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TAKING STOCK
BY MALCOLM BERKO
RELEASE: WEDNESDAY, JANUARY 3, 2018

Stock Market for 2018

Dear Mr. Berko:

Could you please tell us what you think the stock market will do once this tax bill is in effect? All the people I know say that these tax cuts and changes are bearish and that the country will suffer because of these new rules and regulations. — GD, Moline, Ill.

Dear GD:

You should expand your people horizons.

The recent passage of the Tax Cuts and Jobs Act reduces the corporate tax rate from 35 percent to 21 percent.

AT&T will be passing out $1,000 bonuses to employees. And companies such as Wells Fargo, Comcast, IBM, Apple, Fifth Third Bank and Sinclair Broadcast Group will also give employees spendable bonuses.

Be mindful that corporations may repatriate their $2.1 trillion of profits held overseas to avoid onerous U.S. taxes. Bringing this money home will translate to higher employment plus modestly higher paychecks. So, with consumer confidence at a 17-year high, Americans are again able to borrow money for homes, cars, appliances, etc., with zero money down and payments for 10 years. Visa, MasterCard and American Express expect record revenues and profits this year and beyond. Considering these corporate tax cuts, some suggest that the 2018 gross domestic product could come in 3.2 to 3.5 percent higher. This is bullish for our economy, banks and the credit card industry. And it’s bullish for the stock market, which has had a marvelous run since November 2016.

We have the lowest level of unemployment since 2011. Over 63 percent of working-age Americans have jobs or are looking for one. There are 126 million full-time workers in the U.S. But there are 90 million healthy, able-bodied Americans who’re not seeking employment, a result of addictive federal and state entitlement programs. It doesn’t make sense for an unemployed person to work 35 hours a week and earn $12 more from an employer than he would receive in entitlements. Many believe that the new tax law, with the anticipated wage increases, could encourage 17 million new workers to join the economy. That’s nearly half the population of the state of California. Their additional purchasing power would be hugely bullish. Those 17 million new workers could add $1 trillion to the U.S. GDP between 2018 and 2020 and be a Golconda for Visa (V-$114), MasterCard (MA-$151) and American Express (AXP-$98).

The recent approval of the Keystone XL pipeline will add thousands of jobs and enormously reduce the costs of shipping product to producers and refiners. It will create $138 million in annual tax revenue for states and local entities along the pipeline. It will create $586 million in new taxes for communities along the route. It will create more than $5.2 billion in property taxes during the lifetime of the pipeline. And it will generate additional private-sector investment of about $20 billion for food, lodging, fuel, vehicles, equipment, construction supplies and services. There will be 20,000 well-paying jobs and an increase in personal income for workers by $6.5 billion during the lifetime of the project. Wow! That’s bullish!

We recently broke Russia’s stronghold on fuel sales to Europe. Poland signed a long-term deal with the U.S. for liquefied natural gas supplies. This is bullish for energy suppliers and opens the doors to other former Eastern bloc countries subject to Russia’s reach. We’ve withdrawn from the one-sided Trans-Pacific Partnership, and we’re demanding favorable terms from NAFTA. We’ve resigned from the feckless Paris climate accord, and we’ve reduced our contributions to a debauched U.N. by $285 billion, both of which are gaseous sociopolitical organizations. This is market-positive.

This year, the Trump administration will initiate a major push on infrastructure improvement. There’s a $1.2 trillion plan that includes direct federal spending of $200 billion for bridges, dams, seaports and airports, water infrastructure, etc. This would create millions of new jobs, which would translate to new cars, homes, pleasure craft, clothing, electronics, recreational vehicles and camping equipment. This could generate the greatest long-term stimulus the market’s ever had, potentially putting us on the cusp of a 30,000 Dow Jones industrial average.

Caution: In 1949, at Edwards Air Force Base, Capt. Edward Murphy, an engineer on Project MX981, coined the term Murphy’s law.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected] To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

COPYRIGHT 2018 CREATORS.COM

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Finance

Dow Jones Industrial Average Breaks 29,000 For The First Time in History

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Screenshot of Dow Jones Industrial chart taken January 15, 2020.
By ELAINE KURTENBACH, AP Business Writer

Slight gains send Dow Jones Industrial Average above 29,000!

The Dow Jones Industrial Average closed above 29,000 points for the first time and the S&P 500 index hit its second record high in three days Wednesday.

The milestones came on a day when the market traded in a narrow range as investors weighed the latest batch of corporate earnings reports and the widely anticipated signing of an initial trade deal between the U.S. and China.

