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The Best of What They Said and I Read Week Ending 5/27/2018

Short excerpts from articles I found interesting.

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

U.S. Global Investors – May 25, 2018 – Investor Alert – by Frank Holmes

“…The major market indices finished up this week. The Dow Jones Industrial Average gained 0.15 percent. The S&P 500 Stock Index rose 0.31 percent, while the Nasdaq Composite climbed 1.08 percent. The Russell 2000 small capitalization index gained 0.02 percent this week…The 10-year Treasury bond yield fell 12.5 basis points to 2.932 percent.”

“…National home values have increased 8.7 percent since last April to a median value of $215,600, according to Zillow. Newly released data from the Federal Housing Finance Agency (FHFA) confirm the gains seen by Zillow, as home prices rose in all 50 states and the District of Columbia in the first quarter of 2018 compared to a year earlier. The FHFA report shows first quarter home prices rose 6.9 percent from a year earlier.”

“…According to Bloomberg, the strong U.S. dollar is too much of a headwind for gold. As the yellow metal fell below $1,300 an ounce for the first time this year, hedge funds and other large speculators pared bullish bets on bullion to the lowest in more than two years, the article reads. This spurred the biggest weekly decline since December.”

Barron’s  – May 26, 2018 – Dow Ticks Higher, but Beware a Summer Storm – by Ben Levisohn

“…To some observers, the market looks even stronger under the surface. The small-company Russell 2000 traded at a new all-time high last Monday, suggesting that there’s more to this market than just gains in a few big stocks. The NYSE advance-decline line—a cumulative measure of stocks rising and falling—also rose this week and sits near an all-time high, another sign of strength beneath the surface. Even the Cboe Volatility Index, or VIX, closed the week down 1.5%, a sign that there’s little fear in the market.”

“But the market is like an onion—and not just because it can make people cry. Underneath one layer lies another where things might not be quite as rosy. If small-cap outperformance and new highs in the advance-decline line suggest underlying strength, then the average stock in the S&P 500 should be outperforming the index, says Doug Ramsey, chief investment officer at the Leuthold Group. That’s not happening. In fact, the equal-weighted version of the S&P 500 has risen just 2.1% in May, nearly a full percentage point lower than the standard S&P 500’s 3% gain…”

The Wall Street Journal – May 25, 2018 Banks Won Big in Washington.   What it Means for Investors– by Jason Zweig

“The financial-deregulation bill passed by the U.S. Congress this week is the latest phase in the eternal tug-of-war between regulators and banks. As fast as governments impose limits on the financial industry, banks, brokers and other firms fight back.  It’s been happening for millennia, and it probably will keep happening until the end of time.”

“Governments have regulated finance since at least the Laws of Eshnunna, which set out limits and penalties in Mesopotamia more than 4,200 years ago. (The maximum allowable interest rate on loans in silver was 20%; in barley, 33.3%.)  During the reign of Emperor Tiberius (14 to 37 A.D.), the Roman usury laws, long neglected, were suddenly enforced. Compound interest and annual rates above 10% were prohibited, and loans were required to be secured by land. The result was a credit crunch and a real-estate crash, one of the first financial crises on record.”

”…Regulation gets tighter after busts because people say, ‘We don’t want to have another financial crisis,’ and then it loosens during booms as the bankers complain that the rules are too stringent or just find ways around them,” says Richard Sylla, a financial historian at New York University’s Stern School of Business. “This has been going on in the U.S. since the very beginning…”

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