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Prime Working-Age Population near 2007 Peak

Prime Working-Age Population near 2007 Peak

by Bill McBride on 2/09/2017 03:26:00 PM

The prime working age population peaked in 2007, and bottomed at the end of 2012. As of January 2017, there are still fewer people in the 25 to 54 age group than in 2007.
However the prime working age (25 to 54) will probably hit a new peak this year.

Changes in demographics are an important determinant of economic growth, and although most people focus on the aging of the “baby boomer” generation, the movement of younger cohorts into the prime working age is another key story. Here is a graph of the prime working age population (25 to 54 years old) – and prime plus (20 to 59 years old)  from 1948 through January 2017.

Note: This is population, not work force.

Prime Working Age Populaton

Click on graph for larger image.

There was a huge surge in the prime working age population in the ’70s, ’80s and ’90s.

The prime working age labor force grew even quicker than the population in the ’70s and ’80s due to the increase in participation of women. In fact, the prime working age labor force was increasing 3%+ per year in the ’80s!

So when we compare economic growth to the ’70s, ’80, or 90’s we have to remember this difference in demographics (the ’60s saw solid economic growth as near-prime age groups increased sharply).

The good news is the prime working age group has started to grow again, and is now growing at 0.5% per year – and this should boost economic activity.  And it appears the prime working age group will exceed the previous peak this year.

If we look at the prime plus working age (20 to 59 age groups, the story is a little different.  This prime plus group is still growing, but the growth will probably slow over the next few years as the younger boomers start retiring.
 

Participation Rate by Cohort

The second graph shows the current participation rate by cohort. The prime working age is usually considered to be 25 to 54 years old. Note that the participation rate is about the same for all cohorts across these age groups (a little lower for the 50 to 54 cohort).

The cohorts with the next highest participation rates are 55 to 59 years old, and 20 to 24 years old. So these two groups are included in the first graph in the red line.

We could also add 60 to 64 too in the prime plus group (not included in first graph)
 

Population by Cohort

The third graph shows the population by cohort.

Note that 16 to 19 is only for four years; all other cohorts are five year groups.

The largest cohort is now in the 25 to 29 age group (this cohort is one reason I’ve been positive on rentals for the last 5+ years).

With these large cohorts moving into the prime working age – and the prime working age population growing again – this is a reason for optimism.

Read more at http://www.calculatedriskblog.com/2017/02/prime-working-age-population-near-2007.html#AKyfuTAIXR0d7vwL.99

Published at Thu, 09 Feb 2017 20:26:00 +0000

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Repubican Hensarling plans to ease Wall Street rules: memo

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Repubican Hensarling plans to ease Wall Street rules: memo

| WASHINGTON

The Republican leader of the House Financial Services Committee plans to scale back banking reforms, curb the consumer finance agency and ease regulations on financial institutions and companies looking to raise capital, according to a proposal seen by Reuters on Thursday.

In a four-page memo on the legislation he intends to introduce, Texas Representative Jeb Hensarling made a slew of proposals, including one that Wall Street banks’ “stress tests” be performed every two years instead of annually as is done now.

He also said he would have the position of director of the controversial Consumer Financial Protection Bureau changed from its current protected status to a political appointment removable “at will” by the president under another change.

The memo, seen by Reuters, outlined dozens of changes to the Financial Choice Act that Hensarling introduced last year and plans to reintroduce. His new bill is expected to pass the House of Representatives, but faces an uncertain fate in the Senate, where it will require 60 votes to pass.

The memo does not mention the Volcker rule, which limits bank’s ability to make speculative investments in banks’ own accounts.

His original bill would have killed the Volcker rule. Its absence in the memo, which details his changes to the original bill, suggests he will again propose to eliminate that rule.

 

“It’s very aggressive and a very good starting point to rolling back a lot of the rules and regulations,” said Paul Merski of the Independent Community Bankers of America.

Besides rewriting lending rules, Hensarling’s Choice Act would add more hurdles to the U.S. Securities and Exchange Commission enforcement program.

The bill would also scale back a variety of rules for public companies, including some accounting and capital raising rules. It would also reduce regulations for credit rating agencies.

(Additional reporting by Amanda Becker and Sarah Lynch. Editing by Cynthia Osterman)
Published at Thu, 09 Feb 2017 20:08:32 +0000

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U.S. jobless claims near 43-year low; wholesale inventories surge

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U.S. jobless claims near 43-year low; wholesale inventories surge

By Lucia Mutikani
| WASHINGTON

The number of Americans filing for unemployment benefits unexpectedly fell last week to near a 43-year low, amid a further tightening of the labor market that could eventually spur faster wage growth.

Other data on Thursday showed inventories at wholesalers surged in December for a second straight month and sales recorded their biggest increase since 2011, signs of confidence in the economy as domestic demand strengthens.

Initial claims for state unemployment benefits dropped by 12,000 to a seasonally adjusted 234,000 for the week ended Feb. 4, the Labor Department said. That left claims just shy of the 43-year low of 233,000 touched in early November.

Claims have now remained below 300,000, a threshold associated with a strong labor market, for 101 straight weeks. That is the longest stretch since 1970, when the labor market was much smaller.

“There is no sign of a pickup in layoff activity. We continue to view the signal of extremely subdued layoffs from the jobless claims data as evidence of companies attempting to retain their workers in a tight labor market,” said John Ryding, chief economist at RDQ Economics in New York.

Prices of U.S. Treasuries fell, with yields rising to session highs, while the dollar rose against a basket of currencies.

The labor market is at or close to full employment, with the unemployment rate at 4.8 percent after hitting a more than nine-year low of 4.6 percent in November. The economy created 227,000 jobs in January.

Further tightening in labor market conditions could boost wage growth, which has remained stubbornly sluggish despite anecdotal evidence of more companies struggling to find qualified workers.

PRETTY UPBEAT SIGNAL

Lackluster wage growth, if sustained, could hurt consumer spending and crimp economic growth. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 250,000 in the latest week.

“Today’s report sent a pretty upbeat signal about conditions in the job market,” said Daniel Silver, an economist at JPMorgan in New York. “It looks like conditions in the job market have remained solid in the few weeks since the reference period for the January payroll report.”

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,750 to 244,250 last week, the lowest level since November 1973.

The claims report also showed the number of people still receiving benefits after an initial week of aid increased 15,000 to 2.08 million in the week ended Jan. 28. The four-week average of the so-called continuing claims fell 3,750 to 2.08 million.

In a separate report on Thursday, the Commerce Department said wholesale inventories increased 1.0 percent after a similar jump in November. The back-to-back strong increases of stock accumulation, however, suggest a moderation in the pace of inventory investment in the months ahead.

Wholesale stocks excluding autos, the component of wholesale inventories that goes into the calculation of gross domestic product, increased 0.9 percent in December.

