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    Markets "In a Nutshell" for August 21, 2018

    Aug 21, 2018

    Investment Week at a Glance

    Stocks mostly gained ground last week. The Dow Jones Industrial average rose 1.4%. The S&P 500 was up 0.6% while the New York Stock Exchange Composite (2,000 stocks) gained 0.5%. The “average investor’s index” (Value Line index) ticked up 0.4% and foreign stocks (DJ Global ex U.S.) fell 1.3%. Bond yields were slightly up as the 10 year Treasury ended 2.87%. (Data sources: Barron’s Financial, Wall Street Journal)

     

    U.S. and China to mend trade battle?  

    U.S. and Chinese trade negotiators are meeting to try to mend the trade tariff battle before it escalates into a trade war. An ending to the $billions of tariffs can have a positive effect on both countries stock markets which China especially sorely needs. Unlike the U.S. the Chinese stock market has had a big downturn with the Shanghai exchange down 25% from its January high while the U.S. stock market is down only 4% from its January high.  

     

    Is there more room for the U.S. economy to grow?

    Economist John Mauldin writes that the U.S. economy may have some years left to grow yet before the next recession hits. In his latest newsletter (8/18), Mauldin writes that while he is medium term bearish on the economy and stock market (he sees a rough decade in the 2020’s), the next year or two may see a continuance of the decade long economic recovery and bull stock market. Employment data such as employment rates (the 3.9% unemployment rate is among the lowest ever) and wage growth (the 2.8% growth in the second quarter was the highest since 2008) point to stronger growth short term. This should be positive for the U.S. stock market.

     

    Jeff Bezos or John D Rockefeller: Which is (was) the richest?

    The Wall Street Journal’s Jo Craven McGinty wrote a column (8-11/12) on whether Jeff Bezos (Amazon founder) or John D Rockefeller (oil baron from early 20th century and America’s first billionaire) had more money. McGinty writes that at $150 billion of net worth, Bezos has recently been declared the richest person in modern history. But depending on how you calculate the numbers, John Rockefeller may have been richer. Rockefeller hit $1 billion in 1917. If you adjust his $billion strictly for inflation it would be worth approximately $24 billion today. However Rockefeller’s $1 billion was 2% of the U.S. GDP (value of the total economy) in 1917. At 2% of GDP today, Rockefeller would be worth about $407 billion.

     

    Quiz:

    According to MarketWatch who was the richest person ever at the equivalent of $4.6 trillion? a. William the Conqueror b. King Solomon c. Genghis Khan d. Augustus Caesar ...Answer is below…

     

    Have a good week!

     

     

     

     

     

    Answer to quiz:

    d. Augustus Caesar