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The Best of What They Said and I Read Week Ending 7/19/2020

Barron’s – July 17, 2020 – Tech Finally Took It on the Chin.   Why Its Reversal Is Worrisome – Ben Levisohn

  • “ …The Nasdaq Composite has been the vehicle of choice for investors in 2020. The tech-heavy index has gained 17% this year, while the S&P 500 index is roughly flat…Still, the Nasdaq took it on the chin this past week. It dropped 1.1%, to 10,503.19, while the S&P 500 gained 1.2%, to 3224.73. That 2.3 percentage-point gap is the widest between the two since 2016…One week doesn’t seem like much to get concerned about, but it was the way the Nasdaq fell behind that is worrisome: It came after a big reversal. On Monday, the Nasdaq 100, composed of the 100 largest stocks on the exchange, was up more than 2% before finishing the day down more than 2%. That doesn’t happen too often. In fact, there have been just nine other times when the index has gained more than 1%, only to finish the day down more than 1%. Three months later, the Nasdaq 100 was lower 60% of the time, with an average loss of 4.4%, according to Sundial Capital Research.
  •  “…the market’s breadth continues to hold, even as tech rallies. “The Advance-Decline index just made a new high,” writes Wellington Shields’ Frank Gretz. “[Most] days most stocks go up.…That’s not how markets get into trouble.”  

 

 The Kiplinger Lettter – July 12, 2020

  • “In the competition for global talent…The U.S. has long been number one.  But its lead is gradually starting to slip as U.S. immigration policy becomes more restrictive and other countries make bold moves in an effort to attract more of the world’s most skilled workers…Many of the best and brightest come to study at U.S. colleges and universities.  The number of international students in the U.S. reached an all-time high last year, with over half of them pursuing degrees in so-called STEM fields…And the U.S. economy reaps the benefits.  More than half of America’s billion-dollar start-ups, for example, have immigrant founders, including Cambridge, Mass.-based Moderna, one of several biotech companies in the race to develop a vaccine for COVID-19.
  •  The problem: U.S. immigration policy is increasingly restrictive and outdated.  Business demand for skills-based H-1B visas and employment-based green cards has long outstripped supply…Congress hasn’t raised the cap for employment-based green cards in three decades, resulting in lengthy backlogs…The U.K. and China have also made big pushes for scientific talent.  The increased competition is a huge source of concern for the tech sector, which relies heavily on foreign talent in fields such as artificial intelligence. The U.S. hosts a majority of the world’s top AI researchers, but 69% of them are foreign-born.
  •  While a growing number of Americans support increasing immigration…The issue remains politically contentious, making major reform difficult.  Critics say Washington should focus on domestic labor force development. Still, many business leaders are skeptical the U.S. can develop enough homegrown talent to overcome a shortfall in skilled workers, expected to reach 6.5 million by 2030.   Industries facing the worst shortages of talent range from health care to manufacturing.

 

 U.S. Global Investors – July 17, 2020 – Frank Holmes

  • “…Talk of a bubble in technology has been gaining traction, and there is some statistical data that backs the argument. The ratio between the Nasdaq 100 Index and Russell 2000 Index is the highest since the last tech boom between December 1999 and June 2000, approaching a three-standard-deviation move from its mean quarterly average since 1985. The tech-heavy gauge began to roll over earlier this week, possibly stalling above 11,000.”
  • “…Nearly two-thirds of health-care industry leaders anticipate the coronavirus pandemic will continue into the second half of 2021 or longer. The availability of an effective vaccine is the top concern for 71 percent of the respondents, according to a Lazard survey of 221 executives and investors across the health-care industry that was published Thursday.”
  •  “About $4 billion of government debt has been sold for parking facilities, which had already faced long-term threats from ride-sharing companies, self-driving cars and working from home. S&P Global Ratings on Wednesday slashed the credit rating on debt for public parking garages in Baltimore, Maryland, by three notches to junk, saying that the financial hit from the coronavirus is “outside of management’s control.”
  •  “Bilateral trade fell 15 percent in 2019 after President Trump began imposing tariffs on Chinese imports and China responded in kind. It had surged by an annual average of 11 percent from 2001 to 2018. The pandemic and new fights over market access are further depressing trade tensions.”

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