News for the Week of June 6-10, 2016

News for the Week of June 6 – June 10, 2016

by David Abuaf, CFA

Investment Manager, RJFS

 

Government / Political / Economic

 

  1. US officials appear poised to make history by approving the first private space mission to go beyond Earth’s orbit, a move that may set important precedents

  2. A split is emerging inside Sanders’ campaign over whether he should stand down after Tuesday’s primaries and unite behind Clinton

  3. Some large public US universities recorded higher rates of cheating among international students than domestic students

  4. China pushed back strongly against US criticism of its stance on maritime disputes as the two sides began high-level talks

  5. A Buddhist temple in Thailand is at the center of a wildlife-trafficking probe after scores of dead tiger cubs were found

  6. Oh jeez. The Pentagon has decided to rely on an Abu Dhabi owned company to supply the most advanced microchips used in the military. Does the Pentagon know that the best semiconductor technology is publicly owned and based out of California?!

  7. Democrats are facing a battle over their platform as Sanders backers seek to reflect his liberal agenda

    • So, after years of more moderation on both sides, now both sides are moving to the extremes?

  8. The Pentagon is restructuring the way it fights terror threats, deepening its reliance on special operations

  9. An appeals court ruled the Second Amendment doesn’t protect a right to carry concealed guns in public

 

General Markets / Economic

  1. The Fed’s plan for raising rates went on hold after a dismal jobs reports, the market likelihood of a June rate increase fell from 22% to 4%.

  2. A Carlyle Group economist says low interest rates are hurting investment by encouraging stock buyback and dividends

  3. US labor productivity fell at a 0.6% rate in the first quarter, while hourly pay grew at 3.9%

  4. Saudi Arabia unveiled plan to more than triple its non-oil revenue by 2020 while cutting state handouts

    • I read the plan…I very highly doubt they can even double their revenues in five years, let alone triple in four!

 

Company News

 

  1. Yahoo has kicked off an auction for a portfolio of about 3,000 patents expected to fetch over $1B

  2. Societe Generale was ordered to pay $511,000 to a rogue trader who brought the bank near collapse!

  3. Keurig is pulling the plug on a soda machine that failed to win over consumers

    1. My dad still has a “soda” machine he bought in either the late 1970s or early 1980s. We stopped using it by the time I was 7 years old

  4. Remember last week when we said T Rowe Price was going to pay back investors’ money because T Rowe backed the buyout of Dell? Well now T Rowe will be paying $194m to clients.

  5. GM launched a marketing blitz against Ford that questions the durability of its F-150 pickup

    • Allow me to go on an American car diatribe. I imagine some of you can read through the lines and presume I don’t like American cars. You’re absolutely right, I hate them. All the big 3 use in marketing is to sell the fact that they have XYZ horsepower, or WIFI (in a car!), or towing power. My issues is all of that is great, provided the car also meets strong safety standards and can last long. But they never advertise safety; they never advertise the long term client satisfaction (those JD Power awards are always for initial satisfaction). Maybe if the big 3 had better safety and better resale, they could compete against the luxury car makers!

 

Interesting News

 

  1. A West Virginia couple was arrested after they tried to sell the woman’s 3- month old baby to buy drugs. Hmmm, did they ask for a lot of money? Oh my goodness! At first they offered to sell the infant for $1,000, when they got no offers, they lowered the price to $500! They are behind bars and their bail is set at $100,000, I’d make a joke here, but it’s not appropriate.

  2. Ha! 2 robbers in France went into a McDonalds and fired a shotgun in the air, threatening guests. Little did they know, among the 40 customers eating their burgers were 11 off-duty members of France’s paramilitary Special Forces who “took a break from their meal to save the day.” If only McDonald’s was around during WW1 and WW2, maybe France wouldn’t have surrendered

  3. The mayor of Monee, Illinois is accused of punching an umpire during a Little League game and breaking his jaw. He reportedly got upset after the ump let a 7 year old girl try another swing after she’d struck out

  4. A seagull fell into a vat of Chicken Tiki Misala in London. Workers managed to save the creature and clean off all the goop. My favorite quote from the article, “he smelled really good. Like really, really good”.

 

 

 

Commentary for Week of June 6 – June 10, 2016

by David Abuaf, CFA

Investment Manager, RJFS

 

Chart from the Wall Street Journal

Chart from the Wall Street Journal

Too bad the week didn’t end Wednesday. Major market indexes finished the week mixed, and sharply below midweek levels, which came within a whisker of previous all-time highs. The S&P 500 lost 3 points on the week while the Dow Jones Industrials rose 58 points and the Nasdaq fell 1%. European markets weakened on concerns about the coming Brexit vote, which will determine whether the UK leaves the European Union.

 

Investors are confused by a plethora of polls with conflicting results. Some surveys show a majority will vote to leave the EU, but others indicate the country will remain. Outside of the stock world, according to David Seaburg, head of sales trading at Cowen ,he says “you saw a lot of yield-chasing going on,” meaning more folks flocked to US treasuries; in spite of the low historical interest rates the US has, they are still well above most of other countries’ yields of similar risk!

 

According to Steve Massocca, at Wedbush Securities, the Brexit was an excuse last week for profit-taking, “given how much and given how fast the market had risen recently.”

 

 

 

All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services

 

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