May 7, 2019

Market Commentary
By Art Cashin Prepared by UBS Financial Services Inc.

Statistics:
Cashin’s Comments
Fair Value = N.A.
An Encore Presentation
Buy Program = N.A.
Sell Program = N.A. On this day (-1) in....er....no.....the year might give it away.

Let's start again....somewhere between the "Rest of the Story" and maybe
O'Henry on heavy prescription drugs.

Once upon a time there was this man who was so marvelous at presenting
marvelous tales to children (some marvelous, some not) that the world
scrambled to buy his work. The characters he invented were so popular
people began calling them modern classics. Folks thought they might live
forever. So far it looks like they were right - the characters are as popular
today as ever. Every new generation of kids love the stories and clamor to
buy the character dolls. The movie versions are shown again and again.

So this very ingenious man decided to kick it up a notch. How about a theme
park, built around the stories and characters. He solicited friends and
associates to invest in the plan. It was a natural. But where to build? How
about near Hollywood? Good weather and all those movie tourists. He
bought up lots of land near Los Angeles and began working one more
wonder.

The result of course was a fantastic success.....at least it was when Walt
Disney did it several years later. But this wasn't Disneyland and it was surely
no success.

This financially failed fiasco was the creation of an earlier genius - L. Frank
Baum who created the Wonderful Wizard of Oz. The failure of the theme
park broke Baum and on this day (-1) in 1919 he died - perhaps of a broken
heart.

The financial fiasco may have indirectly led to one of the great odd
coincidences in movie making. When the filming of the Wizard began in the
late 1930's the costume people couldn't find just the right design for the
shabby great coat worn by Professor Marvel when he and his horse, Sylvester,
are visited by Dorothy. Then one of the costume crew noticed "just the right
coat" in a secondhand clothing store in L.A. He bought it and brought it to
the set. Everyone thought it was perfect, and with minor alterations it fit
Frank Morgan who played the Professor. One day, as Morgan was examining
Cashin’s Comments May 7, 2019
Page 2 of 3

the coat he noticed a label on the inner pocket. It said - Baum. Could it be? Yes Dorothy, all you have to do is
believe! By checking old tailor markings they discovered that the ratty old coat accidentally bought in the
secondhand store belonged to the late L. Frank Baum. The Wizard would have liked that.

It wasn't the Wizard that moved markets Monday. It was a couple of weekend tweets from President Trump,
threatening to raise and spread tariffs on Chinese goods as early as this Friday.

The surprise tweets shook up equity markets around the globe, with the sharpest losers coming in the Chinese
markets. And, it wasn't just the equity markets that got hit. Agricultural markets got crushed on the assumption
that a trade war could see China boycotting U.S. ag products. The hog market plunged "down the limit", a sign
of extreme selling.

The early confusion was just what triggered this sudden outburst when we had been told that a China trade
agreement was likely in a matter of days. Only later in the day did we learn that the Chinese may have reversed
on several items that had previously thought to have been agreed upon.

Several members of the FoF felt that an unheralded factor in yesterday's bottoming process may have been Becky
Quick's interview with Warren Buffett and his partner Charlie Munger. Both were clearly unflustered by the
headlines about the potential tariff hikes. Munger was borderline dismissive of the headline as a cause to make,
or change, an investment decision.

When the markets finally opened, the opening tick was the low of the day.

A bit later in the session, the comeback got a second wind when it was announced that China had not canceled
this week's visit by their trade delegation, although the delegation might be a bit smaller then had originally been
planned.

Also helping some of the early turn were the technicals. Several chartists noted that the gap down opening in
the S&P was a successful retest of the lows from Thursday's trading.

All in all, it was a nice rebound by the bulls who didn't have quite enough courage to close them on the plus side.

What did manage to close on the plus side was the Russell. That seemed to make sense, since it is composed
primarily of slightly smaller companies who are not that exposed to international trade.

Wow! A market move that seemed to make sense. What will they think of next?

Overnight And Overseas – Tokyo finally reopened after six straight days of holiday closings. They closed down
the equivalent of 400 Dow points, mostly in catch-up from the closings. Hong Kong and Shanghai saw mild
bounces as trade talks appear to resume. India saw a moderate selloff.

In Europe, markets appear to still be a bit nervous. London is seeing a moderate loss, while losses are a bit more
modest in Frankfurt and Paris.

Among other assets, Bitcoin continues on a run, now trading above $6200. Gold is flat and crude is a touch
softer, apparently on rumors about Russian production. The euro is basically flat against the dollar and yields are
unchanged.

Consensus – The tepid market bounce in China suggests that trade talk fears remain. So watch the newsticker
for headlines as trade remains center stage.

So far, markets seemed to have shrugged off yesterday's Fed report. It was less than glowing. They said the
market was overpriced and questioned the credit worthiness of a chunk of corporate debt. We may need to drill
down on the report.

Stay wary, alert and very, very nimble.

Trivia Corner

Answer - Tom started with 7 sandwiches. The first bully took half (3.5) plus half a sandwich (.5) which makes 4
in all. Etc., etc.

Today’s Question - Al and Bill were born on the same day in the same hospital in the same town at roughly the
same time to the same parents - yet they are not twins. How is this possible??

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