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What I Think I Learned Last Week #3

On Thursday, with the backdrop of Spanish terrorism, some lackluster earnings reports and various business advisory councils to President Trump disbanding, US stocks suffered their second biggest daily decline of the year and closed at a one month low.

For the week, the S&P 500 lost 0.65%. The index is off 2.1% over the past two weeks, its worst two-week slide since the week ended Nov. 4, 2016, just before the election. The tech-heavy Nasdaq Composite was down 0.6% on the week. The Nasdaq is down four weeks in a row, and has dropped 2.7% over that time.

NAFTA negotiations officially began. No, NAFTA is not an acronym for Not Another Foolish Trump Action, it is the North America Free Trade Agreement between the US, Mexico and Canada. US Trade Representative Robert Lighthizer said the agreement has been a failure, despite US unemployment at historically low rates.

A plus in the Trump column: The Office of Management and Budget said last month that 469 regulatory actions proposed by the Obama administration had been withdrawn, and 391 more had been sent for review. The rest of the Trump agenda may be moribund, but he has delivered on liberating the economy from anti-business over-regulation.

According to the Financial Times, there is still $9 trillion of debt trading at a negative interest rate.

US Industrial Production for July of 0.2% fell short of the forecasted 0.4%.

Activist fund Corvex has taken a $400 million position in the famous French strategic asset called Danone. As you may recall, this yogurt maker was declared a strategic asset of France some twelve years ago to prevent it from being taken over by Pepsi. While the rest of the world mocked France for declaring yogurt to be a strategic asset, the French sensibly understood the geo-political importance of a healthy digestive tract.

Auditors behaving badly (1): KPMG received a fine of $6.2 million from the US Securities & Exchange Commission for giving an unqualified report despite the company, Miller Energy Resources, grossly overstating asset values, according to the SEC. Apparently some oil wells purchased for $5 million that became worth $480 million on their balance sheet. Oops!

Auditors behaving badly (2): PwC was fined £5.1m by the Financial Reporting Council, the largest penalty issued by the UK’s accounting regulator. PwC admitted to five instances of misconduct in its 2011 audit of RSM Tenon.

Oil prices fell to a three week low as increasing US production numbers offset the largest weekly decline in inventories this year of 8.9 million barrels.

Taiwan GDP growth exceeded expectations.

AP Moller-Maersk said container shipping conditions are the best since the financial crisis.

Concentration, please: In its Hedge Fund Trend Monitor, Goldman Sachs reports that the average hedge fund carries 68% of its long portfolio in its top 10 positions, just below the record high reached in early 2016.

Way to state the obvious: Estee Lauder reported very good quarterly results, beating consensus estimates for both revenue and earnings. The analyst from Citi Research expertly explains how they were able to achieve better than expected revenues and earnings by stating « The upside came from stronger sales growth and better profitability. »

Ending 21 weeks of consecutive inflows, emerging market stock funds saw outflows in the week to August 16, marking the largest weekly outflow since last December, according to data provider EPFR.

And that’s what I think I learned last week.

 

*Les informations sont fournies à partir des meilleures sources en notre possession. Elles ne sont pas constitutives d’un conseil en investissement ou d’une incitation quelconque à opérer sur les marchés financiers. Les opinions émises dans cet article ne sauraient en cas engager la responsabilité de LFDE.
Les valeurs citées sont données à titre d’exemple. Ni leur présence dans les portefeuilles gérés, ni leur performance ne sont garanties.