Inventory investment contributed one percentage point to the economy’s 1.9 percent annualized growth rate in the fourth quarter. That was the second straight quarterly contribution to GDP growth. Inventories had been a drag on GDP growth since the second quarter of 2015.

Sales at wholesalers jumped 2.6 percent in December, the largest increase since March 2011, after increasing 0.5 percent in November.

At December’s sales pace it would take wholesalers 1.29 months to clear shelves, the smallest since December 2014 and down from 1.31 months in November. The ratio has declined from the 1.37 months touched in January of last year, which was the highest since March 2009.

 

(Reporting by Lucia Mutikani; Editing by Paul Simao and Meredith Mazzilli)
Published at Thu, 09 Feb 2017 15:40:39 +0000

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Wall Street opens higher as energy stocks gain

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Wall Street opens higher as energy stocks gain

By Lewis Krauskopf

Wall Street’s three main indexes hit record highs on Thursday after President Donald Trump said he would make a major tax announcement in a few weeks.

“Lowering the overall tax burden on American business is big league,” Trump said during a White House meeting with airline industry executives.

U.S. stocks have rallied since Trump’s Nov. 8 election amid expectations he will not only usher in lower corporate taxes, but also reduced regulations and increased infrastructure spending. The rally had stagnated in recent days as investors seek details about Trump’s economic policy agenda.

Financials .SPSY, which have soared since the election, were the best-performing group, up 1.3 percent after three sessions of declines, while energy shares .SPNY gained 0.9 percent.

Those sectors stand to benefit should lower taxes spur economic activity as interest rates and the demand for energy rise, said Bruce McCain, chief investment strategist at Key Private Bank, in Cleveland.

“Given the groups that responded and the enthusiasms within the market, it seems to be the tax comments that lit off the rally today,” said Bruce McCain, chief investment strategist at Key Private Bank, in Cleveland.

But, McCain said, “when you get to these levels of market sentiment, usually the returns are much more modest and you’re much more subject to a pullback.”

The Dow Jones Industrial Average .DJI rose 134.14 points, or 0.67 percent, to 20,188.48, the S&P 500 .SPX gained 14.72 points, or 0.64 percent, to 2,309.39 and the Nasdaq Composite .IXIC added 37.58 points, or 0.66 percent, to 5,720.03.

All three indexes hit new intraday all-time highs.

The utilities sector .SPLRCU, which is considered a defensive bet, fell 0.9 percent, the worst-performing group.

The focus on Washington comes with U.S. companies in the midst of their corporate reporting season.

With about 70 percent of the S&P 500 having reported results, fourth-quarter earnings are on track to have climbed 8.5 percent, which would be the best performance since the third quarter of 2014, according to Thomson Reuters I/B/E/S.

Shares of Viacom (VIAB.O), Kellogg (K.N) and Prudential (PRU.N) all gained after their respective quarterly results.

Coca-Cola (KO.N) forecast a surprise drop in full-year profit. Its shares fell 2.4 and were the biggest drag on the Dow and the S&P.

Twitter (TWTR.N) tumbled 11.9 percent after the social network reported its slowest quarterly revenue growth since going public in 2013.

Airline stocks rose, with JetBlue (JBLU.O), Delta (DAL.N) and American Airlines (AAL.O) up more than 2 percent, after Trump’s meeting with airline executives.

Advancing issues outnumbered declining ones on the NYSE by a 2.11-to-1 ratio; on Nasdaq, a 2.80-to-1 ratio favored advancers.

The S&P 500 posted 39 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 124 new highs and 19 new lows.

(additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva and Nick Zieminski)
Published at Thu, 09 Feb 2017 14:33:59 +0000

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White House memo confuses Wall Street on fate of fiduciary rule

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 23, 2017. REUTERS/Brendan McDermid

By Sarah N. Lynch and Elizabeth Dilts
| WASHINGTON/NEW YORK

Conflicting messages from the White House have left U.S. brokerage firms and lobbyists unsure whether a controversial rule governing retirement advice will ever be put in place, but they are taking no chances and complying anyway.

President Donald Trump’s Friday memorandum ordered the Labor Department to review the so-called “fiduciary” rule, which requires brokers to put their clients’ interests first when advising them about 401(k) plans or individual retirement accounts.

But that call for a review was significantly weaker than an earlier draft, seen by Reuters, that requested a 180-day delay in the scheduled April 10 effective date of the rule which is already on the books.

Trump’s memo did not go as far as White House early guidance to reporters that the memo would ask the department to “defer implementation” of the rule.

It is not clear just how quickly or easily the Labor Department can delay implementation of the rule.

And while a delay is expected, it still is not clear to Wall Streeters who have already started changing their business models whether they can count on a deferral or reversal of the regulation.

“There’s confusion because it injected a whole lot more noise into the system with very little specificity about what is to come,” said Michael Spellacy, the head of PWC’s wealth management consultancy, who said he spent most of his weekend on the phone with the heads of 35 U.S. brokerages discussing the memo and its implications.

Legal experts say the Labor Department likely will have to undertake a formal rulemaking process in order to delay the rule’s implementation and the lack of a permanent U.S. Labor Secretary may cause further delays.

Trump’s choice to be Labor Secretary, Andrew Puzder, has seen his own confirmation indefinitely postponed in the Senate amidst issues with his ethics paperwork.

One other possible problem that could impact the rule’s implementation is a pending legal challenge in a federal court in Texas. Last week, the judge said she plans to rule no later than Feb. 10.

The fiduciary rule is separate from the banking rules that were put in place after the 2008 financial crisis. Trump has also ordered a review of the 2010 Dodd-Frank reform.

EXPECTING A DELAY, BUT COMPLYING ANYWAY

In the meantime, lawyers are advising their financial services clients to continue preparing for the upcoming deadline.

“What is clear from the memo is that we don’t have certainty yet,” said Michael Kreps, an attorney with the Groom Law Group.

The White House did not explain why it scaled back its memo, but legal experts say it was most likely changed because the prior version may have violated the Administrative Procedures Act, a federal law that governs the rulemaking process.

That law requires public notice and a comment period before changes to a rule can be made.

Had Trump proceeded with the original plan for a 180-day delay, the change could have been vulnerable to legal challenges.

Legal experts say the Labor Department has a few possible options.

It can issue what is known as an “interim final rule,” which would immediately delay the effective date while seeking comments from the public on why a delay is justified.

 

Another option is to a proposed rulemaking to delay the rule’s compliance deadline, give the public 30 days to comment, and then issue a final rule.

A Labor Department spokeswoman reiterated on Monday that the department is reviewing its legal options to delay the rule, but declined to elaborate.

Kenneth Laverriere, an attorney at Shearman & Sterling, said he fully expects the rule to be delayed eventually, though it will come after companies have already spent a lot of money to comply.

Three of the biggest U.S. brokerages, Bank of America Corp’s (BAC.N) Merrill Lynch, Morgan Stanley (MS.N) and Wells Fargo Advisors (WFC.N), said Friday’s memo will not change compliance plans the firms already have in place.

