About 250 years ago, Ben Franklin, John Adams, Thomas Jefferson and the boys decided they were fed up with the excessive fees laid on the colonists from the likes of the Stamp Act, Townsend Act, and others in order to fund the British Empire’s various empire building projects.  At the time, it was considered very controversial to oppose the crown as over half the population supported, in some way, a tie to England.  You might say it required independent thinking to pursue independence.  As this relates to the current financial markets, it is accepted market thinking to buy and hold market indexes, own Google, Facebook, Amazon, and swear off individual stock picking as a waste of time in the long term.  If one looks at the first half of this year, so far in 2017 would prove quite satisfactory with broad market indexes returning 8% and the NASDAQ 14%.  Still, if one was, shall we call it a free thinker, adventuresome, and interested in potentially unique situations which might offer more compelling results going forward, then individual stock picking might be more your speed.  Of course, like our founders discovered centuries ago, the road to prosperity is fraught with difficulty, and the same holds true with trying to choose specific stocks, so make sure one has an independent mind and heart.  

 

In the financial markets this week, the big news came from the banking sector as regulators released the results of the aptly named 2017 Comprehensive Capital Analysis and Review stress tests.  They are designed to look at capital adequacy under difficult market conditions.  The results were the best since the financial crisis as all 34 entities tested were given the OK to raise their dividends and stock buyback plans.  Of note were the large divvy raises at Citigroup and Bank of America, as well as the massive buyback by JP Morgan Chase.  In Europe, Mario Draghi spooked the markets some by indicating the European version of quantitative easing could start to be rolled back sooner than anticipated.  As such, bond yields jumped across the globe, which might have been related to the increased volatility we saw mid week, along with of the typical end of the quarter portfolio reshuffling, er tape painting.  In the merger and acquisition world, the big news is coming from the telecom and cable space, where there are serious rumblings by the biggest entities of all kinds of deals.  Most think Sprint will eventually align with T-Mobile, whose parent is Deutsche Telecom.  The largest cable players are also in exclusive conversations with Sprint, having already secured an alliance with Verizon.  You can probably guess who is driving that dialogue, right?  

 

Walgreen's decided to cherry pick the best stores from Rite Aid, which accepted a revised five billion dollar offer after the government but the kibosh on a larger deal.  Nike announced their quarterly results but the news of a small partnership with Amazon got analysts stirred up as you know what happens when Mr. Bezos company touches anything.  In that vein, you might take a look at this week’s Barron’s as it has an interesting note about the logistical positioning of Whole Foods on the East Coast.  You can see the reasoning behind the purchase, but from an investment perspective, you might say it is priced into the stock, to say the least.  

 

 

In the political domain, you certainly could say President Trump is independent in his thinking, and with his words as we know the political world condemns his persistent run ins with the all important MSNBC hosts.  What else could the President of the United States be spending his time on, I mean, there aren’t that many important issues to spend time pondering, right?   Finally, if you wonder why so many are turned off by both political parties, one only needs to read the comments of retiring Utah Representative Jason Chaffetz, who opined that elected officials need a thirty thousand dollar housing allowance on top of the already 180k salary they already, ‘earn’.   Apparantly, the nation’s capital has very expensive housing markets so it makes it tough for traveling pols.  Rough, real rough.  Anyway, Tuesday is Independence day and I hope it is a happy and healthy one for you and yours.  

Thanks for reading the blog this week and if you have any questions or comments, please email me atinformation@y-hc.com