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The Best of What They Said and I Read Week Ending 7/1/2018

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 30, 2018 – When the Momentum Starts to Fade – by Avi Salzman

“…The Dow Jones Industrial Average finished the week down 309 points, or 1.3%, to close at 24,271.41. The S&P 500 fell 37 points, or 1.3%, to 2718.37, and the Nasdaq Composite dropped 183 points, or 2.4%, to 7510.30.”

 “…For the quarter, all three major indexes were higher – by just 0.7% for the Dow but 2.9% for the S&P 500 and 6.3% for the Nasdaq. It was again a strong quarter for technology stocks, with Apple(AAPL) rising 10.3% and Facebook(FB) closing near all-time highs.  Small-caps also prospered during the quarter, with the Russell 2000 surging 7.4%.  Macro trends have favored smaller companies. The dollar rose 5.5% in the quarter against the euro, hurting larger companies that export more goods. And smaller companies are less likely to be hurt by a trade war, because they sell more of their products domestically…”

Barron’s  – June 30, 2018 – Why Stocks Are Losing Out to Cash – by Randall W. Forsyth

“…“Ta-ta, TINA. That’s as in “there is no alternative,” which has been the description of common stocks in recent years while interest rates hovered near zero.  But TINA is getting dumped by investors who, according to Bianco Research’s Ben Breitholtz, are having a “new love affair with cash.” Not literally the folding green stuff, but supersafe, ultraliquid investments. Exchange-traded funds investing in short-term government securities recently have been attracting 33 cents out of every dollar going into ETFs of all asset categories, he wrote on the Bianco website early in the week.”

“That’s confirmed by the stampede into Treasury bills by the Thundering Herd, according to Bank of America Merrill Lynch’s global investment strategy team led by Michael Hartnett, as the firm’s clients ramp up their holdings of the safest, most liquid investment on the planet. As noted here last week, short-term T-bills provide nearly the same yield as dividends on the S&P 500, which may be why TINA seems a bit fey these days.”

“Hartnett & Co. also note that equity funds suffered their second-biggest weekly outflow, some $29.7 billion, last week. Since the beginning of the year, there has been a big turnaround in flows into equities. From a gusher of $103 billion in the first five weeks of 2018, when stocks seemed on an unstoppable ascent, the inflows slowed to $31 billion over the next five months, before reversing to a $50 billion outflow in the most recent five days…”

The Kiplinger Letter – June 29, 2018

“…E-commerce is big and only getting bigger. A few giant companies are dominating…15% of retail sales take place online now, once you exclude gasoline, restaurant meals and autos…things that are difficult to sell on the web.  In 2013…just 9%. And there’s no slowdown in sight.  Amazon nets 44% of those internet sales. 75% of households with yearly income of $100,000 or more have an Amazon Prime membership. Over 10% of Americans have Amazon’s smart assistant on a device ready and waiting to place orders by voice prompt…”

“…Most states will likely have revised e-commerce tax laws within a year, now that the Supreme Court has ruled states can force out-of-state web sellers to collect sales tax from their residents. The move will help level the playing field for brick-and-mortar stores, which compete with e-tailers that have evaded sales taxes. Look for other states to enact laws similar to that in S.D...the state law that was before the Supreme Court...including using exemptions for smaller sellers. S.D. exempts sellers that make under $100,000 in sales or 200 transactions in a year.”

“…Mark your calendar for Amazon’s self-created shopping holiday, Prime Day. It’s likely to fall on July 16 and 17 this year, with Black Friday-like sales to members of Amazon’s subscription service. Expect competitors to launch discounts of their own. Three-quarters of shoppers on Prime Day also check out rivals’ websites to comparison shop. With all the buzz, it’s a good time to try to lure new customers…”


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