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The Best of What They Said and I Read week ending 5/21/2017

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 – May 20, 2017 – Strong Profits Help Stocks Rebound From D.C. Woes – by Reshma Kapadia

  • “The stock market finally—if only momentarily—took off its blinders last week to the drama in the nation’s capital. The S&P 500 sank 1.8% on Wednesday, suffering its steepest decline since Sept. 9, 2016, as phrases like obstruction of justice and impeachment moved from the fringes of liberal fantasies into mainstream discourse. But by week’s end, the focus returned to stronger-than-expected earnings and the market pared most of its losses.The Dow Jones Industrial Average fell 0.44%, or 91.77 points, last week to end at 20,804.84, while the Standard & Poor’s 500 index lost 0.4%, or 9.17 points, to 2381.73, erasing most of Wednesday’s tumble. The Nasdaq Composite slipped 0.6% to 6083.70. The CBOE Volatility Index, or VIX, closed at 12.04, after sitting near multi-year lows in single digits.”
  • “For months, the market has shaken off legislative setbacks for President Donald Trump’s agenda, including multiple revisions to its health-care plan, and tuned out the turmoil in the White House. But reports that President Trump allegedly tried to get former FBI Director James Comey to drop a probe into a former aide’s ties to Russia and the swift appointment of former FBI Director Robert Mueller as special counsel to investigate the campaign’s links to Russia took the drama to a level the market couldn’t ignore.”
  • “When this turned from legislative frustration into a possible ongoing investigation that could suck up the oxygen to get anything done in D.C., any residual optimism left for tax reform or other policies to stimulate economic growth fell perilously close to zero,” says Brian Nick, chief investment strategist for TIAA Investment, who now does not expect any major boost from tax reform or infrastructure until 2019…”

Barron’s – May 20, 2017 – If Trump Were To Exit, Stocks Could Surge

  • “Wharton finance professor Jeremy Siegel predicts that if President Donald Trump is driven out of office, the Dow could jump by 1,000 points, or 5%, even before President Mike Pence takes over the White House. Short of that, as Siegel told Barron’s, the weakening of the Trump presidency is bullish for the economy and for the stock market. That’s because the bull market is propelled by the Republican agenda, not the agenda of Donald Trump.”
  • “To the extent that Trump is weakened, those parts of Trump’s agenda that are normally anathema to Republicans—especially protectionist measures against free trade—would be less likely to be implemented. Just as likely to be implemented would be key parts of the Republican agenda that include reduced regulation and lower corporate income taxes, which together could boost earnings by 10%. In all, he predicts the Dow could add some 2,000 points, or 10%, by the end of this year…”

U.S. Global Investors – May 19, 2017 - Investor Alert - by Frank Holmes

  • “…Economic growth is finally picking up in Europe—“solid and broad,” as European Central Bank (ECB) president Mario Draghi recently put it—and many countries’ purchasing managers’ indexes (PMIs) are at five- and six-year highs. Export orders and hiring have accelerated. Labor participation is improving. European commodity sectors, including energy and metals, look cheap and oversold, meaning it might be time to start accumulating. Trading at around 17 times earnings, European companies are priced to move compared to American firms, which are trading at 22 times earnings.” Dividend yields also look attractive relative to U.S. stocks…”

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