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Monday, July 31, 2017

End of an Era

Financial Review

End of an Era

DOW + 60 = 21, 891
SPX – 1 = 2470
NAS – 26 = 6348
RUT – 4 = 1425
10 Y + .01 = 2.29%
OIL + .46 = 50.17
GOLD – .30 = 1269.80
BITCOIN – Undefined % = 2910.34 USD
ETHEREUM + 4.76% = 214.43

The Dow industrials traded in record territory. Losses in the tech sector weighed on the broader market. Despite the dip on the day, the S&P is within 1 percentage point off its own record, while the Nasdaq is 1.5% from its own.

For the month, the Dow is up 2.5%, while the S&P is up 1.9% and the Nasdaq has risen 3.4%. July was the second-best month of the year for both the Dow and the S&P. Both posted their fourth straight monthly gain. The DOW, S&P and Nasdaq recorded their eighth monthly increase of the past nine months.

The tech sector has not fallen off a cliff. The Dow hit 21,000 on March 1, and 22,000 is now just a chip shot away. The Dow hit 19,000 back in November.

We made it through some big earnings reports and some investors took profits or shuffled the lineup. Moving forward, good earnings will continue to be rewarded and bad earnings will be punished. S &P 500 earnings are expected on average to have grown 10.8 percent in the second quarter.

Tomorrow, Apple reports after the closing bell.

For the month, oil rallied 8.9%, its biggest monthly gain of the year. On a most-active basis, gold saw a roughly 2.5% gain in July. Silver rose around 1.3% in July. The Dollar Index lost almost 3% for the month of July, and posted its fifth straight monthly decline.

In the latest economic data, the Chicago purchasing managers index fell to 58.9 in July from 65.7 in the previous month. Separately, pending-home sales rose 1.5% in June, snapping a three-month streak of declines.  The housing market remained constrained by a shortage of properties available for sale. The June increase in pending sales suggests that existing home sales will likely increase soon, but the June increase for the index undid only a portion of the decline reported over the prior few months.

Loan officers at US banks reported tightening lending standards on commercial real estate loans while terms for business loans remained largely unchanged. According to the Federal Reserve’s quarterly survey, demand was weaker for commercial real estate and business loans in the second quarter. Some banks also reported a tightening in auto and credit card loan standards, with demand also weakening in that category.

Life moves pretty fast. If you don’t stop and look around occasionally, you could miss it. Today’s case in point, The Mooch is gone. Anthony Scaramucci has resigned as White House Communications Director, just 10 days after accepting the position.

During the Mooch era, we saw the quick resignations of Sean Spicer, the former press secretary, and Reince Priebus, the president’s first chief of staff. Priebus was replaced by General John Kelly, who had been running the Department of Homeland Security.

Kelly began his first day in charge of the White House staff by telling aides that he intended to impose a new sense of order and operational discipline that had been absent under his predecessor.

Even in an administration that has set records for quick departures, Scaramucci’s flameout was fast and phenomenal. It’s been a rough season for Scaramucci, who sold his hedge fund to work for Trump, got a top job, and then saw his marriage and job both crumble. The move leaves Trump once again without a communications director. The office has proven to have something of a curse.

The first person named to the job, Jason Miller, withdrew before taking over. Spicer served on an interim basis until Mike Dubke was named to the post in February, but Dubke resigned in May after an ineffectual term. Spicer then once again stepped in until Scaramucci’s appointment. It’s unclear who will serve in the role now. Deputy Press Secretary Sarah Huckabee Sanders was promoted to press secretary the same day Scaramucci took over.

White House officials outlined what one of them called an “aggressive” timetable for getting a tax overhaul in place before the end of the year. The plan for a tax code rewrite is to start hearings and a markup of the bill after Labor Day so a version can get through the House in October and the Senate in November. The White House has said it wants to lower corporate and individual tax rates, eliminate deductions and simplify the code.

Despite assurances on timing, many obstacles and unanswered questions remain about how to offset cutting tax rates with new revenue. Few details of the planned tax code rewrite have emerged from weekly, closed-door tax meetings between Trump’s advisers and congressional leaders.

Last week, White House officials and congressional leaders released a joint statement outlining their tax principles, with the only real progress disclosed being that the border-adjusted tax wouldn’t be part of negotiations going forward.

The US government slapped sanctions on Venezuelan President Nicolas Maduro today. In a referendum over the weekend, President Nicolás Maduro’s government claimed it has won overwhelming powers to redraft Venezuela’s constitution. Washington denounced the election as a “sham” vote.

No oil-related measures were included in the announcement, but such measures remain under consideration. Under the sanctions, all of Maduro’s assets subject to U.S. jurisdiction were frozen, and Americans are barred from doing business with him.

The sanctions against Maduro could be followed by measures targeting further senior Venezuelan officials as well as oil-sector measures in an “escalatory process” depending on how far the Venezuelan government goes in implementing the new congress following Sunday’s vote.

Former Maricopa County sheriff Joe Arpaio has been found guilty of criminal contempt for violating the terms of a 2011 court order in a racial profiling case. Arpaio, who lost his bid for re-election as Maricopa County sheriff last November after 24 years in office, faces a maximum penalty of six months in jail and a fine when he is sentenced on the misdemeanor offense on Oct. 5.

U.S. District Judge Susan Bolton found Arpaio guilty of contempt for intentionally defying the 2011 court order, which barred his officers from stopping and detaining Latino motorists solely on suspicion that they were in the country illegally.

The judge in the underlying lawsuit, brought by the American Civil Liberties Union and others in 2007, held that such traffic stops were a violation of the motorists’ constitutional rights. Federal prosecutors said racial profiling of Latino drivers continued for about 18 months after the injunction was issued, with 170 more people wrongfully detained. Arpaio says he will appeal the decision.

Los Angeles will host the 2028 Olympic Games. Paris will host the 2024 games. For 2024, Budapest, Rome, Hamburg, and Boston all dropped out after facing popular resistance. Civic leaders have grown wary of the costs of hosting. Russia spent a record $51 billion to host the 2014 Winter Games in Sochi, while organizers of the 2016 Summer Games in Rio de Janeiro have struggled to pay off debts.

Shares of Scripps Networks rose 0.6% after Discovery Communications said it would buy the owner of HGTV, Food Network and Travel Channel among others. Shares of Discovery Communications fell more than 7.4%.

Charter Communications rose 5.8% t to a record high after a source said Japan’s SoftBank Group was considering an acquisition offer.

Friday night Tesla delivered the first of its Model 3 mass-market sedans to their new owners. Tesla has been a manufacturer of high-end electric cars in small numbers. But now, Tesla wants not only to become a large-scale producer in the suddenly crowded field of battery-powered vehicles but also to lure consumers away from mainstream, gasoline-powered automobiles.

The biggest hurdle is expanding manufacturing capacity in Fremont fast enough to begin satisfying the enormous interest in the new car. About 500,000 people have put down $1,000 deposits since last year to reserve delivery of Model 3s when they are available. Tesla manufactured 25,000 cars in the last quarter. Volkswagen and Toyota manufacture 25,000 cars a day.

And all of the sudden, the major manufacturers are going all in on electric. Daimler announced a $740 million investment to produce EV batteries in China. Cummins noted it would have a fully electric truck platform available by the end of 2019.

Lyft pledged to provide a billion rides a year powered by electricity by 2025. Porsche set a 2023 target for having 50 percent of its production be electric vehicles. Volvo Cars announced that “all the models it introduces starting in 2019 will be either hybrids or powered solely by batteries

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