Of those, Bank of America intends to adopt the most aggressive changes with its plans to scrap selling brokerage IRA accounts starting in April.

Any attempts by the Labor Department to kill the rule will draw a fight from Massachusetts Democratic Senator Elizabeth Warren, who wrote the Acting Secretary of Labor Edward Hugler on Tuesday.

Warren said the nation’s largest online brokerage Charles Schwab (SCHW.K), Fidelity Investments, asset manager TIAA-CREF and around 10 other large wealth management firms told her office they are prepared to be compliant with the rule by the April 10 deadline. “The genie is certainly out of the bottle,” Laverriere said.

(Reporting by Sarah N. Lynch in Washington and Elizabeth Dilts in New York; Additional reporting by Ayesha Rascoe in Washington; Editing by Linda Stern and Lisa Shumaker)
Published at Tue, 07 Feb 2017 22:32:29 +0000

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U.S. Courts: Bankruptcy Filings Drop 6 Percent in 2016, Lowest since 2006

by geralt from Pixabay

U.S. Courts: Bankruptcy Filings Drop 6 Percent in 2016, Lowest since 2006

by Bill McBride on 2/06/2017 04:06:00 PM

From the U.S. Courts: Bankruptcy Filings Fall 5.9%, Reach Lowest Level Since 2006

During the 12-month period ending December 31, 2016, 794,960 cases were filed in federal bankruptcy courts, down from the 844,495 bankruptcy cases filed in calendar year 2015—a 5.9 percent drop in filings.

This is the lowest number of bankruptcy filings for any calendar year since 2006, and the sixth consecutive calendar year that filings have fallen. However, it was the first calendar year since 2011 that the rate of annual decline was less than 10 percent.

non business bankruptcy filings Click on graph for larger image.

This graph shows the business and non-business bankruptcy filings by calendar year since 2001.

The sharp decline in 2006 was due to the so-called “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005”. (a good example of Orwellian named legislation since this was more a “Lender Protection Act”).

Other than 2006, this was the lowest level for filings since 1995. This is another indicator of an economy mostly recovered from the housing bust and financial crisis.

Read more at http://www.calculatedriskblog.com/2017/02/us-courts-bankruptcy-filings-drop-6.html#xpDlmGqTZOMt78sO.99

Published at Mon, 06 Feb 2017 21:06:00 +0000

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Premarket: 4 things to know before the bell

 

premarket stocks trading futuresClick chart for in-depth premarket data.

Premarket: 4 things to know before the bell

  @AlannaPetroff

Published at Tue, 07 Feb 2017 09:51:59 +0000

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Tuesday: Trade Deficit, Job Openings

Tuesday: Trade Deficit, Job Openings

by Bill McBride on 2/06/2017 07:27:00 PM

Tuesday:

• At 6:00 AM ET, NFIB Small Business Optimism Index for January.

• At 8:30 AM, Trade Balance report for December from the Census Bureau. The consensus is for the U.S. trade deficit to be at $44.9 billion in December from $45.2 billion in November.

• At 10:00 AM, Job Openings and Labor Turnover Survey for December from the BLS. Jobs openings increased in November to 5.522 million from 5.451 million in October. The number of job openings (yellow) were up 6% year-over-year, and Quits were up 7% year-over-year.

• At 3:00 PM, Consumer credit from the Federal Reserve.  The consensus is for a $20.0 billion increase in credit.

Published at Tue, 07 Feb 2017 00:27:00 +0000

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Clarity on Fed policy sought – stocks, dollar up in meantime

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By Nigel Stephenson
| LONDON

Investors sought clarity on Monday in the face of a host of economic and political uncertainties but gave the benefit of the doubt to shares and the dollar, lifting both.

A heavy week of corporate earnings was a major driver on stocks markets.

In the currency market, the question was how Friday’s U.S. labor market data will affect the pace of Federal Reserve interest rate rises. Far more jobs were added last month than expected, though hourly wages barely budged.

Oil prices rose on news that new U.S. sanctions on Iran could be extended to affect crude supplies.

French government bonds, meanwhile, underperformed German benchmarks with a gap not seen in four years after French far-right party leader Marine Le Pen launched her bid for the presidency with a vow to fight deregulated globalization.

But there was no overarching theme to Monday’s market moves, highlighting how correlations between financial market assets have broken down in recent months as investors sense the era of ultra-loose monetary policy may be winding up.

The pan-European STOXX 600 index rose 0.2 percent, led higher by basics resources shares .SXPP and after some positive company results.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6 percent, with Taiwan .TWII leading the pack by adding 0.9 percent.

Japan’s Nikkei .N225 rose 0.2 percent, with banks rising after U.S. President Donald Trump signed an executive order to scale back regulations in the financial industry that were implemented after the financial crisis.

 

Trump meets Japanese Prime Minister Shinzo Abe on Feb. 10 and 11, with trade and currencies likely to be on the agenda.

China’s CSI 300 stocks index .CSI300 rose 0.3 percent, though investors were caution after the central bank unexpectedly raised short-term interest rates on Friday.

In debt markets, French 10-year government bond yields FR10YT=TWEB rose 1.6 basis points to 1.1 percent. German equivalents, the euro zone benchmark, dipped 2 bps to a two-week low of about 0.4 percent, pushing the gap between the two to its widest in four years.

“The likelihood of Le Pen winning is unlikely, but the situation in France is certainly raising fears among investors,” said DZ Bank rates strategist Christian Lenk. “French bonds will continue to underperform even though a lot is priced into the market.”

 

DOLLAR INCHES UP

The dollar inched up 0.1 percent against a basket of major currencies .DXY. Data on Friday showed average hourly earnings rose just 0.1 percent, suggesting any pick-up in inflation would be slight.

This led some analysts to conclude the Fed would be in no hurry to raise interest rates.

Currency investors are also awaiting details on expected pro-dollar tax and spending initiatives pledged by Trump..

However, San Francisco Fed President John Williams said later in the day that the central bank can prepare to raise rates this year without knowing the details of any new U.S. fiscal policies.

 

On Monday, the euro weakened 0.3 percent to $1.0747 EUR= while the yen gained 0.1 percent to 112.60 per dollar JPY= and sterling dipped 0.2 percent to $1.2450 GBP=D4.

Oil prices rose, partly due to the dollar’s relative weakness, but also on concern about any extension of new U.S. sanctions imposed on major oil producer Iran over that country’s missile program.

“The move by the U.S. to impose new restrictions on Iran … does raise the risk of further tensions disrupting (oil) supply,” ANZ bank said.

Brent crude, the international benchmark, rose 9 cents a barrel to $56.92.

Gold XAU= rose 0.2 percent to $1,222 an ounce.

