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Sarasota Herald Tribune and Naples Daily News


November 2018

October is behind us and what a volatile month it was!! General Electric (GE) replaced John Flannery as CEO about one year after he replaced long time CEO Jeffrey Immelt. New CEO Lawrence Culp is expected to move aggressively to reshape the company. After a brief rally on this news, GE shares made a new 52 week low last month. Mr. Culp had a successful tenure as CEO of Danaher Corporation. To no one’s surprise, Sears filed for Chapter 11 bankruptcy last month. As a result, the shares were delisted from NASDAQ and now trade in the OTC market under the symbol SHLDQ. Its future is very uncertain.

On a positive note, Microsoft’s market capitalization is now the second largest behind Apple. Amazon’s shares have declined approximately 20% from its all time high reached earlier this year. Amazon’s disappointing quarterly results last month enabled Microsoft to move past it and claim the #2 spot for market capitalization behind Apple. Finally, to the surprise of many, Tesla actually posted a quarterly profit last month!!

The Federal Reserve will hold a two day meeting next week (Nov 7-8) and is expected to keep rates steady at this meeting. The final Fed meeting for 2018 will take place December 18-19  and the Fed, at present, is widely expected to raise rates a quarter point at this meeting. Pres. Trump has openly criticised Fed Chair Jerome Powell for the Fed’s rate making policy as compared with the very accommodative interest rate policy by the other major central banks around the world.

Deutsche Bank’s continuing struggles is one story that has not received much coverage in the US financial press. It is Germany’s largest bank and one of the largest banks in the world. Like GE, its CEO position has lately resembled a revolving door. On April 8, Deutsche Bank named Christian Sewing as the bank’s third CEO in as many years, never a good sign. The shares also reached a multiyear low last month and could be headed lower. Deutsche Bank’s derivatives exposure and book of troubled loans is staggering. To put things in perspective, Deutsche Bank’s TRILLIONS of credit default swaps (CDS) book is larger than the total GDP of the entire world!!

After Thanksgiving, the 2018 G20 Buenos Aires Summit will take place Nov 30 - Dec 2. Market strategists are hopeful the US and China will be able to make progress while at this meeting on their trade dispute before the next wave of tariffs are in effect. Undoubtedly, German Chancellor Angela Merkel will discuss Deutsche Bank’s ongoing problems with the G20’s economic leaders as well.

My weekly radio show on WWPR 1490 AM airs at 12.30pm each Friday. The show can also be heard live on the station’s website (www.1490wwpr.com). My prior radio shows and news columns are available on my firm’s website (www.amescapmgmt.com).

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