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Financials Boost Markets As ECB Prepares QE Exit

Success is neither magical nor mysterious. Success is the natural consequence of consistently applying the basic fundamentals.
Jim Rohn

People admire excellence in any area, but especially in subjects which gather a great deal of attention, like sports, music, business, and politics. As one examines the enduring aspects of success, what you discover is sticking to the basics, the fundamentals (mockingly called funnymentals), might be considered routine, dull, not exciting, even boring, but they win out. In business, friendly customer service, good merchandising, an efficient supply chain, and well thought out financing are easy to talk about, but difficult to put into practice. Any element of these can be a major problem against good competitors. With the constant focus on automation these days, the human element doesn’t get enough attention. In fact, most businesses can only survive by having great employees who keep their customers coming back routinely. Anyone can get a customer once, keeping them coming in the door for thirty years is how great enterprises are built. Trying to find these businesses, or those which have the potential to be built into a great establishment, is what investing is about (at a reasonable price, of course).

After the May jobs report came in strong last week, the ECB announced that they are considering winding down their version of QE, potentially as early as September. It gave a boost to the financial sector, although Italian bond yields went higher and European markets sold off slightly. Jamie Dimon and Warren Buffet made a joint appearance to discuss their newfound emphasis of trying to dissuade corporations from the focus on quarterly guidance. It was received with a mixed response, as some echoed the long term approach while others noted more shareholder voting rights might be a better solution. The G-7 meeting in Canada has Mr. Trump ruffling the feathers of his fellow leaders by suggesting that no tariffs, taxes, or subsidies should be the preferred approach for the largest economies in the world. In the midst of NAFTA negotiations, an election for a new leader in Mexico (who will probably be a difficult partner), and next week’s Singapore summit with the nutball from North Korea, our understated President sure has a full plate. Founder and long time CEO of Starbucks, Howard Schultz, resigned from the Board of Directors and hinted at a potential run for public office. He is trying to claim a move to the center is where the Democratic party should be headed (as opposed to being left of Mao Tse Tung, like Bernie and Elizabeth). He noted the country’s 21 trillion dollar deficit and entitlement problems which need to be addressed. Amen. Whether the Democrats will listen to Mr. Schultz is another question as they have got Donald on the brain, and then some.

Elsewhere, the world was saddened this week with the suicides of Kate Spade (designer and founder of Kate Spade) and Anthony Bourdain (noted chef, author, and CNN host of ‘Parts Unknown’). In addition, yesterday we learned Charles Krauthammer, the legendary columnist and Fox TV analyst, has only weeks to live (cancer). All are losses as Kate Spade made people smile with her colorful collections, Bourdain did it with his storytelling and bringing to life far away locales with wonderful food, and Mr. Krauthammer with his brilliant mind and prose, along with a dry, witty way. It is a reminder of the fragility of life and how important it is to soak up all the sunshine one can find. Speaking of sunshine, our Golden Knights lost in the Stanley Cup Finals last week to the Washington Capitals, four games to one. The team gave our city, which some observers call a —-show (use your imagination there folks), a massive lift. They were a team of rejects, which fits because many residents come from other places to settle here and view themselves in the same way. I hope they can build on the success next year, but regardless, they are our team and we are quite proud of their achievement for a first year group. Still, the team thrived because they focused on the fundamentals, which is typically the case.

If you found the blog interesting, entertaining, or just like reading about investing, get every blog post, newsletter, and article written by Y H & C Investments by submitting the following information-

Thank you for reading the blog this week, and if you have any questions about investing, please email me at information@y-hc.com.

Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one’s overall financial situation.  The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantee performance better than market indexes.

Wall Street Goes Planet Love-tron!

“Lovetron was a planet that I even thought about in high school, and everybody’s say, “Man, you crazy.” It was just a planet in my own little mind that I could escape to. And it was a drug-free planet, you know. It was just, ‘you get your girl and you go off and y’all just chill out somewhere.’ And it was Lovetron. And it was a lot of fun for me. I started to talk about it in Philadelphia, you know, and I thought people would think I was crazy, but people said, “I like that!” Darrell Dawkins

As a young boy growing up, I loved watching basketball (still do, just not as much). In the early seventies, the best teams were the Los Angeles Lakers, Boston Celtics, and Philadelphia 76r’s. Games were telecast late at night, not at prime time. The Philadelphia team drafted the first player out of high school, a 6-11 center who specialized in naming his dunks, as well as someone with an interesting personality. He called one of his dunks, ‘Chocolate Thunder.’ He quite accurately once noted he would rather play for the Afghanistan All-stars than for the team he played for at the time, the Utah Jazz. It didn’t win him any points from those fans at the time. So, Darrell was a different kind of dude, but actually quite observant. Even more unique, he believed he lived on his own planet, as you see from the leading quote, one called ‘Lovetron.’ Anyway, why do I bring up Mr. Dawkins and his imaginary abode, you might ask? It is because in many ways, the brilliant guys and girls on Wall Street also live on their own planet.

It is quite understandable as to why they might occupy their own mental domain. You see, when looking around the globe, there are plenty of places where you might question the wisdom of placing your hard earned money there, or anywhere else. For example, when the leading parties occupying the legislature in Italy could not agree on forming a ruling government, bond yields broke 3% there and our market participants decided the Euro currency demise was imminent, so they sold our equities hard. The next day, stocks recovered. In the middle of the week, when our administration announced that they were placing tariffs on steel and aluminum from the EU, Canada, and Mexico, again, visions of an impending trade war danced in the heads of investors and equities sold off. With a trucking strike causing countrywide and political issues in Brazil, so much so that the Petrobras CEO resigned (largest oil company in South America and home of the largest proven oil reserves in the world), Brazil became the latest reason to consider moving to another planet. In conjunction with the fact that a hard line socialist is leading the race in Mexico to become it’s next El-Presidente, you can see why South America doesn’t seem like a place where your money will be treated like a refreshing margarita (especially with Senor Trumpe talking about how Mexico will pay for the wall, and like it) any time soon. When the May jobs number came in at a strong 223K (versus estimates of 188k), again equities recovered their losses. All in all, when the week was finally over, we pretty much ended in the same place and the market makers on Wall Street got the volatility they just adore so (hmm, I wonder why that is, ka ching).

Elsewhere during the week, HP met estimates while Salesforce crushed the numbers, as has been the case for quite some time. Box earned the penalty box as did Michael Kors, while Phillip Van Huesen posted a strong figure. Costco just nudged across the earnings line but margins did not impress, while Sears reported another miserable loss as its market value slipped to a slim 300 million. If ever there was the poster child for why you cannot cut your way to success, Eddie Lampert’s disaster would be it. Naturally, Eddie owns the debt and arranged to cherry pick the best real estate too, so don’t feel for easy E. Just so you know we admire clear thinking and vision, you might check out this interview with JP Morgan CEO Jamie Dimon, as it shows that at least one member of Wall Street is quite definitively living on our planet.

Finally, in the first NBA final game this week, a member of the Cleveland Cavaliers payed tribute to Darrell Dawkins by forgetting the score (it was tied) with 5 seconds left and deciding to dribble the clock out instead of trying to score and win the game. Clearly, some members of the investment community, as well as current NBA players, continue to reside on that far out planet called Lovetron. Thank you for reading the blog this week, and if you have any questions about investing, please email me at information@y-hc.com.

If you found the blog interesting, entertaining, or just like reading about investing, get every blog post, newsletter, and article written by Y H & C Investments by submitting the following information-

Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one’s overall financial situation.  The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantee performance better than market indexes.

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