(Additional reporting by Wayne Cole in Sydney, Dhara Ranasinghe in London Editing by Jeremy Gaunt)
Published at Mon, 06 Feb 2017 10:01:25 +0000

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Trump’s deregulation nation; Silicon Valley tackles immigration ban; Macy’s buzz

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Trump: Travel ban working out very nicely
Trump: Travel ban working out very nicely

  @juliakhorowitz

1. Deregulation nation: Investors cheered an executive order signed by President Donald Trump on Friday that began to dismantle expansive Dodd-Frank reform of Wall Street. Bulls hope it will boost stocks through the week.

Shares of big banks like JPMorgan (JPM), Wells Fargo (WFC) and Citigroup (C) rallied more than 2% each on Friday. Goldman Sachs (GS) popped over 4%. They’ll aim to keep the streak going — but they’ll need Congress’ help to actually repeal the bill.

Trump’s promises to cut taxes, spend on infrastructure and slash regulation sent stocks surging after the election. But the president spent his early days focused on more controversial policies, such as a ban on travelers from seven Muslim-majority nations. He’s also taken an aggressive stance on trade. Those actions sent a chill through Wall Street, which had been crossing its fingers for a pivot to stimulus and regulatory reform.

2. What about tech? The standoff between Trump and tech leaders over the White House’s immigration ban will likely continue into next week. But for now, tech stocks are holding steady.

Strong earnings boosted Facebook (FB, Tech30) and Apple (AAPL, Tech30) last week. Amazon(AMZN, Tech30) and Netflix (NFLX, Tech30) are also performing well this year. But investors will keep a watchful eye on Silicon Valley’s strained relationship with Washington, especially as industry leaders decide what further actions to take.

Last week, Uber’s Travis Kalanick left the president’s business advisory council, and Amazon and Expedia joined a legal challenge to the travel ban. Apple is also weighing its legal options.

3. Macy’s buzz: A sale of the troubled but iconic retailer may be on the horizon.

Macy’s (M) stock soared 10% Friday after the Wall Street Journal reported that Hudson’s Bay(HBAYF), the parent company of Lord & Taylor and Saks Fifth Avenue, is mulling a bid. A source familiar with the matter confirmed to CNNMoney that an offer has been made but discussions are still in early stages.

Last month, Macy’s said it would shut down 68 stores and cut more than 10,000 jobs after disappointing sales during the holiday season.

4. Assortment of earnings: An array of companies are set to report results this week, from GM(GM) to Disney (DIS).

Twitter (TWTR, Tech30) couldn’t nail down a takeover offer in 2016, but there could be renewed interest if the company posts decent earnings on Thursday. And Time Warner (TWX)’s Wednesday numbers will come under close scrutiny due to the media giant’s pending sale to AT&T (T, Tech30).

5. Coming this week:

Monday – 21st Century Fox (FOXA) earnings

Tuesday – CNN Town Hall on health care with Bernie Sanders and Ted Cruz; GM (GM) and Disney(DIS) earnings

Wednesday – Whole Foods (WFM), Time Warner (TWX), GlaxoSmithKline (GLAXF) earnings

Thursday – Twitter (TWTR, Tech30), Coca-Cola (KO), Expedia (EXPE), Yum! Brands (YUM), Dunkin’ Donuts (DNKN) earnings

Friday – Renault (RNSDF) earnings

Published at Sun, 05 Feb 2017 13:03:38 +0000

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Wall St. Week Ahead: Dollar’s sudden weakness could help U.S. profit picture

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By Caroline Valetkevitch and Sinead Carew
| NEW YORK

Stock investors could have at least one less worry in the next earnings period: the suddenly limp U.S. dollar.

The greenback, whose strong rally after the Nov. 8 U.S. election hit profits at many U.S. multinationals in the fourth quarter, has had a sharp reversal since the start of the year.

Coupled with comments suggesting that the Trump administration favors a weaker currency, that could shift the picture for the current quarter.

Fourth-quarter results, even with the dollar’s drag, are mostly beating Wall Street’s expectations and helping provide a buffer to some of the uncertainties facing investors, including the new U.S. president’s policies. The S&P 500 .SPX ended with a slight gain for the week.

With earnings in from more than half the S&P 500 companies, year-over-year profit growth for the fourth quarter is now estimated at 8.0 percent, up from 6.1 percent forecast at the start of January, and on track to be the strongest since the third quarter of 2014, according to Thomson Reuters data. Analysts expect first-quarter earnings to rise 11.5 percent.

That “sets the stage for a stronger Q1, particularly when you look at the jobs numbers coming out and when you look at the business confidence surveys and consumer confidence surveys. There’s a lot of improving sentiment,” said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts.

U.S. nonfarm payrolls had the largest increase in four months in January.

“Even as the companies are talking their expectations down, consumers and businesses are likely to act on that better sentiment.”

The dollar index .DXY on Jan. 31 posted its worst start to a year in three decades, putting in a decline of 2.6 percent for January after gaining 7.1 percent in the last quarter of 2016.

Comments this week by President Donald Trump and a top economics adviser suggested to some that the administration is prepared to jettison two decades of “strong dollar” policies advocated by predecessors.

A strong dollar is a worry for equity investors because it makes U.S. multinationals’ foreign currency earnings worth less in dollars. Nearly half of S&P 500 sales come from overseas, according to S&P-Dow Jones Indices.

Executives from a slew of U.S. companies cited the strong dollar as a negative in their fourth-quarter reports and also concern about its effect on 2017 results.

Among them, Apple (AAPL.O) gave a cautious outlook for the current quarter that it mainly attributed to the strong dollar, despite its upbeat fourth-quarter results.

“For a company like ours where we do about two-thirds of our business outside the United States, the strong dollar presents a headwind of more than 2 percent growth,” Apple Chief Financial Officer Luca Maestri told Reuters.

 

Other companies citing currency hurdles for the last quarter or for 2017 included Procter & Gamble (PG.N), Mead Johnson Nutrition (MJN.N), 3M Co (MMM.N) and PPG Industries (PPG.N).

Procter & Gamble said it expects combined headwinds of foreign exchange and minor brand divestitures to cut sales growth by two to three percentage points for fiscal 2017.

Some strategists say the dollar is still likely to be stronger rather than weaker this year, especially given expectations for interest rate hikes for this year, but that earnings should still benefit from an improving economy.

“You should get more than enough growth from the economy if you’re a corporation to more than offset the rise in the dollar,” said Sameer Samana, global quantitative strategist for Wells Fargo Investment Institute, which expects the dollar index to rise 7 percent by year end.

(Reporting by Caroline Valetkevitch and Sinead Carew in New York; Additional reporting by Stephen Nellis in San Francisco; Editing by James Dalgleish)
Published at Sun, 05 Feb 2017 09:43:18 +0000

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Some Random Concerns and Observations …

Some Random Concerns and Observations …

by Bill McBride on 2/02/2017 05:33:00 PM

In addition to Captain Chaos (aka Agent Orange) … here are a few random concerns and observations:
• From Bloomberg: China’s Army of Global Homebuyers Is Suddenly Short on Cash

China’s escalating crackdown on capital outflows is sending shudders through property markets around the world. … In Silicon Valley, Keller Williams Realty says inquiries from China have slumped since the start of the year. And in Sydney, developers are facing “big problems” as Chinese buyers pull back, according to consultancy firm Basis Point.

