Financial Review

23K(ish)

Sinclair Noe — October 17, 2017

Podcast: Play in new window | Download (Duration: 13:15 — 7.6MB)

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DOW + 40 = 22,997 (Record)
SPX + 1 = 2559 (Record)
NAS – 0.35 = 6623
RUT – 5 = 1497
10 Y – .01 = 2.30%
OIL + .14 = 52.01
GOLD – 9.70 = 1285.80

Cryptocurrency

• Number of Currencies: 881
• Total Market Cap: $164,018,283,218
• 24H Volume: $4,954,812,161

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Vol.	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	5,358.1	$89.65B	$1.86B	37.48%	1	-4.27%	+12.45%
	Ethereum	ETH	304.46	$29.07B	$530.61M	10.71%	0.0568999	-3.54%	+1.24%
	Ripple	XRP	0.22479	$8.75B	$412.24M	8.32%	0.00004228	-1.92%	-13.77%
	Bitcoin Cash	BCH	345.00	$5.95B	$942.47M	19.02%	0.0663392	-6.41%	+12.14%
	Litecoin	LTC	56.180	$3.01B	$208.32M	4.20%	0.0105002	-5.10%	+11.48%
	Dash	DASH	287.68	$2.21B	$41.24M	0.83%	0.0538494	-3.45%	-0.64%
	NEM	XEM	0.21036	$1.89B	$3.05M	0.06%	0.00003909	-5.30%	-2.68%
	NEO	NEO	29.112	$1.45B	$78.17M	1.58%	0.00540911	-8.06%	-4.17%
	Monero	XMR	89.19	$1.36B	$44.46M	0.90%	0.016648	-1.85%	+2.95%
	BitConnect	BCC	186.401	$1.34B	$13.34M	0.27%	0.0347181	-4.43%	+14.14%

The Dow Industrials and the S&P 500 hit another record high close. The Nasdaq Composite barely missed. The Dow briefly moved above 23,000 intraday – for the first time ever. Wait for 24,000 before you buy a hat.

It took 53 trading days for the Dow industrials to move from 22,000 to the 23,000 mark. Don’t know how long you might have to wait. Valuations seem a bit high at these levels. But a 1,000-point move isn’t what it used to be. If the Dow picks up another 1,000 points to reach 24,000, that will represent a 4.3% advance from the 23,000 mark.

Two senators announced a bipartisan breakthrough to shore up Obamacare, a least for the short-term. The agreement worked out by Republican Senator Lamar Alexander and Democratic Senator Patty Murray would meet some Democratic, including a revival of the subsidies for Obamacare and restoring $106 million in funding for a federal program that helps people enroll in insurance plans.

In exchange, Republicans would get more flexibility for states to offer a wider variety of health insurance plans while maintaining the requirement that sick and healthy people be charged the same rates for coverage. The deal still has to make it through both houses of Congress and be signed by Trump.

If it becomes law, it could end a chaotic situation for insurers after the White House moved last week to dismantle parts of the Affordable Care Act. Shares of U.S. hospital operators moved higher after news of the deal. Tenet shares were up 4 percent, while HCA was 2.3 percent higher. Shares of some health insurers also extended their gains on the day, with Anthem up 2.5 percent and Centene rising 2.8 percent.

UnitedHealth, the largest US health insurer, is the first health insurer to report and its third-quarter net earnings rose 26.3 percent, beating analysts’ expectations. Its shares rose more than 5 percent

Trade ministers from the United States, Canada and Mexico wrapped up a contentious round of NAFTA negotiations. The three sides agreed to carry on with talks and said they would negotiate into the first quarter of 2018, beyond the end-year framework initially envisaged to complete the negotiations.

Canada and Mexico have rejected U.S. proposals involving the dairy and auto sectors, dispute resolution, government procurement and a sunset clause that would effectively end NAFTA after five years unless all parties agree to extend it.

A federal judge in Hawaii on Tuesday granted a temporary restraining order against Trump’s third travel ban, just hours before it was set to take effect at midnight. Trump issued a proclamation last month restricting travel to the US from nationals of eight countries, including Iran, Syria, Yemen, Somalia, Venezuela, Chad, Libya, and North Korea.

