longer, healthier lives…In every part of the world IQ scores have been rising, by a whopping 30 points in 100 years, meaning that the average person today scores better than 98% of people a century ago…The answer is better nutrition (“brains are greedy organs”) and more stimulation. Children are far likelier to go to school than they were in 1900, while “outside the schoolhouse, analytic thinking is encouraged by a culture...”

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

  • “… U.S. consumer confidence jumped to a 17-year high in February as optimism about employment prospects grew and Americans began seeing additional money in their paychecks from recently enacted tax cuts...The confidence index rose…the highest since November 2000…The weekly U.S. jobless figures continue to reflect a tight labor market. U.S. filings for unemployment benefits fell last week to the lowest level in almost five decades…The four-week average of initial claims fell to 220,500, also the lowest since 1969.”
  • “…According to a report by Bloomberg, the use of Bitcoin (or any cryptocurrencies) is beginning to make many divorces end even worse. One of the reasons for this is the fact digital currencies make it much easier for a spouse to hide assets. In addition, the wild volatility in these coins makes it difficult to determine exact valuation of assets.”

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