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The Best of What They Said and I Read Week Ending 8/26/18

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 24, 2018 – S&P 500 Gains 0.9% to Break its Record – at Last – by Ben Levisohn

“Finally. After nearly seven months since its Jan. 26 top, the S&P 500 once again hit a new all-time high.  The broad-market index gained 0.9%, to 2874.69, this past week. The Dow Jones Industrial Average rose 121.03 points, or 0.5%, to 25,790.35. The Nasdaq Composite climbed 1.7%, to 7945.98, also an all-time high.”

“It sure took the S&P 500 long enough. The Nasdaq Composite broke its Jan. 26 high in March, and has racked up a total of 26 new records this year. The small-cap Russell 2000 cleared its Jan. 23 peak in May and also closed at an all-time high last week. And the Wilshire 5000, the broadest U.S. stock index, traded at a new record on Aug. 8.”

The Wall Street Journal – August 24, 2018 – As Veterinary Bills Add Up, More Pet Owners Opt for Insurance – by Jo Craven McGinty

 “Two out of three American households—or about 85 million homes—own pets, and those lovable little roommates don’t come cheap.  Americans spent $17 billion last year on veterinary care alone, according to figures published by the American Pet Product Association. Per pet, that included $257 for the routine care of dogs and $182 for cats.”

“…more households have turned to pet insurance, a niche product that for the first time last year grossed $1 billion in annual premiums…Last year’s gross annual premiums were 23% higher than the previous year, when the total was $837 million, according to the North American Pet Health Insurance Association. The number of insured pets also increased, climbing to 1.83 million last year, up about 16% from the previous year.”

“That’s only 1% of dogs and cats, but insurers expect the expansion to continue…One yardstick to assess the potential is the U.K., where a quarter of cats and dogs are insured, according to Laura Bennett, a pet insurance actuary and fellow of the Society of Actuaries…About a dozen companies sell pet insurance in the U.S. The largest, in order of market share, are Nationwide, Trupanion and Healthy Paws…Premiums also vary depending on a policy’s deductible, but in general, monthly pet insurance payments range from $25 to $150.”

The Wall Street Journal – August 24, 2018 – Jerome Powell Defends Policy of Gradually Raising Interest Rates – by Nick Timiraos

“Federal Reserve Chairman Jerome Powell defended the central bank’s strategy of gradually raising interest rates against criticisms that the central bank is moving either too quickly or too slowly, jeopardizing the economy’s expansion.  Mr. Powell, in remarks Friday at an annual central banking conference in the Grand Tetons, built out the case for lifting rates so long as inflation is stable and unemployment falling, in order to keep the economy on an even keel. He also pushed back against critiques that the Fed is risking high inflation or asset bubbles by raising rates too slowly.”

“The Fed faces two major risks, of “moving too fast and needlessly shortening the expansion, versus moving too slowly and risking a destabilizing overheating,” he said. “The current path … [is] taking seriously both of these risks.”  Minutes of the Fed’s most recent policy meeting signaled officials are ready to raise their short-term benchmark rate at their Sept. 25-26 meeting. The Fed has raised the rate twice this year, most recently in June to a range between 1.75% and 2%.”

"Mr. Powell’s remarks were his first public comments since President Trump’s recent criticisms of the Fed’s rate increases. While Mr. Powell’s speech has been in the works for months, its message took on extra import after Mr. Trump chided the Fed’s moves, which he said worked against his efforts to boost growth.…Mr. Powell’s speech underscored the Fed’s intent to operate independently of any political pressure—even from the White House. Objections from politicians, including the president, will have no effect “at all,” said Dallas Fed President, Robert Kaplan in an interview Thursday.”

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