Those restrictions came after the first two iterations of the travel ban, which targeted majority-Muslim nations, faced court challenges. Trump’s second travel ban was partly implemented, and the Supreme Court was scheduled to hear arguments on its constitutionality in October. But the justices removed oral arguments from the schedule after part of the second ban expired and Trump issued the third ban as a replacement in September.

The third ban will likely make its way to the Supreme Court, as well, though it must go through the appellate court system first. Another federal court is also expected to rule on the ban in a separate legal challenge. Almost immediately, the Department of Justice announced it would appeal the ruling.

Morgan Stanley and Goldman Sachs reported earnings and they followed a pattern of weak results due to calm markets. Like JPMorgan Chase and Citigroup, the firms that reported today showed a decline in fixed-income trading revenue. Low volatility has been problematic for Wall Street, especially compared with what was an active trading environment in the third quarter of 2016.

Goldman’s fixed-income trading revenue dropped 26 percent from a year ago, while Morgan Stanley posted a 21 percent decline. Still, both banks’ debt trading units slightly beat analyst expectations for the quarter. Morgan Stanley, Wells Fargo and JPMorgan all posted record revenue from their wealth- and asset-management units as stock markets hit records and after the Federal Reserve hiked interest rates three times in the past year.

Goldman Sachs also gained from rising markets, as its revenue from equity investments climbed to the highest in almost four years. JPMorgan, Citigroup, Bank of America and Wells Fargo boosted provisions for consumer loan losses from the previous quarter, which could be a leading indicator of a turn in the credit cycle. Goldman Sachs reported earnings of $5.02 per share vs. $4.17 expected.

Also, revenue of $8.33 billion also easily beat expectations of $7.54 billion. Goldman Sachs was down 2.6%. Morgan Stanley posted earnings of 93 cents a share – topping estimates of 81 cents. Morgan Stanley was up slightly.

IBM reported third-quarter net income of $2.7 billion, or $2.92 a share, compared to $3.2 billion, or $2.98 a share, in the year-ago period – still, that beat estimates. Revenue fell slightly to $19.1 billion from $19.2 billion in the year-ago period, marking the 22-consecutive quarter of revenue declines. IBM shares popped 4% in after-hours trade.

Yesterday, after the closing bell, Netflix reported earnings – a modest beat, but they added a whole bunch of subscribers. And one of the major reasons they keep adding subscribers is because they keep adding movies. Netflix has released at least 34 original movies so far in 2017. It plans to release 80 next year. That’s more titles than most movie studios release in a year.

Disney—which also owns Pixar, Marvel Studios, and Lucasfilm—released 13 movies in the US in 2016; Time Warner’s Warner Bros., New Line, Fine Line, Warner Independent, and Picturehouse studios released a combined 23 films; and Sony, which released the most, put out 38 movies throughout its studio portfolio last year, less than half of what Netflix is proposing.

Netflix is padding its already massive content budget to support the ambitious movie-release schedule it has planned. It expects to spend between $7-8 billion on content overall next year, up from $6 billion in 2017. Even with a recently announced hike in subscription fees, you have to wonder if Netflix is experiencing a bit of cash burn. Netflix shares dropped about $3 today.

Volvo and Chinese parent company Geely unveiled the first model of its new Polestar electric brand, and announced a more than $750 million investment to develop the brand further. It is the first step to developing high-performance electric cars that are aimed at some of the same customers targeted by makers such as Tesla.

The first production car will be the Polestar 1, a hybrid 600-horsepower two-door, four-seater hybrid coupe, with just above 90 miles of pure electric range. That car will go into production in 2019. It will be followed soon by an all-electric car aptly named the Polestar 2.

Industrial production in the U.S. rebounded in September after two straight declines, rising 0.3% in September. Capacity utilization rose to 76% from 75.8% but remained below summer levels.

Production for July, meanwhile, was revised to show a small decline instead of a 0.4% gain. The decline in August lowered to 0.7% from 0.9%. Most industries boosted output in September, led by construction and utilities.