“Everything changed’’ as it became more difficult to send money offshore, said Coco Tan, a broker associate at Keller Williams in Cupertino, California.

If this continues, it could have a significant impact on housing, especially in some areas of the west coast.

• After the election, many analysts thought the priorities of the new administration would be tax cuts, infrastructure spending, and deregulation. Goldman Sachs analysts thought the negative policies – immigration and trade – would be delayed until at least 2018. So far the new administration has delayed the policies with potential short term economic benefits – and pushed the negative policies.  This could have negative economic consequences.

• An airplane broker mentioned to me this morning that the high end used airplane business has slowed recently.  Maybe this is related to less money from China and the strong dollar (fewer foreign buyers).

• A couple of observation about coastal California housing: There are many new high end homes under construction (this is all replacing existing stock with high end homes). I’ve never seen this many homes under construction in the coastal areas. Also there are many homes for rent (maybe this is just seasonal).  It just seems odd.

Read more at http://www.calculatedriskblog.com/2017/02/some-random-concerns-and-observations.html#Tf8xMOrT4QQCcyq5.99

Published at Thu, 02 Feb 2017 22:33:00 +0000

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Why Stock Market Analysts Will be Wrong About 2017

 

Why Stock Market Analysts Will be Wrong About 2017

By: Clif Droke | Thu, Feb 2, 2017


We’re already a month into New Year and there has been an ample amount of sentiment data to suggest that investors, both retail and institutional, aren’t terribly enthusiastic on the stock market outlook for 2017. Granted that institutional analysts are still bullish, as per usual, but in the round table type opinion polls I’ve seen they’ve apparently lowered their expectations. Everyone seems to be preparing for a somewhat disappointing year based largely on the assumption that after eight years of a bull market, surely another major rally is out of the question.

The decennial rhythm we discussed in an earlier commentary argues against these diminished expectations. Indeed, seventh year of the decade tends to be one of unusual volatility for stock prices. While it’s true crashes, corrections and panics are quite common in the seventh year (e.g. September 1987, October 1997, February/August 2007), the seventh year also sees a pronounced tendency for sustained rallies in the first seven months of the year. Accordingly, 2017 could be a year filled with tremendous opportunity for making money in the stock market – in both directions.

For 2017, the 10-year rhythm equates to 2007. As you recall, 2007 was a momentous year characterized at once by great volatility alternating between great fear and euphoria. It was the year that saw the last major stock market top and also the onset of the credit tsunami which overwhelmed the market the following year. If the decennial pattern holds true, 2017 should witness both a meaningful rally to new all-time highs as well as a decline of potentially major proportions.  In short, it could turn out to be a big year for the bulls as well as the bears.

As for the idea that the bull market is getting “long in the tooth” and has therefore exhausted its upside potential, consider that the previous two years could well be characterized as a stealth bear market. The major large cap indices essentially went nowhere in 2015-2016 while the Russell Small Cap Index (RUT) experienced a 25% decline. That’s a bear market by anyone’s definition.

Retail investors have also been quite pessimistic since 2015 in the overall scheme of things. From the start of 2015 up until the election, more than $200 billion was pulled out of U.S. equity funds and ETFs, while a bit more than that was funneled into bond funds and ETFs. That two-year stretch of risk aversion, however, is apparently ending as investors have gradually embraced more risk tolerance since the election. Since the election nearly $46 billion has flowed into U.S. equity funds, while nearly $3 billion has left bond funds, according to money flow statistics.

The evidence strongly suggests that the past two years served the purpose of clearing out the excesses generated by the long-term bull market which began in 2009. In other words, the market is rested and ready to resume its potential as we head further into 2017.

Another concern among investors is that the rise in interest rates since last year could stifle the stock market’s upside potential. While it’s true that sustained periods or rising Treasury yields have often proved a hindrance to higher stock prices, there is an exception to that rule. According to LPL Research, there have been 11 periods of rising interest rates (at least a 1% rise in the 10-year Treasury note) since 1996, each lasting an average of six months. During those times, the S&P 500 rose an average of 5.44%, thus proving that in the early stages of rising interest rates stocks and yields often rise simultaneously.

We’re at a point in the long-wave credit cycle where interest rates are ready to rise after being depressed for years. According to K-Wave theory, after the 60-year economic cycle bottomed in 2014 we should see a gradual increase in rates as the economy recovers its former vigor. Of course this process will take a long time to complete – possibly decades – but we’re likely at a point in the newly formed 60-year cycle where even a temporarily sharp run-up in rates won’t damage the economy or even necessarily hinder the stock market.  In fact, rising rates at this point indicates increasing demand for credit and a corresponding improvement in the economy.

Following is a 10-year chart of the 10-year Treasury Yield Index (TNX). The double-bottom in the interest rate is clearly visible between the years 2012 and 2016. I believe this marks the long-term low in interest rates for the previous long-term cycle.

TNX Weekly Chart

As long as rates don’t rise too high, too fast it’s very possible that stock prices will rise along with Treasury yields without much interference along the way. An added bonus to the rally in T-bond yields is that bond prices are now in a downward trend. This should serve to discourage investors who piled heavily into the bond market in the last few years. It should also cause them to look more closely at stocks as a long-term investment once again, especially as painful memories from the 2008 crash gradually wear off. The underperformance of corporate debt vis-à-vis equities should also encourage investors to take a second look at the stock market. Below is the 1-year graph of the Dow Jones Corporate Bond Index.

Dow Corporate Bond Index

The bottom line is that 2017 should see an increase in business activity across the board as the U.S. returns to a normal business cycle after being artificially suppressed by the actions of central banks for years. Moreover, the decennial rhythm suggests that except for a period of potential weakness in the August-October time frame, year 2017 will likely prove to be a memorable one especially from the standpoint of the upside potential in both the equity market and the U.S. economy.


Mastering Moving Averages

The moving average is one of the most versatile of all trading tools and should be a part of every investor’s arsenal. Far more than a simple trend line, it’s a dynamic momentum indicator as well as a means of identifying support and resistance across variable time frames. It can also be used in place of an overbought/oversold oscillator when used in relationship to the price of the stock or ETF you’re trading in.

In my latest book, Mastering Moving Averages, I remove the mystique behind stock and ETF trading and reveal a completely simple and reliable system that allows retail traders to profit from both up and down moves in the market.  The trading techniques discussed in the book have been carefully calibrated to match today’s fast-moving and sometimes volatile market environment. If you’re interested in moving average trading techniques, you’ll want to read this book.