President Donald Trump and China’s chief negotiator, Liu He, signed the “Phase 1″ deal before a group of corporate executives and reporters at the White House. The pact eases some sanctions on China. In return, Beijing has agreed to step up its purchases of U.S. farm products and other goods.

“This was telegraphed well enough that the market is kind of looking through it and toward the next phase and what that means,” said Keith Buchanan, portfolio manager at Globalt Investments.

Health care stocks accounted for much of the market’s gains. Utilities and makers of household goods also rose. Those gains outweighed losses in financial stocks, companies that rely on consumer spending and the energy sector.

The S&P 500 index rose 6.14 points, or 0.2%, to 3,289.29. The index also climbed to an all-time high on Monday.

The Dow gained 90.55 points, or 0.3%, to 29,030.22. The Nasdaq composite added 7.37 points, or 0.1%, to 9,258.70.

Smaller-company stocks fared better than the rest of the market. The Russell 2000 picked up 6.66 points, or 0-4%, to 1,682.40.

The benchmark S&P 500 index is on track for its second straight weekly gain.

Bond prices rose. The yield on the 10-year Treasury note fell to 1.78% from 1.81% late Tuesday.

While limited in its scope, investors have welcomed the U.S.-China deal in hopes that it will prevent further escalation in the 18-month long trade conflict that has slowed global growth, hurt American manufacturers and weighed on the Chinese economy. The world’s two largest economies will now have to deal with more contentious trade issues as they move ahead with negotiations. And punitive tariffs will remain on about $360 billion in Chinese goods as talks continue.

With the “Phase 1” agreement now a done deal, investors have more reason to focus on the rollout of corporate earnings reports over the next few weeks. Earnings have been flat to down for the last three quarters, and if the fourth quarter meets expectations, it should be around the same.

However, analysts are projecting 2020 corporate earnings growth to jump around 9.5%, which is why traders will be listening this earnings reporting season for any clues management teams give about their business prospects in coming months.

“We’re expecting a reacceleration in the back end of the year, so any (company) guidance that brings any type of skepticism to that could threaten the recent rally we’ve had and the gains that we’ve accrued in the past few months,” Buchanan said.

Health care stocks powered much of the market’s gains Wednesday. Several health insurers climbed as investors cheered a solid fourth-quarter earnings report from UnitedHealth Group.

The nation’s largest health insurer, which covers more than 49 million people, said its revenue rose 4% on a mix of insurance premiums and growth from urgent care and surgery centers. Its stock rose 2.8%. Other health insurers also moved higher. Anthem gained 1.6%, Cigna added 1.5% and Humana climbed 1.9%.

Technology companies also rose. The sector is reliant on China for sales and supply chains and benefits from better trade relations. Microsoft gained 0.7% and Advanced Micro Devices gained 0.8%.

Utilities and consumer staples sector stocks also notched gains. Edison International climbed 2.5% and PepsiCo rose 1.7%.

Financial stocks fell the most. Bank of America slid 1.8% after reporting weaker profits due to the rapid decline of interest rates in late 2019.

Energy stocks also fell along with the price of crude oil. Valero Energy dropped 3.3%.

Homebuilders marched broadly higher on news that U.S. home loan applications surged 30.2% last week from a week earlier. The pickup in mortgage applications reflects heightened demand for homes and suggests many buyers are eager to purchase a home now, rather than waiting for the traditional late-February start of the spring homebuying season. Hovnanian Enterprises jumped 6.4%.

Target slumped 6.6% after a disappointing holiday shopping season prompted the retailer to cut its forecast for a key sales measure in the fourth quarter. The company said weak sales of electronics, toys and home goods crimped sales growth to just 1.4% in November and December.

Benchmark crude oil fell 42 cents to settle at $57.81 a barrel. Brent crude oil, the international standard, dropped 49 cents to close at $64 a barrel.

Wholesale gasoline fell 1 cent to $1.64 per gallon. Heating oil declined 3 cents to $1.88 per gallon. Natural gas fell 7 cents to $2.12 per 1,000 cubic feet.

Gold rose $9.70 to $1,552.10 per ounce, silver rose 25 cents to $17.92 per ounce and copper fell 1 cent to $2.87 per pound.

The dollar fell to 109.91 Japanese yen from 110.00 yen on Tuesday. The euro strengthened to $1.1150 from $1.1128.

Markets in Europe closed mostly lower.

AP Business Writer Damian J. Troise contributed.

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Business

20 Stocks Every Investor Should Add to Their Watch List in 2020

Editorial Staff

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Best Stocks in 2019

Interested in what stocks to look out for this year? Then you’ll love this list of the best stocks to watch in 2020.