Manufacturing production edged up 0.1%. The most notable decline was in chemicals, an industry concentrated in the South. A pair of major storms that swept through the region from Texas to Florida held down U.S. production by about 0.25 percentage points.

Industrial production fell at a 1.5% annual rate in the third quarter, but the Fed said its index would have risen at least 0.5% if not for the hurricanes. Other indicators of heavy industry points to steadily rising sales and production and that’s likely to help keep the U.S. on its current 2% annual growth path.

The cost of imported goods jumped 0.7% in September in the biggest gain in more than a year, led by fuel prices and industrial supplies. Excluding fuel, import prices rose a smaller 0.3%.

Sentiment among home builders spiked in October after faltering over the summer. The National Association of Home Builder’s monthly confidence gauge jumped four points to a reading of 68, the highest reading since May. The NAHB warned that builders need to be mindful of long-term repercussions from the recent hurricanes, such as intensified material price increases and labor shortages.

And a final note, if you follow the metals markets you may have noticed that palladium is now trading around $980, while platinum is just $938 an ounce. That reverses long-term price trends.

Financial Review

Boring Record Highs

Sinclair Noe — October 16, 2017

Podcast: Play in new window | Download (Duration: 13:16 — 7.6MB)

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DOW + 85 = 22,956
SPX + 4 = 2557 (Record)
NAS + 18 = 6624 (Record)
RUT + 0.02 = 1502
10 Y + .03 = 2.31%
OIL + .42 = 51.87
GOLD – 8.80 = 1295.50

Cryptocurrency

• Number of Currencies: 879
• Total Market Cap: $172,368,733,175
• 24H Volume: $5,079,040,463

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Vol.	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	5,630.4	$93.83B	$2.02B	39.87%	1	-2.33%	+17.30%
	Ethereum	ETH	328.70	$31.21B	$653.51M	12.87%	0.0580434	-1.70%	+10.33%
	Ripple	XRP	0.25810	$9.99B	$992.48M	19.54%	0.00004592	+0.47%	+4.45%
	Bitcoin Cash	BCH	310.19	$5.19B	$111.39M	2.19%	0.0549922	-1.29%	-5.04%
	Litecoin	LTC	62.630	$3.34B	$196.10M	3.86%	0.0110818	-3.23%	+24.30%
	Dash	DASH	302.36	$2.31B	$38.49M	0.76%	0.0536745	+0.12%	+5.98%
	NEM	XEM	0.22402	$2.04B	$14.73M	0.29%	0.00004015	+0.88%	+11.51%
	Monero	XMR	94.51	$1.44B	$32.29M	0.64%	0.0167811	-1.26%	+9.31%
	NEO	NEO	28.205	$1.41B	$31.54M	0.62%	0.00498581	-0.87%	-3.03%
	BitConnect	BCC	195.007	$1.40B	$14.05M	0.28%	0.0345448	+1.17%	+21.68%

This year, the S&P 500 index has hit records on almost four dozen different occasions, with the single biggest drop from the latest record amounting to less than 3 percent. More than $3.2 trillion of market value has been added to U.S. equities, and volatility is at an all-time low. With the S&P already up, 14 percent so far this year, investors are looking to justify the relatively high valuation of stocks through the earnings.

The S&P 500 hasn’t experienced a decline of at least 3% since Nov. 7, 2016. That 237-day span registers as the second-longest period without a single-session drop of that magnitude since the 241 days from Jan. 26, 1995 to Jan. 9, 1996 – so, if we make it to next Wednesday without breaking down – this will officially become the most boring stock market of all time. The VIX index is reflecting that complacency, hovering around levels last seen in 1993. Just a reminder – the absence of risk doesn’t mean the elimination of risk.

Asian shares rallied to a decade high after figures showed China’s producer prices beat market expectations to rise 6.9 percent in September from a year earlier, suggesting the Chinese economy is growing much faster than expected. Upbeat data from China came before the Communist Party Congress on Wednesday and third-quarter economic data on Thursday. Japan’s Nikkei climbed to a level not seen since 1996.

Wide-ranging comments from Trump on tax cuts and health-care reforms following a luncheon meeting with Senator Majority Leader Mitch McConnell did not move the market. However, both issues are critical for the market as lower taxes are as crucial to supporting a continued rally in stocks. The House is on recess this week, and when it returns, it will have just 28 days left on its calendar to tackle issues including taxes and funding the government.

