Foreign Money

A reader shares his memory of 9/11:

“I woke up to my mother in tears; she said, “We’ve been attacked.” Before I could ask what happened, a plane crashed into the second tower. Then the Pentagon and another jet, supposedly, heading to the White House. News later came out about the heroes who took matters into their own hands and intentionally crashed that jet.

“My father died earlier that year in May and I’m grateful he didn’t see the events of that terrible day in our history, a day like a second Pearl Harbor.”

Next, a reader responds to what we said yesterday about Trump calling on the Fed to cut rates to the bone, refinance our debt — all with zero inflation…

“There is no good reason to make American dollars attractive to foreign money. Interest paid on Treasuries comes from taxpayers. Right now, a 1% rate on Treasuries is equal to $300 billion in interest — or our tax burden.

“Lower the U.S. dollar so we are competitive in the world’s money market and sell more goods.  The $800-billion trade deficit means American dollars going into foreign hands who buy U.S. Treasuries and make all of us poorer for buying their subsidized goods.”

An interesting opinion. First, I don’t know if there’s any economy in the world that can/will turn down foreign money — including China. Second, the European Central Bank meets today. Their aim? To weaken the euro thereby strengthening the U.S. dollar.

Don’t think the Trump administration’s going to take that lying down.

Speaking of, National Security Adviser John Bolton got his walking papers Tuesday. (We’ll miss his ‘stache.)

Do you think Fed Chairman Jerome Powell’s next?

Your Rundown for Thursday, Sept. 12, 2019:

China’s Shopping Like It’s Black Friday

Chinese shoppers got a taste of what it’s like to shop in the States on Black Friday when warehouse store Costco opened in Shanghai for the first time.

Obviously, there’s a demand for a brick and mortar Costco in China even though the company’s had an online presence in the country for five years. So far, it appears Costco can compete with companies like Walmart and Alibaba for Chinese consumers.

More backstory on Costco (COST): While the retail sector has severely underperformed this year — SPDR S&P Retail ETF (XRT) is up 6% to date versus broader S&P 500 gains of 19% — Costco has rocketed up 46%.

Sounds like a stock to BUY, right?

Well… Oppenheimer downgraded the stock’s rating from “Outperform” to “Perform” due to the company’s overextended valuation, with a PE ratio of 35. To give you an idea, a PE ratio between 10 to 20 is considered fair.

So the stock might have less room to grow in 2020 but it’s still a solid company. “Costco Wholesale is the best-positioned company in the world of consumer staples and food retailing,” Barron’s reports.

And there seems to be an opportunity for Costco to expand, capturing a share of the second largest economy in the world.

Market Rundown for Thurs. September 12, 2019

S&P 500 futures are up 9 points to $3,010.11.

Oil is down $1.62 to $54.13 per barrel.

Gold’s up $22.20 per ounce to $1,525.40.

Bitcoin is up $117.03 to $10,282.04.

Have a great day; we’ll talk tomorrow.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

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Aaron Gentzler

Aaron Gentzler is the publisher of Seven Figure Publishing. He is also the editor of The Rundown and has been with Agora Financial / Seven Figure Publishing since 2005. He's been covering technology and markets for over a decade.

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