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The Best of What They Said and I Read Week Ending 5/31/2020

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 29, 2020 – Frank Holmes

  • “Sometimes it can be challenging to remain optimistic, to look past the never-ending raft of negative headlines and see the upside.   This past week was no exception.   The number of COVID-19 deaths in the U.S. exceeded 100,000, a significant toll, with cases continuing to climb in new hot spots.  Meanwhile, political and racial tensions are running high. Violent protests erupted in Minneapolis in response to alleged police brutality. The incident also led to an escalation of the ongoing feud between Twitter and President Donald Trump, when Twitter blocked one of the president’s tweets for violating its rule about “glorifying violence.”  And across the Pacific, protests resumed in Hong Kong following China’s passage of a national security law that, among other things, enables Chinese law enforcement officials to operate within the special administrative region. The U.S. State Department announced that it no longer considers Hong Kong to have reasonable autonomy under Chinese rule.”
  •  “You get the idea.  As troubling as these developments are, it’s important not to lose sight of the good that appears to be taking place right now. Investors that focus only on the negative tend to miss out on the opportunities.  Consider airlines. Shares of commercial carriers flew up 10 percent on Tuesday on renewed hopes that a vaccine against the novel coronavirus can be developed as soon as year-end.  Dr. Anthony Fauci, the leading U.S. expert on infectious diseases, shared his outlook on Wednesday, telling CNN that “we have a good chance… that we might have a vaccine that would be deployable by the end of the year, by December and November.”

 

 Barron’s – May 29, 2020 – The Dow Rallied Again for the Week – but New Worries Are Adding Up. – Ben Levisohn

  • “…The Dow Jones Industrial Average gained 3.8%, the Nasdaq Composite advanced 1.8%, and the S&P 500 rose 3%. It was the S&P’s best week since, well, last week…Yet market sentiment is starting to feel a little stretched. The percentage of bearish respondents in the American Association of Individual Investors survey fell to a 12-week low, though it continues to remain elevated relative to historical levels…That shift in sentiment doesn’t mean a drop is coming, but it could leave the stock market more vulnerable to bad news. It isn’t an overstatement to call this market headline-driven, especially with so much of the economic data and earnings numbers made virtually meaningless by the coronavirus clampdown.”
  •  “…Just as worrisome is what has happened to Big Tech. Until recently, the Nasdaq had been leading the market higher. This past week, it lagged. Even worse, some of its biggest components suffered difficult weeks, particularly Facebook, which dropped 4.2% as it became collateral damage in the battle between Trump and Twitter, which fell 5.1%, over the future of social media.  For now, the Nasdaq might just be taking a rest as investors turn to cheaper, more economically exposed names. But with Big Tech such a huge part of the S&P 500— Microsoft, Apple, Amazon.com, Alphabet, and Facebook make up 20% of the index—a stall could be problematic for the market.”

The Wall Street Journal – May 29, 2020 – Stocks Notch Big Monthly Gains – Gunjan Banerji and Avantika Chilkoti

  • “The S&P 500 edged up Friday, notching a second consecutive week of strong gains and its best two-month performance since 2009.   Investors have been encouraged in recent weeks by signs of states and businesses around the country reopening, helping stocks rebound from their March lows.”
  •  “The S&P 500 and Dow Jones Industrial Average both climbed more than 4% in May, building on April’s robust rally when the indexes posted their best monthly percentage gains since 1987. The two-month rally has cut the indexes’ losses for the year to 5.8% and 11%, respectively.   The rally was initially led by shares of big technology companies, which helped the Nasdaq Composite outperform. The tech-heavy index rose 6.8% in May and is up 5.8% for 2020.  But the market’s leadership has shifted over the past two weeks, and the latest leg of the rebound has been underpinned by shares of companies that were considered laggards just weeks ago.”
  •  “Investors have turned to shares of financial companies and cooled toward the tech giants, for now. Financial companies in the S&P 500 jumped 6.6% this week, while the information-technology sector inched up 1.2%.  To many observers, the climb in value stocks like financials, which typically trade at low multiples of their book values, is a sign that investors are bracing for a broader economic recovery ahead.”

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