Trump also told reporters he is looking at reforming the welfare system. The White House began circulating a draft order in late September, calling on agencies to review regulations and propose new rules that conform to a broad set of principles, streamline or eliminate duplicative services, set metrics to measure accountability and create greater cooperation with state and local governments.

Trump’s proposed fiscal 2018 budget called for a massive reduction in funding for social safety nets, such as food stamps, Social Security disability insurance benefits, and the Temporary Assistance for Needy Families program. The problem is that there’s very little welfare left to reform. The Temporary Assistance for Needy Families program has a budget of $16 billion, which is unchanged since 1996; even though inflation has reduced its actual value by a third since then.

In 1979, more than 80 percent of families living below the federal poverty line received welfare benefits under the old Aid to Families with Dependent Children program. By 2015, that figure had fallen to just 23 percent. That doesn’t mean poverty has been reduced significantly, just that the states have made it much tougher to get welfare assistance.

Iraqi government forces captured the major Kurdish-held oil city of Kirkuk. The military action was in response to a Kurdish election 3 weeks ago, that called for Kurdish independence. Baghdad refuses to recognize Kurdish control of the area. Iraq is the second-largest producer within the Organization of Petroleum Exporting Countries, pumping most of its 4.47 million barrels a day from fields in the south and shipping it from the Persian Gulf port of Basra.

Kirkuk’s oil fields and deposits inside the adjacent Kurdish region were exporting about 600,000 barrels a day through a Kurdish-controlled pipeline to Turkey. Best estimate is that Iraq taking control in Kirkuk could cut shipments by 450,000 barrels daily until the federal government repairs its own disused pipeline to Turkey or reaches a revenue-sharing deal with the Kurds. Crude oil climbed to a 2-week high intra-day.

The Spanish government has given Catalan leaders until Thursday to drop their push for independence, signaling to could act to strip the Catalonia region of its autonomy if they do not comply. The move came after Catalan President Carles Puigdemont ignored an ultimatum from Madrid to provide a clear answer on whether the region has declared independence.

That lack of response, seen as an act of defiance, has opened the door for the central government to take over control of the region. Meanwhile, Monday night in Spain, 2 Catalan leaders were arrested for investigation of acts of sedition.

Federal Reserve Chair Janet Yellen said that the central bank expects to continue to raise interest rates gradually as solid growth, a strong labor market and a healthy global economy lift prices even as she recognized that inflation has been surprisingly low. Yellen said: “The biggest surprise in the U.S. economy this year has been inflation,” or more specifically the lack of inflation, which according to the Fed’s preferred gauge is running at 1.3%, for the core rate.

Still, it looks more and more that the Fed will raise rates at their December policy meeting. The Fed voted last month to begin unwinding their balance sheet, and Yellen reiterated on Sunday that they do not intend to use that process as an active monetary policy tool.

Here’s a thought – maybe the Fed could keep buying debt for just one more month – they could buy all of Puerto Rico’s debt, probably pick it up for about 30 cents on the dollar, and then just let it fade away on their balance sheet. Just a thought.

After the closing bell, Netflix report earnings of 37 cents per share, topping estimates of 32 cents. Revenue of $2.98 billion just barely beat estimates. But for Netflix, the key number is new subscribers. The company now has about 109.3 million subscribers globally.

Netflix said it added 850,000 subscribers in the U.S., ahead of the 810,000 estimates for the quarter. It boomed internationally, signing up 4.45 million subscribers versus the 3.69 million estimates. The subscription additions were up 49 percent year over year.

It’s official: Nordstrom’s quest to go private is over — at least for now. This morning, the family members who own the department store chain suspended their attempt to sell the company to a private equity firm through the end of the year. The family struggled to raise enough debt to finance the deal. The news sent Nordstrom’s shares down more than 6%, and then the declines rippled throughout the rest of the retailers.

Food services company Aramark said it would buy Avendra LLC, majority owned by Marriott International, and uniform and linen supplier AmeriPride Services for a total of $2.35 billion.

