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The Best of What They Said and I Read week ending 7/30/2017

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 29, 2017 – As D.C. Tests New Lows, Markets Keep Soaring –– by Randall W. Forsyth

  • “This is truly a tale of two cities: Washington and New York. One is setting highs, the other is reaching previously unimaginable lows. And it’s not the National League East standings we’re talking about. Stocks traded on the New York Stock Exchange, downtown at Wall and Broad, and those on the Nasdaq, headquartered in Times Square, set record highs last week, at least in terms of the major market averages. That contrasted with the lows being plumbed in the nation’s capital, both in the quality of discourse and the ability to advance policies.”
  •  “Not that any of what happens within the Beltway seems to matter much in economic and financial terms. The U.S. economy continues to chug along, steadily if unimpressively, and prices of stocks and other so-called risk assets, such as speculative-grade bonds, continue their ascent. They seem undeterred by the disarray in D.C.…The Dow Jones Industrial Average ended on Friday at yet another record, up 1.2% for the week, while the Standard & Poor’s 500 and the Nasdaq Composite set marks on Wednesday, but trimmed their gains over the next two sessions, ending the week lower by 0.02% and 0.2%, respectively.”

 The Wall Street Journal – July 30, 2017 – Four Activists Challenge Plan To Break Up DowDuPont by David Benoit

  • “Andrew Liveris is days away from what was supposed to be his crowning achievement: merging Dow Chemical Co. with longtime rival DuPont Co.  But instead of celebrating his legacy, Mr. Liveris is fighting for it. A quartet of well-known activist investors, including Jana Partners LLC and Trian Fund Management LP, has lined up to challenge the plans taking shape to break apart DowDuPont. The $150 billion company is set to be created in August upon the deal’s close.”
  • “…As the companies review the exact details of the breakup, these investors are concerned the final plan won’t deviate much from the original one outlined when the deal was announced in December 2015. Their main complaint: The materials company expected to emerge from the breakup, the new version of Dow Chemical, looks too much like the current Dow and needs to shrink.”
  • “…The business at the nexus of the dispute is Dow Corning, a pioneer in silicones used in products from laundry detergent to building insulation. Dow Chemical took full ownership of the longtime joint venture with Corning Inc. in a separate deal announced the same day as the DowDuPont merger.  The activist investors want Dow Corning’s assets to go to the specialty-products company carved out of DowDuPont, not the materials firm.  The activists view the new Dow as a commodity company and think more value would be created if silicones were grouped with other high-margin and research-intensive businesses…Dow Chemical executives have emphasized that Dow Corning fits “hand-in-glove” with traditional chemicals. Executives say having both silicones and commodity chemicals together has helped grow sales. Dow Corning’s earnings before interest, taxes, depreciation and amortization have doubled since the takeover after years of stagnant growth. Executives now expect silicones to generate $2 billion in additional Ebitda, double the original goal.”

 U.S. Global Investors – July 28, 2017 - Investor Alert - by Frank Holmes

  • “…According to Bloomberg, bankers and accomplished financiers are leaving lucrative careers and salaries to get into one of the hottest financial instruments around right now: initial coin offerings (ICOs). As resentment mounts over central bank policies and negative interest rates, interest in untraditional investment vehicles has mounted – such as precious metals and cryptocurrencies (recently sparking comparisons of bitcoin to gold). Interestingly enough, due to the increased popularity of ICOs, U.S. regulators are now stepping in. The Securities and Exchange Commission’s Report of Investigation found that tokens offered and sold by a certain virtual organization were indeed securities and therefore subject to federal laws.”

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