But before we get started, remember the most important advice when it comes to investing in stocks: the wisest way to invest is to use a stock index fund.

These funds purchase multiple stocks and spread risk appropriately across the top companies. This is the advice of Warren Buffett, who once said,

“By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals.”

If you’re looking for a stock index fund, check out Vanguard’s 500 Index Fund.

With that aside, here are the most promising stocks going in to 2020:

1. Chipotle Mexican Grill

Chipotle is an international chain of restaurants specializing in tacos, burritos, and other Mexican style cuisines. They have establishments all over the world from the United States to Germany and France.

This beloved food joint performed very well in the first two quarters of 2020 and are expected to continue to grow.

P/E ratio as of August 2019: 87.81

2. Constellation Brands, Inc.

Constellation is an international beer and wine producer. They are the largest importer of beer in the United States and command 7.4% of the market share.

P/E ratio as of August 2019: 17.00

3. Lululemon Athletica

Lululemon Athletica creates athletic apparel such as performance shirts, shorts, and pants, as well as yoga accessories. They’ve built a brand over the years that millions recognize and love.

P/E ratio as of August 2019: 47.51

4. Coty Inc.

Coty Incorporated is a multinational company that specializes in beauty products and services such as cosmetics, fragrances, skincare, and nail care.

Coty owns over 70 brands, such as CoverGirl, Clairol, and Bourjois. In 2018, the company’s revenue was over $9.4 billion.

As of August 2019, Coty Inc. stock is valued at 10.42 USD. Their P/E ratio is not yet available.

5. Anadarko Petroleum Corporation

Anadarko is in the natural gas and petroleum industry. This entails everything from gathering resources to treating and transporting gas. The company is also in the hard mineral business.

In early 2019, Anadarko had an estimated 1.47 billion barrels of oil in reserve, making it one of the biggest players in the industry.

As of August 2019, Anadarko’s stock is valued at 73.48 USD. Their P/E ratio is not available yet.

6. Brookfield Infrastructure Partners L.P.

Brookfield Infrastructure Partners acquires and manages infrastructure assets all over the world. They specialize in utilities, energy, and transportation infrastructure.

The company invests in ports, toll roads, pipelines, and telecommunication lines. In other words, things that people will always need and use.

P/E ratio as of August 2019: 75.27

7. ONEOK Inc.

ONEOK (pronounced “one – oak”) Incorporated is in the natural gas industry and is a key leader in the gathering, storing, processing, and transporting natural gas in the United States.

P/E ratio as of August 2019: 22.62
TerraForm Power Inc.
TerraForm Power specializes in renewable energy, particularly solar and wind power. There is an ever-growing trend that demands less damage to the environment.

As the world values green innovations, companies like TerraForm are expected to be favored in the coming years.

P/E ratio as of August 2020: 227.44

8. Netflix

Netflix is a service provider and production company with their main product being a subscription-based streaming service.

Streaming TV and movies have largely replaced traditional television. With no commercials and instant access to thousands of products, Netflix is suspected to continue to grow.

P/E ratio as of August 2019: 120.23

9. iRobot

iRobot is an advanced technology company that specializes in military and domestic robots. They designed the Roomba, which is an autonomous vacuum cleaner.

The U.S. military has purchased and uses thousands of robots from iRobot and are contracted to make more.

P/E ratio as of August 2019: 22.24

10. Amazon

Amazon is a multinational company that specializes in e-commerce and cloud computing. It’s considered one of the big four technology companies along with Apple, Google (Alphabet, Inc.), and Facebook.

Amazon is well known for distributing goods through technological innovation and on a massive scale. Some estimate that Amazon commands 50% of all goods sold online.

P/E ratio as of August 2019: 73.65

11. Apple Inc.

Apple is a multinational tech company that develops and sells computer software, electronics, and online services. They designed some of the world’s greatest tech products including the iPhone and Apple Watch.

Being a leader in tech devices, many analysts believe Apple is one of the most promising stocks to invest in.

P/E ratio as of August 2019: 16.61

12. Alphabet Inc.

Alphabet Inc. is a multinational conglomerate founded in 2015. It’s the parent company of Google, which is the dominating search engine on the internet.

Google performs 90% of all searches on the internet. Alphabet has additional subsidiaries such as Calico, Capital G, and Deep Mind.

These subsidiaries have their hands in industries such as autonomous cars, biotechnology, video game software, and internet tech.

P/E ratio as of August 2019: 23.87

13. Facebook Inc.

Facebook is the popular American social media site founded by Mark Zuckerberg. In 2018, Facebook had a net income of $22.11 billion and its total assets were $97.33 billion.