Order today and receive an autographed copy along with a copy of the book, The Best Strategies For Momentum Traders. Your order also includes a FREE 1-month trial subscription to the Momentum Strategies Report newsletter: http://www.clifdroke.com/books/masteringma.html


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Clif Droke

Clif Droke
ClifDroke.com

Clif Droke is a recognized authority on moving averages and internal momentum. He is the editor of the Momentum Strategies Report newsletter, published since 1997. He has also authored numerous books covering the fields of economics and financial market analysis. His latest book is Mastering Moving Averages. For more information visit www.clifdroke.com

Copyright © 2003-2017 Clif Droke

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Published at Thu, 02 Feb 2017 14:59:08 +0000

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Premarket: 6 things to know before the bell

 

Premarket: 6 things to know before the bell

  @AlannaPetroff

premarket stocks trading futures
Click chart for in-depth premarket data.

1. Earnings deluge: There are so many earnings coming out on Thursday that you probably won’t be able to say them all in one breath.

Here we go: AstraZeneca (AZN), ConocoPhillips (COP), Estee Lauder (EL), Merck (MRK), New York Times (NYT), Nokia (NOK), Ralph Lauren (RL), Royal Dutch Shell (RDSA), Sony (SNE), Deutsche Bank (DB) and Vodafone (VOD) are all reporting earnings ahead of the open.

Shares in Germany’s Deutsche Bank were sharply lower following the release of its earning report.

More major firms will report results after the close, including Amazon (AMZN, Tech30), Chipotle(CMG), GoPro (GPRO, Tech30) and Visa (V).

2. Australia and Iran in focus: President Trump’s comments on Iran and Australia have put the two countries in the spotlight. Trump specifically said he would study a “dumb deal” that that U.S. had made to take in refugees detained by Australia.

“The Trump twitter feed overnight included some strong language about Iran, and that most diplomatic of phrases ‘a dumb deal’ in reference to relations with Australia,” said Paul Donovan, global chief economist at UBS Wealth Management.

“Both areas may have market importance — the former given Middle Eastern investors’ apprehensions about the U.S., and the latter given shifting dynamics in Asia-Pacific leadership,” he said.

3. Let’s do a deal, okay?: Shares in Mead Johnson Nutrition (MJN) are poised to surge at the open after the infant formula maker said it’s in talks to be acquired by the British conglomerate Reckitt Benckiser (RBGLY), which owns a range of consumer brands, including Lysol, Clearasil and Durex.

The two companies said they’re in talks about doing a $16.7 billion deal, though nothing has been finalized.

Meanwhile, shares in Macy’s (M) are edging up premarket based on rumors that the company may be open to being acquired. The New York Post said the firm’s CEO “has recently become open to offers from potential friendly buyers.”

Macy’s did not immediately respond to a request for comment.

4. Super Thursday in London: The Bank of England is scheduled to announce its latest interest rate decision, quarterly inflation report and meeting minutes on Thursday. Central banker Mark Carney will also hold a press conference where he’ll discuss his expectations for Brexit and how it will impact the economy.

This comes as the British government is set to release a document on Thursday outlining its formal negotiation plans for the U.K. to leave the European Union.

5. Global stock market overview: U.S. stock futures are looking a bit weak right now.

European markets are mixed in early trading. Most Asian markets ended the day with negative results.

6. Coming this week:

Thursday – Amazon (AMZN, Tech30) and Chipotle (CMG) earnings
Friday – U.S. jobs report for January

Published at Thu, 02 Feb 2017 10:05:38 +0000

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Fed leaves interest rates unchanged, remains upbeat on economy

 

Fed leaves interest rates unchanged, remains upbeat on economy

By Lindsay Dunsmuir and Jason Lange
| WASHINGTON

The Federal Reserve held interest rates steady on Wednesday in its first meeting since President Donald Trump took office, but painted a relatively upbeat picture of the U.S. economy that suggested it was on track to tighten monetary policy this year.

The U.S. central bank said job gains remained solid, inflation had increased and economic confidence was rising, although it gave no firm signal on the timing of its next rate move.

Fed policymakers are still awaiting clarity on the possible impact of Trump’s economic policies.

“Measures of consumer and business sentiment have improved of late,” the Fed said in a unanimous statement following a two-day policy meeting in which it left its benchmark interest rate in a range of 0.50 percent to 0.75 percent.

The Fed also highlighted that the unemployment rate, currently at 4.7 percent, was still hovering near its recent low.

Financial markets were little changed after the rate decision, while investors were still expecting the next rate increase to occur in June, according to Fed funds futures data compiled by the CME Group.

The Fed raised rates in December for only the second time in a decade and forecast three rate increases in 2017.

 

Fed Chair Janet Yellen recently underscored that, with the economy near full employment, the central bank risked a “nasty surprise” on inflation if it is too slow with rate hikes.

The Fed said in its statement that it still expects inflation to rise to its 2 percent target in the medium term, although it noted that inflation compensation was still low and long-term inflation expectations were little changed.

It did, however, indicate that the effects of weak oil prices had ended, something that will give it a “clean” read on inflation in the future. On Monday, the Commerce Department reported an uptick in inflation to 1.7 percent.

“The economy continues to chug along and sentiment has improved. The Fed does sound more confident about eventually getting to its 2 percent inflation target,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management.

 

FISCAL POLICY UNCERTAINTY

Investors had all but ruled out a rate increase this week, given the uncertainty surrounding Trump’s fiscal and trade policies and how they would affect the Fed’s outlook.

Trump’s promises on infrastructure spending, tax cuts, regulation rollbacks and a renegotiation of trade deals could quickly spur higher inflation, which may necessitate a faster pace of rate hikes.

The businessman-turned-politician has offered few specifics on his economic plans or a timeline for their rollout, while the announcement of policies viewed by many as protectionist and an immigration crackdown have caused market jitters in recent days.

“There is still uncertainty about fiscal policy, so the Fed is likely waiting for a bit more data and more certainty,” said Tony Bedikian, head of global markets at Citizens Bank.

Earlier on Wednesday, data showed U.S. factory activity accelerated to more than a two-year high in January while a report by a payrolls processor showed U.S. private employers added 246,000 jobs in January, far above analysts’ expectations.

The Labor Department is scheduled to release its closely-watched monthly jobs report for January on Friday. Yellen may also give a clearer signal on the Fed’s thinking when she provides semi-annual testimony to Congress in mid-February.

There are seven more Fed policy meetings in 2017, with the next one scheduled for March 14-15.

(Reporting by Lindsay Dunsmuir and Jason Lange; Additional reporting by Rodrigo Campos and Dion Rabouin in New York; Editing by Paul Simao)
Published at Wed, 01 Feb 2017 23:26:26 +0000

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FOMC Statement: No Change to Policy

FOMC Statement: No Change to Policy

by Bill McBride on 2/01/2017 02:01:00 PM

FOMC Statement:

Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate stayed near its recent low. Household spending has continued to rise moderately while business fixed investment has remained soft. Measures of consumer and business sentiment have improved of late. Inflation increased in recent quarters but is still below the Committee’s 2 percent longer-run objective. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will rise to 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1/2 to 3/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Jerome H. Powell; and Daniel K. Tarullo.