Reuters reports T-Mobile and Sprint plan to announce a merger agreement without any immediate asset sales, as they seek to preserve as much of their spectrum holdings and cost synergies as they can before regulators ask for concessions. The companies are expected to make a merger announcement within the next month.

The Supreme Court agreed to resolve a privacy dispute between the Justice Department and Microsoft over whether prosecutors should get access to emails stored on company servers overseas. The justices will hear the Trump administration’s appeal of a lower court’s ruling last year preventing federal prosecutors from obtaining emails stored in Microsoft computer servers in Dublin, Ireland in a drug trafficking investigation.

The Microsoft dispute is the second that the justices have agreed to hear in their current term that touches upon digital privacy rights. The other case concerns whether police officers need a warrant to access information on the past locations of cell phone users that is held by wireless carriers. Rulings in both cases are due by the end of June.

The Supreme Court also agreed to decide whether American Express is violating federal antitrust law by forbidding merchants that accept its credit cards from encouraging customers to use rival cards that charge lower fees. The justices will hear an appeal by 11 states led by Ohio that had sued American Express of a 2016 lower court ruling that endorsed the legality of the company’s “anti-steering” provisions in contracts with merchants.

Merchants annually pay more than $50 billion in so-called swipe fees to process credit card transactions, and these fees can be passed along to customers through higher prices. American Express charges merchants higher fees relative to the other credit card networks.

Financial Review

Bull Run

Sinclair Noe — October 5, 2017

Podcast: Play in new window | Download (Duration: 13:16 — 7.6MB)

Subscribe: Android | RSS

DOW + 113 = 22,775 (Record)
SPX + 14 = 2552 (Record)
NAS + 50 = 6585 (Record)
RUT + 4 = 1512
10 Y + .02 = 2.35%
OIL + .78 = 50.76
GOLD – 6.80 = 1268.80

Cryptocurrency

• Number of Currencies: 869
• Total Market Cap: $148,138,835,945
• 24H Volume: $2,583,600,772

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Vol.	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	4,404.2	$72.93B	$1.15B	44.37%	1	+2.06%	+6.81%
	Ethereum	ETH	299.59	$28.41B	$229.67M	8.89%	0.0679355	+1.45%	+3.73%
	Ripple	XRP	0.23424	$8.98B	$234.88M	9.09%	0.00005319	-1.59%	+22.33%
	Bitcoin Cash	BCH	368.00	$6.12B	$261.05M	10.10%	0.083414	+3.69%	-15.73%
	Litecoin	LTC	52.340	$2.79B	$67.96M	2.63%	0.0118994	+1.32%	+0.39%
	Dash	DASH	307.75	$2.34B	$24.44M	0.95%	0.069831	-0.20%	-5.95%
	NEM	XEM	0.21582	$1.97B	$3.96M	0.15%	0.0000498	+0.53%	-3.96%
	NEO	NEO	34.020	$1.69B	$64.82M	2.51%	0.00769487	+4.71%	+20.88%
	IOTA	MIOTA	0.55701	$1.55B	$7.43M	0.29%	0.00012624	+2.85%	-2.55%
	Monero	XMR	91.97	$1.39B	$26.99M	1.04%	0.0208051	+0.35%	-2.22%

This is the second-longest bull market ever, trailing only the 1990-2000 run during the dot-com era. Today was the eighth straight gain in the S&P 500, its longest winning streak since 2013. The S&P 500 also had its sixth straight record close, the longest such streak since 1997.

The S&P 500 is on track for its ninth consecutive winning year, tying the record from 1991 through 1999. It’s been more than a year since the S&P 500 fell as much as 5 percent from a previous high, the fifth-longest period without such a correction. The Nasdaq is also on an 8-day winning streak. The Russell 2000 was just a fraction off the record high from Tuesday.

The VIX, has closed below 10 for the seventh straight day, already making this the least volatile October in the history of the so-called fear gauge.

Now you might say that this just means the market is overextended and overdue for a pullback. You might say that.

