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What I think I learned last week #39

For those who found this weekend’s qualifying competition at the American Accordion Association for the upcoming Accordion Coupe Mondiale too exciting, there was some sort of soccer contest going on. There was a lot of celebrating after France won, but market investors will remember what happened the last time France was victorious on July 12, 1998. The S&P 500 dropped 20% six weeks later. Apparently the concept of happy French people just throws off the global karma.

Meanwhile, US stocks rallied last week as the S&P 500 hit its highest level since February 1 and the Nasdaq Composite continued to hit new highs, along with key constituents Amazon, Facebook and Microsoft, which saw its market capitalization break $800 billion for the first time ever.

The UK Information Commissioner’s Office imposed a fine of £500,000 on Facebook for the Cambridge Analytica problems. It will take Facebook around 7 minutes to generate the revenue to pay the fine.

Facebook also hired a head of semiconductor chip development, joining Google, Apple and Amazon as companies attempting to make their own custom semiconductors.

US banks have been posting good earnings results. Illustrating the strength of the US economy, JPMorgan CEO Jamie Dimon said the economy was charging ahead on most fronts and that if “you’re looking for potholes out there, there are not a lot of things.”

Pfizer raised prices on 100 drugs this week. President Trump tweeted that they should be ashamed. Pfizer then postponed those price increases.

According to the International Energy Agency, the oil market is “stretched to the limit” despite OPEC’s agreed production increases.

Rising oil prices are hurting airlines. American Airlines cut guidance, while Delta Air issued a profit warning due to rising fuel costs.

The Institute of International Finance said that relative to gross domestic product, global debt exceeded 318%, the first increase since the third quarter of 2016.

Core inflation in the US hit 2.3% over the last year, the highest rate since January 2017. The headline number of 2.9% was the highest in six years.

Personal-computer shipments in the second quarter had the strongest showing in six years, driven by growing demand from business customers, according to preliminary data from two research firms.

China’s economy grew at 6.7% in the second quarter, in line with estimates, but its slowest rate since 2016. Of course, nobody really takes the Chinese number all that seriously.

Investors withdrew $900 million from emerging market funds in the week ending July 11, making total outflows of $17 billion over the last ten weeks. European equity fund saw their 18th consecutive week of outflows with $4.2 billion withdrawn.  US equity funds gained $4.3 billion.

Despite emerging market troubles, the Mexican peso has been as active as a Mexican jumping bean. After the landslide election of the leftist Andrés Manuel López Obrador, the administration has appeared to not be as anti-market as feared and the peso has rallied 10% since mid-June.

Finally as reported in the Financial Times: A report by governance consultant Equilar said 38 of the top 500 US public companies last year had proposals to install an independent chair. All failed. At seven of the top 10 US companies by market value, there is no independent chair. In contrast is the UK Corporate Governance Code that deems independence essential.  “This may play well with corporate governance experts. It does not seem to help performance. The top four companies on the S&P 500 are now worth more than the entire FTSE 100.”

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