Read more at http://www.calculatedriskblog.com/2017/02/fomc-statement-no-change-to-policy.html#wadYPbUdBhSeMxg0.99
Published at Wed, 01 Feb 2017 19:01:00 +0000

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Jobs Report Week: Gold Stays Firm

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By Unsplash from Pixabay

Jobs Report Week: Gold Stays Firm

By: Stewart Thomson | Tue, Jan 31, 2017


Graceland Updates 4am-7am
Jan 31, 2017

  1. As I have noted for many years, gold has a rough general tendency to decline ahead of the US jobs report, and then rally in the hours and/or days following the release of the report.
  2. The next monthly jobs report will be released at 8:30AM on Friday. This report and the closure of the Chinese gold market for the New Year’s holiday should be quite negative for gold, but…
  3. The sell-off from the $1220 area is orderly, and gold feels firm.
  4. Please click here. Double-click to enlarge. Gold did break down from a small double top pattern.
  5. The price target of the pattern is $1170, but there may be an uptrend channel forming. I’ve highlighted that in blue.
  6. Also, the lead line of the 14,7,7 Stochastics series oscillator that I use exclusively on daily bar and candlestick charts is now sitting at about 50, where momentum-based rallies can occur.
  7. With China offline and the jobs report dead ahead, why is gold acting so firmly? Well, please click here now. Double-click to enlarge. The US dollar looks very weak on this daily bars chart against the Swiss Franc.
  8. It’s broken down from a head and shoulders top pattern, and has not rallied since arriving at technical support yesterday.
  9. The rally could still happen, and that would likely push gold down to $1170 ahead of the jobs report.
  10. Given that gold has rallied from $1125 to $1220, a decline to $1170 is perfectly normal. An orderly decline like this should not make gold investors nervous.
  11. Please click here. Double-click to enlarge this dollar versus yen chart.
  12. All gold community eyes should be focused on the 112.50 price level. A breakdown below that level would almost certainly usher in a gold price rally to my $1250 target zone.
  13. The Swiss franc, the Japanese yen, and gold bullion are all viewed as key “risk off” assets by bank FOREX traders.
  14. It’s clear that the dollar is struggling now against both the franc and the yen.
  15. Please click here. Double-click to enlarge this weekly bars euro versus the dollar chart.
  16. The euro never rallied against the dollar in 2016 in the way that the franc, yen, and gold did.
  17. That’s partly because Europe’s economic recovery has been more anemic than America’s, but mainly because euro is not viewed as a safe haven currency by the large bank traders.
  18. Having said that, most gold price discovery takes place in US dollars, and a rally in the euro could add some zest to the gold price!
  19. The recovery taking place in Europe now could be enough to reverse the ECB’s policies of QE and low interest rates.
  20. That would create both European inflation and a euro rally.
  21. Please click here. Double-click to enlarge this daily bars GDX chart.
  22. Gold stocks are performing exceptionally well since gold ran into resistance at my $1220 target zone.
  23. Can GDX rally to $25 if gold falls to $1170? I think that’s asking a bit much (for now), but GDX should easily rally to $25 if gold can climb back to $1220.
  24. A rally to $1250 would likely see GDX surge to $28, and a bigger move to $1650 for gold should see GDX make a new all-time high. That’s a bit further down the road, but eager gold stock investors should ensure they are building a solid block of core positions now, to partake in all the upside fun!

Thanks!
Cheers
St

Special Offer For Website Readers: Please send me an Email to freereports4@gracelandupdates.com and I’ll send you my free “Senior Super Stars” report. I cover seven of the top senior gold stocks, with key buy and sell tactics for both short term traders, and long term core position enthusiasts!


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Stewart Thomson

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Stewart Thomson
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:

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Published at Tue, 31 Jan 2017 08:56:24 +0000

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Fed likely to keep rates steady as it awaits Trump economic plan

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By Lindsay Dunsmuir
| WASHINGTON

The U.S. Federal Reserve is expected to keep interest rates unchanged on Wednesday in its first policy decision since President Donald Trump took office, as the central bank awaits greater clarity on his economic policies.

Trump has promised a large infrastructure spending program, tax cuts, a rollback of regulations and a renegotiation of trade deals but has offered few details or a timeline for their roll out since his victory in the Nov. 8 election.

The central bank’s latest policy decision is scheduled to be released at 2 p.m. EST (1900 GMT) on Wednesday at the conclusion of a two-day meeting. Fed Chair Janet Yellen is not due to hold a press conference.

The policy decision will come a week after Yellen underscored that the U.S. economy is near full employment and warned of a “nasty surprise” on inflation if the Fed is too slow with its rate hikes.

Economists polled by Reuters have all but ruled out a rate increase at this week’s meeting. Investors next see an interest rate rise in June, according to Fed futures data compiled by the CME Group.

The Fed raised its benchmark interest rate at its last policy meeting in December, the second such move in a decade, to a target range between 0.50 percent and 0.75 percent. It forecast a further three rate increases this year.

 

WAIT-AND-SEE MODE

Despite encouraging U.S. economic data, Fed policymakers are currently hampered in assessing how quickly inflation might rise until they have more information on Trump’s economic plans.

“At the moment there’s incredible uncertainty surrounding fiscal policy and the potential for stimulus and the composition of that,” said Paul Ashworth, an economist at Capital Economics. “The Fed can’t react until it knows what to react to.”

With the U.S. economy already bumping up against full employment, Trump’s promises on fiscal stimulus and tax reform could quickly spur higher inflation as would imposing tariffs on Mexican imports.

 

That may cause Fed policymakers to raise rates faster.

Other policies, such as an immigration crackdown, go against what the Fed argues the U.S. economy needs to grow over the long term.

U.S. stocks fell on Monday after Trump curtailed travel and immigration to the United States from seven predominantly Muslim countries.

 

The S&P 500 index .SPX is still up roughly 6 percent since Trump’s victory and the robustness of the domestic economy makes the United States increasingly divergent from Japan, the euro zone and Britain, none of which are expected to raise rates anytime soon.

The Fed will likely only make minor tweaks in its policy statement on Wednesday to reflect a string of positive recent economic reports.

“Changes to the … statement should be mostly upbeat,” Roberto Perli, an economist at Cornerstone Macro LLC, said in a note to clients.

The U.S. unemployment rate is 4.7 percent and business investment has improved, despite a slowdown in fourth-quarter economic growth caused mostly by a widening trade deficit. Consumer spending, which accounts for more than two-thirds of the nation’s economic activity, rose solidly in December, according to Commerce Department data released on Monday.

In the same report, the Fed’s closely-watched inflation gauge also edged up to 1.7 percent.