The House narrowly passed a $4.1 trillion budget today. The final tally was 219-206. More than a dozen Republicans voted with Democrats against the budget, objecting to elements of the spending package or to parts of the tax reform proposal. The budget contains $1.1 trillion in non-entitlement spending, including nearly $622 billion on defense. The Senate is voting on a similar measure.

When both chambers pass their respective budget resolutions, it would trigger a legislative process known as reconciliation, during which they could pass a sweeping tax reform bill with a simple majority of 51 votes in the Senate, instead of the usual 60-vote requirement.

That does not mean tax reform will be easy. There are already disagreements over how much to cut certain tax rates, which deductions could be eliminated, and whether the tax reform package would be revenue-neutral. Look for a fight over the elimination of state and local tax deductions.

The number of Americans filing for unemployment benefits dropped 12,000 to a seasonally adjusted 260,000 for the week ended Sept. 30. The Labor Department’s closely watched employment report on Friday will likely show that nonfarm payrolls increased by 90,000 jobs last month after rising by 156,000 in August. The estimates are all over the place because no one is sure exactly what impact the hurricanes had on jobs.

The Commerce Department said the trade gap declined 2.7 percent to $42.4 billion, the smallest since September 2016. When adjusted for inflation, the trade deficit was little changed at $61.8 billion.

The so-called real trade deficit average for July and August was below the second-quarter average of $62.4 billion. That suggests trade could contribute to gross domestic product in the third quarter and help to soften the economic blow of the hurricanes, which are expected to cut at least six-tenths of a percentage point from economic growth in the third quarter.

In another report, the Commerce Department said orders for non-defense capital goods excluding aircraft – seen as a measure of business spending plans – jumped 1.1 percent in August instead of the 0.9 percent increase reported last month.

Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, shot up 1.1 percent instead of the previously reported 0.7 percent rise. Strong business spending on equipment is helping to underpin manufacturing. Business investment in equipment grew at its fastest pace in nearly two years in the second quarter.

The National Rifle Association announced it will support “additional regulations” on devices that boost semi-automatic weapons’ firing rates, like the tools used by the shooter in the Las Vegas massacre. In a statement, the NRA urged the Bureau of Alcohol, Tobacco, Firearms and Explosives to review the legality of so-called bump stocks.

They stopped short of pushing Congress to pass a bill banning or regulating the devices. It is always surprising to see the NRA support restrictions but it was the least they could do. Really, this was the least they could do. Anything less would have been nothing.

Russian government hackers stole NSA information on how the US infiltrates foreign computers and defends itself against cyberattack. They hacked an NSA contractor who was using antivirus software made by Russia-based Kaspersky Lab, the sources said, which was how the hackers were able to target the contractor. The incident occurred in 2015 but wasn’t uncovered until last year.

Spain’s Constitutional Court ordered the suspension of Monday’s session of the regional Catalan parliament, throwing into doubt its plans to declare unilateral independence from Spain. The speaker of the Catalan parliament accused the Madrid government of using the courts to deal with political problems and said the regional assembly would not be censored. But she said parliamentary leaders had not yet decided whether to defy the central court and go ahead with the session.

Secessionist Catalan politicians have pledged to unilaterally declare independence at Monday’s session after Sunday’s referendum, banned by Madrid and marked by violent scenes where Spanish police sought to hinder voting.

California Gov. Jerry Brown signed sanctuary state legislation extending protections for immigrants living in the United States illegally — a move that gives the nation’s most populous state another tool to fight President Donald Trump. Brown’s signature means that police will be barred from asking people about their immigration status or participating in federal immigration enforcement activities starting Jan. 1.

Jail officials only will be allowed to transfer inmates to federal immigration authorities if they have been convicted of certain crimes. The measure came in response to widespread fear in immigrant communities following Trump’s election. Among other things, the other bills signed today by Brown will limit federal immigration authorities from entering schools and workplaces without warrants; prohibit landlords from reporting tenants to ICE; and stop local governments from contracting with for-profit companies and ICE to hold immigrants.

Some law enforcement officials say the impact of the sanctuary measure likely will be minimal because it bans immigration enforcement activities that few agencies participate in. The bill does not prohibit ICE from operating in California.

