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.
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.
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.