 

(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)
Published at Tue, 31 Jan 2017 06:09:25 +0000

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Earnings bonanza; Jobs report; Fed talks rates; Last chance to enroll in Obamacare

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Will Trump administration accept government unemployment numbers?
Will Trump administration accept government unemployment numbers?

Earnings bonanza; Jobs report; Fed talks rates; Last chance to enroll in Obamacare

  @shannonfgupta

1. Earnings bonanza: This is a busy week for earnings.

On Tuesday, Apple will reveal just how successful the iPhone 7 was during the holiday season. Analysts predict Apple’s (AAPL, Tech30) sales for the final quarter of 2016 will clock in at $77.4 billion, up from $75.9 billion this time last year. But profit is expected to sink.

Investors will also be keeping an eye on ExxonMobil (XOM) Tuesday. The oil giant — whose former CEO Rex Tillerson was just approved as Trump’s Secretary of State — is expected to report $222.7 billion in annual sales. That’s a 17.2% decrease from 2015.

Facebook will report quarterly results on Wednesday and expectations are high. Analysts are hoping to see $27.3 billion in sales for the whole of 2016, a more than 52% increase from 2015. Still, Facebook (FB, Tech30) is working hard to keep its huge audience coming back for more. It announced plans to revamp its trending topics section to combat fake news. It also began testing a new feature, similar to Snapchat Stories, that allows users to post temporary videos.

It will be Amazon’s (AMZN, Tech30) turn in the hot seat on Thursday, with sales for 2016 expected to reach $137 billion. Amazon made history last week by becoming the first streaming service to receive a Best Picture Oscar nomination for its film ‘Manchester By the Sea.’ Earlier this month, the company announced it would create 100,000 U.S. jobs.

2. Jobs report: Friday marks the first jobs report since President Donald Trump’s inauguration — and he’s got big shoes to fill. In Former President Barack Obama’s last full month in office, unemployment clocked in at a low 4.7%. December also marked a record 75 straight months of job growth.

Trump has made job creation a priority, saying in his inaugural address that he plans to put “America First” by keeping jobs in the U.S. On Friday, Trump released an initiative to grow American manufacturing jobs. It’s part of his broader promise to create 25 million new jobs over the next decade, which would be the most by any American president.

3. Fed meets to discuss rates: The Federal Reserve is meeting on Tuesday to discuss interest rates. Fed Chair Janet Yellen made waves in December when she announced the Fed would hike key interest rates 0.25 percentage points. It was the first rate hike in a year, reflecting the Fed’s confidence in the improving U.S. economy.

The Fed may also discuss Trump’s economic policies. Before Trump took office, Fed officials said there was “considerable uncertainty” surrounding his financial plans. They also said the U.S. economy could grow faster under Trump’s policies, which could lead to more rate hikes.

4. Obamacare on life support: Tuesday is the last day for Americans to enroll in coverage under Obamacare. Earlier this month, the government reported that more than 11.5 million Americans had signed up for 2017 coverage. But within hours of his inauguration, Trump signed an executive order to start rolling back Obamacare. On Friday, the Trump administration halted up to $5 million worth of advertising for Obamacare.

Trump isn’t the only one dealing blows to the Affordable Care Act. Health care company Aetna(AET), which will report quarterly earnings on Tuesday, pulled out of 11 Obamacare exchanges last year. Aetna claimed the decision was strictly a business move fueled by mounting losses. But a judge ruled this month that Aetna’s real reason for dropping Obamacare was to avoid judicial scrutiny over its merger with Humana (HUM).

5. Coming this week:

Monday – Pending home sales index

Tuesday – Fed meeting begins; Last day for Obamacare open enrollment; Apple (AAPL, Tech30), Nintendo (NTDOF), Aetna (AET), ExxonMobil (XOM), Under Armour (UA) and UPS (UPS) report earnings

Wednesday – Facebook (FB, Tech30) earnings; Auto sales report

Thursday – Amazon (AMZN, Tech30) and Chipotle (CMG) earnings

Friday – Jobs report

Published at Sun, 29 Jan 2017 13:00:36 +0000

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Wall Street dips after tepid GDP, earnings

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| NEW YORK

U.S. stocks edged lower for a second consecutive session on Friday as underwhelming corporate earnings and gross domestic product data dampened recent enthusiasm over policy actions by President Donald Trump.

U.S. economic growth slowed more than expected in the fourth quarter, with GDP rising at a 1.9 percent annual rate, below the 2.2 percent rise expected by economists and the 3.5 percent growth pace logged in the third quarter.

Chevron (CVX.N) fell 2.4 percent to $113.77 after its quarterly profit fell short of analysts’ expectations. The stock was the biggest drag on the S&P 500 and the Dow Jones Industrial Average indexes. The S&P energy index .SPNY was the worst performing of the 11 major S&P sectors.

The Nasdaq was weighed down by Starbucks (SBUX.O), whose shares dropped 3.8 percent to $56.21 after the world’s biggest coffee seller trimmed its full-year revenue forecast.

Traders were encouraged losses were not steeper despite the disappointing data and earnings.

“The market is exhausted today. This week just wore everybody out, just flat-out, wore everybody out,” said Keith Bliss, senior vice-president at Cuttone & Co in New York.

“You take a look at what the market is doing, albeit an exhausted market, and it is not getting whacked. Some things like that would have had the ability to take the Dow down one hundred points, to take the S&P down twelve or thirteen points, and it’s not.”

Even with some disappointing corporate results, fourth-quarter earnings are expected to show growth of 6.8 percent, which would mark the biggest increase in two years and second straight quarter of growth, according to Thomson Reuters data.

The Dow remained above 20,000 for the third straight day, after breaching the milestone for the first time on Wednesday as the post-election rally reignited.

All three major indexes were also on track to post weekly gains.

The Dow Jones Industrial Average .DJI fell 10.43 points, or 0.05 percent, to 20,090.48, the S&P 500 .SPX lost 3.08 points, or 0.13 percent, to 2,293.6 and the Nasdaq Composite .IXIC added 1.77 points, or 0.03 percent, to 5,656.95.

Microsoft (MSFT.O) rose 2.2 percent to $65.72, while Intel (INTC.O) gained 1.5 percent to $38.11 after the two companies reported quarterly results above Wall Street expectations.

However, Google parent Alphabet (GOOGL.O) was down 1.2 percent at $846.74 after it posted fourth-quarter profit below analysts’ estimates.

Colgate-Palmolive (CL.N) fell 5.5 percent to $64.52 after the personal products maker’s fourth-quarter revenue missed estimates.

Declining issues outnumbered advancing ones on the NYSE by a 1.39-to-1 ratio; on Nasdaq, a 1.19-to-1 ratio favored decliners.

The S&P 500 posted 25 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 96 new highs and 25 new lows.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)
Published at Fri, 27 Jan 2017 19:52:03 +0000

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