Stranger Things will cost more. Netflix will now charge $11 per month instead of $10 for a plan that includes HD and allows people to simultaneously watch programs on two different internet-connected devices. The price for another plan that includes ultra-high definition, or 4K, video, is going up by 17 percent, to $14 from $12 a month. A plan that limits subscribers to one screen at a time without high-definition will remain at $8 a month.

The increase will be the first in two years for Netflix, although it won’t seem that way for millions of subscribers. That’s because Netflix temporarily froze its rates for long-time subscribers the last two times it raised its prices, delaying the most recent increases until the second half of last year for them. Netflix isn’t giving anyone a break this time around.

A new program called Seller Flex would allow more items on Amazon — even those sold by third parties — to be listed with the Prime badge of two-day shipping. Amazon itself will handle the pickup of packages from sellers. In some cases, it will also handle delivery to customers, eliminating the major delivery partners of UPS and FedEx.

Shares of UPS and FedEx were initially hit after the report about competition from Amazon. FedEx ultimately closed a fraction of a point higher, while UPS recovered to close 0.7 percent down. UPS says that no customer constitutes 10 percent of its revenue, and FedEx says no one constitutes three percent of its revenue. So, while there is exposure to Amazon, it is not make or break.

Amazon is prudently cherry-picking areas with dense delivery and will probably still leave rural delivery up to other companies. Meanwhile, Amazon could also take years to establish its new service, but it is coming. Amazon has not taken over the world, not yet.

Two-thirds of Amazon’s revenue comes from sales in the U.S. Amazon Prime is available in a dozen or so countries, but it’s not big in many of them. The biggest global prize is India, where Amazon has pledged to spend $5 billion to break into what many technology companies see as a future gold mine.

Tonight, that full moon you’ll see ascending in the east after sunset is the Northern Hemisphere’s Harvest Moon. Over the years, we’ve seen lots of informal uses of the term Harvest Moon. Some people (in the Northern Hemisphere) call the full moons of September and October by that name. And that’s fine.

Point is the moon will be full, it is close to Earth, and that means there will be strong gravitational pull. In Miami, that means King tides. King tides are determined by the orbits and alignments of the Earth, moon and sun.

In South Florida, they occur each fall, but in recent years they’ve gotten increasingly dramatic. In Miami Beach, University of Miami researchers found flooding from high tides soared 400 percent between 2006 and 2016. Parking lots turn into lakes. Streets turn into rivers.

It is quite the problem. Earlier this year, Miami Beach initiated $100 million in spending to raise roads, redesign sewers and install pumps to keep the tidal impact in check. Across Biscayne Bay, Miami will vote in November on whether to approve what is called the “Miami Forever” bond issue, a $400-million tax increase that includes nearly $200 million for seawalls and drainage pumps, in addition to money for housing and economic development.

Financial Review

Death by a Thousand Cuts

Sinclair Noe — July 18, 2017

Podcast: Play in new window | Download (Duration: 13:15 — 7.6MB)

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DOW – 54 = 21,574
SPX + 1 = 2460 (record)
NAS + 29 = 6344 (record)
RUT – 3 = 1427
10 Y – .05 = 2.26%
OIL + .30 = 46.32
GOLD + 8.30 = 1243.00
BITCOIN + 0.45% = 2338.41 USD
ETHEREUM – 9.33% = 225.56

The S&P 500 and the Nasdaq closed at records.

Last night, two Republican senators, Mike Lee of Utah and Jerry Moran of Kansas, issued statements declaring that they would not vote for the revamped BCRA health care bill. The two senators timed the release of their statements and made clear that modest tinkering around the edges of the legislation drafted by Senate majority leader Mitch McConnell would not be enough to meet their demands.

They joined a pair of GOP colleagues in calling for a complete redrawing of the legislation that would take many months, short-circuiting McConnell’s wish to end the debate this month. So, the plan to repeal and replace Obamacare is dead, at least for the foreseeable future. Trump tweeted: “Republicans should just REPEAL failing ObamaCare now & work on a new Healthcare Plan that will start from a clean slate.”

And so, this morning, McConnell started to push for a repeal only bill; an idea that would immediately push insurers out of the marketplace. The repeal plan never got off the ground. Three senators said they would not support a motion to proceed on the efforts to repeal without a ready-made replacement. So, repeal and replace is dead, and repeal-only is dead.

