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The Best of What They Said and I Read Week Ending 7/14/2019

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

Barron’s – July 12, 2019 – Stocks Hit Record Highs, and Earnings Could Keep Them There – Nicholas Jasinski

  • “…The driving force has been the promise of lower interest rates that could boost economic growth and keep stocks climbing higher. In two days of congressional testimony on Wednesday and Thursday, Fed Chairman Jerome Powell did everything but promise a cut at the Federal Open Market Committee’s next meeting on July 30 and 31. He cited persistently low inflation, stumbling foreign economic data, and lethargic U.S. business investment as reasons for easing.”

  • “Investors responded by bidding U.S. large-cap indexes to record highs. The S&P 500 index climbed 0.8%, to 3013.77, this past week; the Dow Jones Industrial Average rose 1.5%, to 27,332.03, and the Nasdaq Composite gained 1.0%, to 8244.14. All three are at their highest-ever closing values…Investors seem convinced that a rate decrease is coming at the end of the month, with federal-funds futures pricing implying a 100% probability of a cut.”

U.S. Global Investors - Investor Alert – July 12, 2019 – Frank Holmes 

  • “…There’s also a one-in-three chance we could see a full-blown recession sometime next year. That’s according to the New York Fed’s recession probability index, which flashed a 12-year high of 32.9 percent last month. Since 1960, every time the index has surpassed 30 percent, the economy has tanked within the next 12 months.”

  • “Despite the risks, the U.S. economy is still expanding—an unusual, though not unheard-of, time for the Fed to consider cutting rates.  So let’s assume for a moment that the Fed does take action next week. What effect would that have on the stock market as well as manufacturing activity?  That’s precisely what analysts at market research firm Fundstrat looked into recently, and what they found is that 100 percent of the time, the market increased in the next three, six, nine and 12 months. The median gain over nine months, in fact, was nearly 18 percent.  Once again, for those in the back: In every case going back to 1971, when the Fed began a new easing cycle while the economy was expanding, stocks went up three months, six months, nine months and 12 months later. No exceptions.”

  •  “…Turkish President Recep Tayyip Erdogan unexpectedly removed Murat Cetinkaya as central bank governor, after he refused an informal request to resign. Apart from the damage inflicted on the central bank’s credibility, the biggest concern for investors is whether Erdogan will force the central bank to cut rates too aggressively and too quickly.  The lira slumped against all of the world’s major currencies on concern that the interest rates will be lowered faster than warranted. The lira’s expected volatility soared after the news broke.”

  • “…Thailand’s struggling tourism industry is finding support with visitors India. At a beachfront hotel on the tropical island of Phuket, the occupancy rate from Chinese clientele has stalled, while bookings from India have begun to rise. Indian arrivals accelerated in recent months due to more direct flights, a visa waiver and, most importantly, increasing wealth. Thailand expects to see a fivefold jump in Indian visitors in the next 10 years.

Fortune – July 2019 – Small Loaves and Forever Rolls – Lydia Belanger

  • “Living alone is increasingly common.  In 2018, 28% of U.S. households were home to just one person, according to the census bureau.  That’s more than double the proportion of single-person residences in 1960, when the nuclear family peaked.”  

  • “For several years now, businesses in the real estate, home improvement, and jewelry sectors have been marketing to this growing solo demo.  Enter the consumer packaged-goods industry.  Proctor & Gamble’s Charmin brand, for example, is capitalizing on this paradigm shift with its newly marketed long-lasting Forever Roll of toilet paper – available in 8.7 – or 12-inch diameter.  The idea is to free up storage space, a concept that caters to single dwellers because they’re especially concentrated in dense urban areas.  Other products for singles aim to minimize food waste.  Bread brand Arnold now sells 10-slice Simply Small loaves for consumers who can’t bear to throw away moldy slices – or freeze bread for later use.”

  • “…A common thread here is the idea that millennials exhibit “a lack of commitment to anything in general,” says Mintel senior trend analyst Diane Kelter.  “Maybe they don’t know whether going to go out to eat or end up cooking.” They aren’t tied down to what’s on their calendars, or in their cabinets and closets…” 

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