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The Best of What They Said and I Read Week Ending 6/14/2020

Short excerpts from articles I found interesting.  I may not agree with the author and the following material is not intended as investment advice

 

Barron’s – June 12, 2020 – The Dow Fell 1505 Points for the Week.   Why Investors Shouldn’t Fret. – Nicholas Jasinski

  • “…The Dow Jones Industrial Average fell 1505.44 points, or 5.6%, to 25,605.54 this past week, its worst weekly performance since the third week in March...After rising to three straight record highs, the Nasdaq Composite closed the week down 2.3%, at 9588.81, while the S&P 500 lost 4.8%, to 3041.31, and the Russell 2000 tumbled 7.9%, to 1387.68…Still, coming after a more than 40% surge since late March—and with many of the market’s most coronavirus-sensitive companies more than doubling from their troughs in just weeks—conditions were overbought and ripe for a slide, and the past week’s reminders presented the catalyst.”
  • “…A catalyst for a pullback, not something more serious. That’s because the factors that boosted the market in recent weeks are still almost entirely in place: a flood of liquidity from the Fed, what’s expected to be better incoming economic data, and consumers and corporations adjusting to life and business in a coronavirus world. Together, they point to improving corporate earnings and justify high valuation multiples.”
  • … “Right now we’re so consumed by the reopening news,” says Jonathan Golub, chief U.S. equity strategist at Credit Suisse. “I think that we’ll find that the jump to 80%, 90% of normal is going to be reasonably quick, but then that last mile is going to be more difficult, and that will eventually get people’s attention. But right now the market is focusing on this sequential improvement, and as long as that’s what’s happening, small-caps will beat large, value will beat growth, and cyclicals will do better.”  Until they don’t.”

 

U.S. Global Investors – June 5, 2020 – Frank Holmes

  • …Treasury Secretary Steven Mnuchin said the U.S. shouldn’t shut down the economy again even if there is another surge in coronavirus cases. “We’ve learned that if you shut down the economy, you’re going to create more damage -- medical problems that get put on hold,” Mnuchin said Thursday on CNBC. “We can’t shut down the economy again.”
  • “…Ajay Kapur, head of Asia and global emerging-market strategy at Bank of America, says that the U.S.-China rivalry could have many benefits, particularly in driving investment and innovation. The escalation in tensions between the two countries since President Trump took office in 2017 has been viewed as negative by stock traders, but in fact could be positive…“For equity investors, especially growth investors, the seeds of new military-civilian technologies that are germinating today will be irrigated by the full-blown great power rivalry, and blossom in unknown ways in the coming decades,” 
  • “Contemporary Amperex Technology Co. Ltd., a Chinese company that makes electric car batteries for Tesla and Volkswagen, has developed a power pack that lasts more than a million miles, reports Bloomberg. The company said it is ready to produce the battery that lasts 16 years, or 1.24 million miles. Warranties on batteries currently used in electric cars cover on average 150,000 miles, or eight years, making this development a landmark for the industry. Chairman Zeng Yuqun said that the battery would cost around 10 percent more than current electric vehicle batteries.”
  • “…New legislation from the U.S. shows that lawmakers are considering investing tens of billions in America’s semiconductor industry to help it retain an edge over China. Prior legislation has focused on chip research, but this latest bull emphasizes domestic manufacturing. Although positive for the U.S., this is negative for China in potentially losing business in its semiconductor sales and heating up tensions between the two countries.”

 

The Kiplinger Letter – June 5, 2020 

  • “…A bipartisan group of lawmakers wants to require businesses to accept cash over worries that the rising trend of firms refusing to take cash will cause harm to the 6% of Americans who don’t have a bank account, and others who prefer cash.  The House bill would also bar retailers from charging extra for paying in greenbacks.   The Payment Choice Act was introduced last year, but its sponsors say the pandemic means more people won’t have the funds to open, or maintain, bank accounts, which often require minimum deposits and other terms. The Senate hasn’t weighed in with its own bill, but look for the proposal to gain steam as economic turmoil lingers

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