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The Best of What They Said and I Read Week Ending 7/12/2020

Barron’s – July 10, 2020 – The Markets Reckoning Is Almost Here.   It’s Not Just About Earnings. – Nicholas Jasinski

  • “ …The Dow Jones Industrial Average rose 248 points, or 0.96%, this past week, to 26,075.30, while the unstoppable Nasdaq Composite rose 4.01%, to 10,617.44. The week was a microcosm of the past month’s market action, with stocks falling on days following record U.S. coronavirus cases and rising on less-bad days, including Friday’s gains on a positive incremental analysis of remdesivir data from Gilead Sciences. Through it all, tech shares continued to rise.
  • “…Selective rollbacks of reopening measures like ordering bars and restaurants to shut down will have had a few weeks to work their way through, and lagging case and hospitalization numbers should begin to show their effect—or not. Either outcome has implications for the path and speed of the economic recovery, and thereby the market. So does the next fiscal stimulus package out of Congress. As things currently stand, funding for enhanced unemployment benefits and the small-business Paycheck Protection Program expire on July 31 and Aug. 8, respectively. That has some concerned about an impending “income cliff,” in which millions of U.S. consumers’ earnings see a sharp and sudden drop.”
  • “…Speaking on Thursday, Treasury Secretary Steven Mnuchin said that the Trump administration and Senate leadership are discussing a new bill and singled out a period between July 20 and July 31 for passing it, pending an agreement with Congressional Democrats. That could be another potential hiccup or boost for the market in the next few weeks.”

U.S. Global Investors – July 10, 2020 – Frank Holmes

  • “…Energy was the worst performing S&P 500 sector of the first half of the year, falling as much as 35.3 percent, just beating banks, which sank 34.9 percent. Natural gas, coal and oil were all down more than 20 percent for the https://twentyoverten.com/edit six-month period as travel restrictions were put in place and demand forecasts deteriorated.” 
  • “…Kantar Group, a London-based consulting firm, recently published its Brandz Top 100 Most Valuable Global Brands for 2020, and once again, the Amazon brand ranked first in the world at $416 billion. (This is not to be confused with market capitalization, of which Amazon’s currently stands at around $1.6 trillion.)  Rounding out Kantar’s top 10 to were Apple, Microsoft, Google, Visa, Alibaba, Tencent, Facebook, McDonald’s and Mastercard.  Besides being highly recognizable, all of these brands are similar in that they’re highly innovative and have managed to adapt to change. That includes change in the face of global pandemic, which few people saw coming.”

 The Wall Street Journal – July 5, 2020 – Are Stock Investors Irrationally Exuberant Again – Mark Hulbert

  • “There’s a lot of talk these days about the return of “irrational exuberance”—the frothy stock market seen in the internet-stock bubble of the late 1990s. But a close look at the data suggests things are nowhere near that heated. That doesn’t mean the stock market won’t fall in coming months, of course. But if it does, it will be for reasons other than speculative excesses rivaling those of two decades ago.”
  • “The term “irrational exuberance” traces to a now-famous speech in December 1996 by Alan Greenspan, then chairman of the Federal Reserve. Persuaded by comments by Yale University professor Robert Shiller, Mr. Greenspan wondered, “How do we know when irrational exuberance has unduly escalated asset values?” The comment caused a sensation among investors, and for years, the term and the date Mr. Greenspan uttered it was referenced whenever the press published stock charts on milestones in the markets.”
  • “…it is hard to argue that there aren’t pockets of irrational exuberance in the market. But that is far different than concluding that the market as a whole is as frothy as it was in the late 1990s. Our memories are notoriously unreliable when trying to make such comparisons, which is why it is important to rely on objective data. Perhaps the most systematic effort to quantify investor exuberance was conducted 20 years ago by Malcolm Baker, a finance professor at Harvard Business School, and Jeffrey Wurgler, a finance professor at New York University. In research done in the wake of the bursting of the internet-stock bubble, they identified five variables for comparing investor sentiment at different points in time and showing how that relates to stock performance. A composite of those indicators shows that the current market is far less exuberant than in the late 1990s.”

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