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The Best of What They Said and I Read Week Ending 8/23/2020

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 – August 22, 2020 – Apple Is Unstoppable – and It Carried the Stock Market to a Record High – Ben Levisohn

  • “…The S&P 500 index hit a record high last week, but it’s probably fairer to say that Apple stock hit an all-time high and the index simply followed.  Yes, the S&P 500 closed the week up 0.7% at 3397.16, a new closing high. Apple, however, was responsible for about 60% of the S&P 500’s gain after climbing 8.2% to $497.48 this week. Apple’s influence on the Dow Jones Industrial Average was even starker. The blue-chip benchmark was unchanged on the week, at 27,930. Without Apple, which contributed 259.61 points, the Dow would have fallen 260.30 points, or 0.9%. The Nasdaq Composite, meanwhile, rose 2.65% to 11,311.80.”
  • “While tech’s role in leading the market higher has been much discussed, including in this space, the singularity of Apple’s rise has not. Consider: Earlier this summer, Apple was battling Microsoft for the title of America’s most valuable stock. Now, it’s not even close: Apple finished the week with a market cap over $2 trillion, while Microsoft’s is “just” $1.6 trillion. The gap is now the widest it has been since Apple became the world’s largest company for the first time in 2012.”

  

Bloomberg Businessweek – August 14, 2020 – A Love Letter to the Fed From the Adoring Stock Market – Michael P. Regan

  • “Dear Fed, Hey there! It’s me, the stock market. I know it’s weird to write you like this, but I felt like I needed to drop a quick thank-you note for everything you’ve done for me this year. I mean, your big ol’ balance sheet is almost $3 trillion larger since early March! You’re backing up the truck and loading it with Treasuries and corporate bonds and bond ETFs, all to keep the competition to stocks from fixed-income yields as limited as Jim Cramer’s understanding of me. It’s been a dream come true, honestly. I mean, fess up: Have you been reading my diary?!”
  • “Maybe you’ve noticed, but everything else is a royal mess. Covid-19 is still killing people. Parents are dreading the beginning of “school.” U.S. unemployment is still above 10%, higher than it’s been since the 1980s. The country is facing the biggest economic contraction in its history. Corporate profits are plunging. The recession is forecast to continue at least through the first quarter of next year. And me? I’m soaring! Have you seen these record highs I’ve been setting?...With sincere and deepest gratitude, The Stock Market.”

     

U.S. Global Investors – August 21, 2020 – Frank Holmes

  • “…Business activity in the U.S. snapped up to a post-pandemic high this month. The preliminary Composite Purchasing Manager’s Index (PMI), a measure of both the manufacturing and services sectors, hit an expansionary 54.7, the highest since February 2019. The upturn was due primarily to stronger exports and new orders as overseas economies continue to reopen. China is also currently positive, as I shared with you last week, meaning 40 percent of the world’s economy is now in expansion mode once again.”
  • “U.S. homebuilders are incredibly bullish right now. This month’s…(NAHB)/Wells Fargo Housing Market Index climbed to 78, matching a previous all-time record set in December 1988…sales of existing homes soared almost 25 percent in July from June, the strongest monthly gain in U.S. history, on near-zero interest rates.  Finally, the S&P 500 closed at a new record high on Tuesday, ending the shortest bear market in U.S. history. The pandemic-induced pullback lasted only 33 days, compared to the median bear market length of 302 days based on data going back to the 1920s, as Reuters reports.”
  • “…Between the market bottom on March 23 and August 20, shares of Apple, Amazon, Microsoft, Facebook, Alphabet and graphics processor designer NVIDIA were responsible for an incredible 33 percent—an entire third—of the uptrend in the S&P 500.  Apple alone was responsible for more than 11 percent of the market’s moves. This week, the iPhone-maker became the first U.S. company to surpass $2 trillion in market capitalization, nearly as much as all the companies in the Russell 2000 Index of small-cap stocks combined. Apple is now valued more highly, in fact, than German stocks in the Deutsche Boerse Index and is closing in on Canadian stocks in the S&P/TSX Composite Index.”
  • “And then there’s Tesla, whose stock we really like. Tesla isn’t a member of the S&P 500 (yet), but its shares cracked $2,000 this week ahead of its stock split, bringing its market cap to $370 billion. As of Wednesday, that was enough to make the electric vehicle manufacturer more valuable than Walmart.”

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