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The Best of What They Said and I Read Week Ending 5/31/2019

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 - Investor Alert – May 31, 2019 – Frank Holmes 

  • “…The major market indices finished down this week. The Dow Jones Industrial Average lost 3.01 percent. The S&P 500 Stock Index fell 2.62 while the Nasdaq Composite fell 2.41 percent. The Russell 2000 small capitalization index lost 3.21 percent this week.  The 10-year Treasury bond yield fell 19 basis points to 2.13 percent.”

  • “…During this year’s South by Southwest, NYU professor Scott Galloway (who predicted Amazon’s takeover of Whole Foods) made the prediction that Tesla will be acquired within a year, reports Business Insider. According to Galloway, the company’s tanking share price makes it a prime takeover target.”

  • “…Elizabeth Warren's presidential campaign is running a billboard in San Francisco calling for the breakup of the tech giants. "Break up big tech," the sign reads, and then asks people to text the campaign to "join our fight." The increased political attention could lead to regulations that negatively impact the profits of these big tech companies.”

The Wall Street Journal – May 31, 2019 – Tariff Man Unchained – The Editorial Board

  • “The biggest economic risk of a Donald Trump Presidency has always been that his trade obsessions would swamp the benefits of tax reform and deregulation. For two years he has kept his worst protectionist impulses mostly in check, but as he seeks a second term we are now seeing Tariff Man unchained. Where he stops nobody knows, which is bad for the economy and perhaps his own re-election.”

  • “Mr. Trump’s trade talks with China have broken down and both countries are escalating their rhetoric. The U.S. is blocking Huawei from buying U.S. products, while China is threatening to block the export of rare-earth minerals that are crucial to many U.S. industries. A trade deal that looked imminent weeks ago now looks months away, if it happens at all. Mr. Trump’s threat of 25% tariffs on foreign autos also hangs over Europe and Japan.”

  • “Then out of the blue late Thursday Mr. Trump announced escalating tariffs up to 25% on U.S. imports from Mexico for alleged sins on immigration…The Mexico tariffs also heighten economic uncertainty because they aren’t even about trade. The risk is that Mr. Trump has come to view tariffs as a blunt-force tool to achieve any diplomatic goal. They are Mr. Trump’s magic elixir that will solve any political ailment. Like Barack Obama’s willy-nilly regulation, tariffs can thus pop up at any time for any reason. No supply chain is safe from Tariff Man.”

  • “There’s also the matter of this President’s credibility around the world. Only months ago Mr. Trump signed a new trade pact with Mexico and Canada to replace Nafta. The deal reassured financial markets. But now he whacks Mexico with unilateral tariffs that violate Nafta and World Trade Organization (WTO) rules. Other national leaders can be forgiven for concluding that any trade deal with Mr. Trump is subject to revision on his personal political whim.”

  • “…But then Tariff Man is impulsive and often his own worst enemy. Equities have fallen for six straight weeks and corporate profits are down. The job market is strong, but that isn’t guaranteed if investment starts to lag. Senate Republicans need to get off their sedan chairs and send this President a message on trade, or they may be in the minority in 2021.”

The Economist – Sin taxes, Soda Stream, How to tax sugary drinks – May 31, 2019  

  • “Sugar taxes are on a high.  Around 40 countries and seven American cities have started to tax sugary drinks, mostly in the past few years.  Supporters say such levies compensate for the costs imposed on health services by higher rates of obesity, diabetes and heart disease.  They might also help short-termist buyers avoid the long-term consequences of sugary indulgences. Opponents counter that such levies are a fun-killer, souring peoples pleasure, and regressive, because poorer people spend a bigger share of their income on soft drinks…”

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