Facebook has subsidiaries such as Instagram and WhatsApp, which are also very popular social media outlets.

P/E ratio as of August 2019: 31.00

14. MarketAxess Holdings Inc.

MarketAxess is an international company that specializes in financial technology, also known as fintech.

They operate an electronic trading platform for various credit markets such as corporate bonds and income products.

P/E ratio as of August 2019: 70.82

15. AT&T Inc.

AT&T is a multinational conglomerate holding company and is the world’s largest company in telecommunications.

AT&T is the parent company of Warren Media, which makes it the largest entertainment company in the world in terms of revenue.

P/E ratio as of August 2019: 14.17

16. Verizon Communications Inc.

Verizon is a multinational telecommunications conglomerate. They are well known for their subsidiary Verizon Wireless, which is its mobile network.

Together with AT&T, these two companies dominate the mobile and landline market. Since our needs for communications will develop, these two stocks are poised to grow.

P/E ratio as of August 2019: 14.49

17. Axon Enterprise Inc.

Axon Enterprise Inc. is a U.S.-based company that develops weapon products and technology for civilians and law enforcement. This company developed the Taser, a line of electric shock weapons.

Since then, Axon developed other technologies including body cameras and a cloud-based management system that empowers police departments to manage and review evidence.

P/E ratio as of August 2019: 129.55

18. Intuitive Surgical Inc.

Intuitive Surgical Inc. develops and manufactures surgical equipment to make surgeries less invasive. As of 2017, they had 4,271 bases worldwide.

P/E ratio as of August 2019: 48.51

19. Ford Motor Company

Despite the localized recession in Detroit, the automotive giant is doing very well.

The market continues to demand their SUVs and commercial vehicles, not to mention their luxury vehicles, which are usually created under their Lincoln brand.

P/E ratio as of August 2019: 16.90

20. General Motors Company

General Motors is a multinational manufacturer of vehicles and own automotive brands like Buick, GMC, Cadillac, and Chevrolet. They have nearly 400 facilities on six different continents.

P/E ratio as of August 2019: 6.19

Conclusion

Let’s point out two trends from this list:

  • Tech and software companies are dominating
  • Utility-related companies are tried and true

About half of the world still doesn’t have internet access. And a large portion still doesn’t have access to common devices like cell phones and laptops. That means these industries are set up to grow significantly for years to come.

Of course, that doesn’t mean other industries will simply disappear. As you’ve seen in the list, there are still key industries that our society relies on, such as energy and infrastructure companies.

Some of the most promising stocks are in tech and software, such as Apple, Facebook, Google, and Amazon.

Nevertheless, the wisest investment is still a stock index fund, which bets on the collective market rather than individual companies.

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Economy

Stocks Rally Despite Impeachment News

Editorial Staff

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Stocks rose on Thursday as investors looked past the news of President Donald Trump’s impeachment as well as mixed U.S. economic data.

The Dow Jones Industrials advanced 53.85 points to begin trading at 28.293.13

The S&P 500 recovered 4.93 points to 3,196.07

The NASDAQ added 19.39 points to Wednesday’s all-time record, at 8,847.12.

The S&P 500 is up nearly 7% since House Speaker Nancy Pelosi launched a formal impeachment inquiry in September.

Cisco Systems was the best-performing Dow component, rising 1.6%. The consumer staples and real estate sectors led the S&P 500 higher, gaining 0.4% each. Micron Technology shares also contributed to Thursday’s move higher. Conagra shares surged more than 14% and were on pace for their biggest one-day gain since Oct. 16, 1989.

Micron shares climbed 3.5% on the back of strong quarterly results. The chipmaker posted earnings per share and revenue that topped analyst expectations.

On the economic data front, weekly jobless claims fell to 234,000 from 252,000 the week before. However, economists expected claims to fall to 225,000.

Meanwhile, the Philadelphia Federal Reserve’s business conditions index fell to 0.3 in December from 10.4 in the previous month. Economists expected the index to slip to 8.

The Democrat-led House of Representatives voted Wednesday to impeach Trump for abuse of power and obstruction of Congress. Trump became only the third president to be charged with high crimes and misdemeanors and will now face a trial in the Republican-controlled Senate.

Prices for the 10-Year U.S. Treasury were lower, raising yields to 1.94% from Wednesday’s 1.93%. Treasury prices and yields move in opposite directions.

Oil prices gained seven cents to $61.00 U.S. a barrel.

Gold prices moved forward $1.80 at $1,480.50 U.S. an ounce. Copyright © 2019 Baystreet.ca Media Corp. All rights reserved.

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