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They Best of What They Said and I Read Week Ending 1/13/19

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 – January 11, 2019 – Nasdaq Gains 3.5% in a Fit of Extreme Buying – Ben Levisohn

  • “The world is neither as frightening as we fear nor as safe as we hope—and that’s something investors should keep in mind as the market whipsaws from extreme losses to sizable gains.  Stocks certainly continued their winning ways last week. The Dow Jones Industrial Average advanced 562.79 points, or 2.4%, to 23,995.95, while the S&P 500 rose 2.5% to 2596.26. The Nasdaq Composite gained 3.5% to 6971.48. The Nasdaq is up 10.1% during three weeks, the largest three-week gain since 2011.”
  • “If the previous week’s rise was spurred by a suddenly patient Federal Reserve, this past week’s gain could be attributed to trade talks between the U.S. and China. Not that anything was accomplished, mind you. But the fact that the two sides are talking means they’re closer to a deal than Republicans and Democrats are to ending the shutdown.”
  • “All of which suggests that investors’ thinking is more than a bit muddled. Fears that the U.S. was heading for recession sent the S&P 500 tumbling, culminating in a 2.7% drop on Dec. 24. The index’s 10-day advance/decline line hit minus 2,440 that day—with that many more stocks declining than advancing... That was the worst reading since 2011 and one that suggests that just about everyone had thrown in the towel on the stock market.The problem with selling everything is that when the world doesn’t end, you have to buy something. And that’s exactly what investors did over the next 10 days, when the 10-day advance/decline line rocketed up to positive 1,938 last Wednesday, the highest since 2016...That 4,378-point swing from extreme selling to extreme buying was the largest on record, with the next largest occurring on Dec. 5, 2008.”

U.S. Global Investors Investor Alert – January 11, 2019 – Frank Holmes

  • “…Due to the ongoing trade war with China and U.S. government shutdown, economists surveyed by Bloomberg put the risk of a U.S. recession at the highest in more than six years. The survey this week showed a median 25 percent chance of a slump in the next 12 months, which is up from 20 percent in last month’s survey…The Federal Reserve can “afford to be patient” on future interest rate hikes. Minutes from the December Federal Open Market Committee (FOMC) meeting released Wednesday reiterate the central bank’s claim that it is not on a preset rate path. This flexibility was well received by investors who fear a policy mistake by the Fed.”
  • “…Because of the ongoing partial government shutdown, the U.S. economy has lost an estimated $3.6 billion, according to an analysis by Standard & Poor's Global Ratings. It will only take another two weeks for the shutdown to cost the economy $5.7 billion, the same amount that the White House has requested for President Donald Trump's southern border wall.”
  • “…The U.S. is likely to lose its crown as the world's most powerful economy next year. China is forecast to become the world's strongest economy in 2020, when measured by a combination of purchasing power parity (PPP), exchange rates and nominal GDP…Soy was the worst performing commodity for the week. The commodity dropped 1.13 percent after the U.S.-China trade talks ended without any specific commitments for China to purchase U.S. grains.”

The Wall Street Journal – January 8, 2019 – Amazon Takes Top Market-Cap Crown – Brian R Fitzgerald and Amrith Ramkumar

  • “Amazon.com is the latest technology titan to claim the crown of world’s most valuable public company…Amazon finished Monday’s session…with a market capitalization of $796.78 billion, the first time the retailer has attained the market-cap title…It ended a weeks long reign by Microsoft Corp. which finished…with a value of $783.57 billion.”
  • “Tech stocks are well below their peaks – Apple was valued above $1.1 trillion at its apex in October, while Amazon touched $1 trillion midday before closing below that in September.  But they remain far more valuable than the most valuable companies in other parts of the U.S. economy…Berkshire Hathaway Inc. is the closest challenger at $485 billion, ahead of Facebook Inc., whose value has plunged in the past year amid a series of scandals.  JPMorgan Chase & Co. and Johnson & Johnson…have market values of less than $350 billion.”

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