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The Best of What They Said and I Read Week Ending 6/7/2020

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 5, 2020 – The Stock Market Is Always Right – Ben Levisohn

  • “So much for the disconnect between the market and the economy.  Ever since stocks bottomed on March 23, we’ve been wondering how the S&P 500 index —up 43% from then through Thursday’s close—could keep going higher. Now we know.  On Friday, we learned that the U.S. economy added 2.5 million jobs in May. It was predicted to see job losses of about 8 million. The unemployment rate unexpectedly fell to 13.3%, down from 14.7% in April and far better than the 20% predicted by economists.  To say the number was a surprise understates just how unexpected the good news was to everyone but the stock market, which has been telling us that good news was coming.”
  • “It’s easy to forget that the stock market is a leading indicator—it starts to respond before we get the data. That’s why the S&P 500 was already in free fall when the World Health Organization declared a pandemic on March 11 and was starting to rise as the headlines kept getting worse. It’s also why the Dow Jones Industrial Average climbed 1727.87 points, or 6.8%, to 27,110.98 this past week, while the Nasdaq Composite rose 3.4%, to 9814.08, and the S&P 500 gained 4.9%, to 3193.93.”
  • “…That risk could grow if a new stimulus bill—something that the market is betting on—isn’t passed. On the surface, passing such a bill would appear less likely following the payrolls number. White House economic advisor Stephen Moore, for instance, said that one isn’t needed now. Still, CIBC’s Donabedian doesn’t think that’s too much of a problem yet with an election just five months away.  “We’ll hear skepticism from the few remaining fiscal hawks in Washington,” he says. “But no one wants to have to defend being called a Scrooge.”

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

  • “…The major market indices finished up this week. The Dow Jones Industrial Average gained 6.81 percent. The S&P 500 Stock Index rose 4.91 percent, while the Nasdaq Composite climbed 3.42 percent. The Russell 2000 small capitalization index gained 8.11 percent this week…The 10-year Treasury bond yield rose 24 basis points to 0.891 percent.”
  •  “…The S&P 500’s biggest-ever gain over 50 trading days “offers a reason to think stock prices may be even higher this time next year,” according to Ryan Detrick, a senior market strategist at LPL Financial LLC. Detrick made the comment in a post Thursday on LPL’s research blog. The index rose for the 50 days ended Wednesday by 40 percent, the most since it was restructured to include 500 companies in 1957, according to data from Bloomberg. Peak gains of more than 20 percent occurred seven times between 1975 and 2009, and the S&P 500 moved higher each time in the next 12 months. The average advance was 17 percent.”

The Kiplinger Letter – June 5, 2020 

  • “…A bipartisan group of lawmakers wants to hike spending on science and tech.  New legislation calls for more money and a remake of the National Science Foundation.   The goal is to prevent China and other tech rivals from outpacing the U.S.  The Endless Frontier Act would create a new $100-billion program within the NSF over five years to lead investment in researching artificial intelligence, robotics, etc.  It calls for 10 regional tech hubs outside current tech hot spots. Plus, new funding for research spending at universities, with a focus on partnering with private firms.  With both parties worried about China, the bill will get a close look.” 
  •  “…Amid widespread protests and the worst civil unrest in the U.S. since 1968... A few things seem clear. Public outrage at the Minneapolis killing is broad.  Black or white, Republican or Democratic, of whatever class, there is little difference.   Most Americans condemn what happened and back the protests decrying the killing.  A major push for policing reform at the state and local levels appears likely.  Anger over prior racially charged police shootings faded. This time looks different.   But the public does not condone the looting and violence that have followed in the wake of the protests, and wants the cities’ streets made safe again. However, not via excessive force by law enforcement, which would only inflame the situation. Navigating this volatile climate may be the president’s greatest challenge.  The number of voters who support his response or oppose it will weigh heavily in Nov.”

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