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The Best of What They Said and I Read Week Ending 6/9/2019

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 – June 7, 2019 – Frank Holmes 

  • “…The major market indices finished mostly up this week. The Dow Jones Industrial Average gained 4.71 percent. The S&P 500 Stock Index rose 4.41 percent, while the Nasdaq Composite climbed 3.88 percent. The Russell 2000 small capitalization index gained 3.34 percent this week…The 10-year Treasury bond yield fell 4 basis points to 2.082 percent."

  • “…Amazon unveiled a new Prime Air drone it says "within months" will start delivering packages. The new device can fly up to 15 miles, deliver packages up to 5 pounds and get deliveries to customers within 30 minutes…Big tech is taking big hits this week. Facebook, Google and Amazon all lost 4.5 percent to 7.5 percent on Monday after multiple reports suggested some of the biggest names in tech were being looked at over antitrust concerns.”

  • “…The unemployment rate for the month of May remained at 3.6 percent, the same as the month prior, reports MarketWatch.  Average hourly earnings rose by 0.2 percent in May, the same as April’s rate. Over the last 12 months, earnings rose by a solid 3.1 percent.  A gauge of U.S. consumer sentiment climbed to the second-highest level since 2000. The Bloomberg Consumer Comfort Index rose to 61.7 in the week ended June 2, according to a report on Thursday.”

  • “According to the Labor Department, job creation fell sharply in May, with nonfarm payrolls up by just 75,000, even as the unemployment rate remained at a 50-year low. The decline was the second in four months that payrolls increased by less than 100,000, CNBC reports.  The ISM manufacturing index unexpectedly fell in May to the lowest level since October 2016, coming in at 52.1. As Bloomberg reports, this is a sign that President Trump's trade war with China is weighing on the economy as he considers further tariffs.

Barron’s – June 7, 2019 – Is the 2020 Campaign Already Shaping the Stock Market – Randall W. Forsyth

  • “Lost in last week’s headlines was some actual good news: The net worth of U.S. households rose to a record in the first quarter, according to the Federal Reserve. A rebound in the value of their stocks and mutual funds, combined with the continued, steady increase in their real estate holdings, helped to lift their net worth by 4.5% in the first three months of 2019, to $108.6 trillion. That more than reversed the 3.7% drop in the fourth quarter of last year, when the equity market swooned.”

  • “If you missed that, it may be because it got lost in the cacophony of tweets and talking points. But it also may be that the good news didn’t touch most Americans. Torsten Slok, chief economist of Deutsche Bank Securities, observes that 10% of the richest U.S. households now control 70% of the nation’s wealth, up from about 60% at the turn of the century. Based on the demographics of Barron’s readers, you probably count yourself among that fortunate top decile, but the news might mean little to the other 90%, which haven’t participated in the gains.”

  • “But it also may have escaped the notice of many investors because, as David Rosenberg, chief economist and strategist for Gluskin Sheff, tweeted, the stock market has provided investors “nothing except the dividend, volatility, and acute anxiety” for the past 16 months. The S&P 500 index has crossed the 2800 mark 19 times since it first reached that level in January 2018, he notes.”

  • “What has changed in the past year and a half? For one thing, the Fed has increased its federal-funds rate four times in one-quarter-percentage-point steps. There also have been other changes, writes the Strategas Washington policy team, led by Dan Clifton. After the powerful combination of supply-side tax cuts and deregulation boosted growth last year to 3%, “recent events have shifted U.S. economic policy towards increasing taxes (tariffs) and regulation, which is a toxic mix for risk assets,” they write in a client note.  Those policy moves include the escalation of tariffs on China, the sudden imposition of tariffs on Mexico for anti-immigration purposes, and a “coordinated antitrust attack on U.S. tech companies,” according to the Strategas strategists. The combination means that companies are devoting more resources to shifting supply chains and complying with government rules than to growing their businesses, they add.

Kiplinger’s Personal Finance Adviser – Don’t Count on a Big Social Security Raise – June, 2019  

  • “Social Security recipients can expect the annual cost-of-living adjustment for benefits in 2020 to be 1.7%, or about $24 a month for the average monthly payout of $1,420, according to the Senior Citizens League, an advocacy group. The League's projections are based on the Consumer Price Index through April. The COLA could increase if higher tariffs on Chinese imports or a spike in gas prices drive up inflation in the third quarter. Social Security will announce the official increase for 2020 in October.”

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