What next? Insurance companies are asking the same question and they are facing an uncertain future. Obamacare’s insurance markets still have problems, with insurers pulling out of some areas and raising premiums in others. Trump has many powers at his command to undermine them further, and has threatened to do so.

And there’s no map and no timeline by which lawmakers might find a resolution. Individual markets continue to spiral downward partly because of the inherent issues in Obamacare’s market architecture and partly because of Republican efforts to make things even worse. In some states, Obamacare is doing relatively well, but in others it’s struggling and even starting to fail.

Many insurers have stopped bleeding money from sicker-than-expected enrollees, but they remain wary about continuing to play on the exchanges. The number of insurers filing initial applications on the federal marketplace dropped 38% for 2018. That figure could grow if more insurers get spooked by Washington’s indecisiveness. Insurers aren’t locked into participating in 2018 until late September. Open enrollment begins November 1.

The next deadline comes this week, when the Trump administration must decide whether to keep paying what are known as cost-sharing subsidies. The subsidies help low-income people afford co-payments and cost-sharing on medical services, and their legitimacy is the subject of a legal dispute. The Trump administration has threatened to stop making them.

Obamacare might not implode but it could still die a death of a thousand cuts.

Meanwhile, Congress still need to find agreement on next year’s budget, an increase to the government debt ceiling, as well as promised tax reform. A hard fight over the budget resolution process would portend hurdles to moving forward on reconciliation and tax legislation.

The health-care bill is only one piece of the tax puzzle. Congressional Republicans want to use reconciliation rules to pass a tax bill since it appears unlikely that there will be enough Democratic votes in the Senate to reach the 60-vote hurdle. However, using reconciliation is predicated on Congress passing a budget resolution — no budget resolution means no reconciliation, which means no tax bill.

The National Association of Realtors released a report that said foreign buyers and recent immigrants spent an estimated $153 billion on American properties in the year ending March 2017. That was a 49% increase over the previous year and the highest level since record-keeping began in 2009. The purchases accounted for 10% of the total value of existing home sales in the U.S. The report did not include new homes.

Canadian real estate investors nearly doubled their purchases of American homes over the period because of the relative affordability of properties in the States. Many Canadians have been squeezed out of property markets in cities like Toronto and Vancouver that have experienced rapid price gains. Canadians were the second biggest foreign purchasers of homes after the Chinese.

Buyers from China shelled out nearly $32 billion over the period, while Canadians spent $19 billion. Nearly half of all foreign sales were in three states: Florida, California and Texas. Canadians gravitated to Florida. Chinese buyers focused on California. And Texas was the preferred state for Mexican buyers. New Jersey and Arizona were the fourth and fifth most popular states.

The monthly confidence gauge from the National Association of Home Builders fell two points to a reading of 64. The index now stands at the lowest level since before the election. Any reading over 50 signals improvement. The traffic component of the index broke above the neutral 50 line after the election for the first time since the housing bubble, but has since moderated.

Home-builders are increasingly concerned over rising material prices, particularly lumber. The price of lumber is soaring. Lumber in June cost 17% more than it did just a year earlier, and it’s even more expensive than during the building boom last decade.

Strong demand is one reason for rising lumber prices. Housing starts are up 3% this year compared with the same period last year, according to the Census Bureau. And building permits are up twice as much. The Trump administration has also proposed a tariff of up to 24% on Canadian lumber.

The administration says the Canadian government creates an unfair advantage by subsidizing the lumber industry. A tariff could drive up the price of an average home by $3,000. The tariff has not been imposed, but the threat alone has driven up the price of lumber.

Also, more than 375 fires have swept across British Columbia, burning forests and forcing sawmills to shut down or evacuate. While the impact on supplies is minimal so far, there are concerns that the blazes will continue to spread amid hot, dry conditions.

An even bigger problem is a growing labor shortage. Government statistics show fewer unemployed construction workers were available to be hired last year than at the height of the housing boom. Many workers left the field after the housing bust or just retired.

Americans say they love U.S.-made goods. They are less enthusiastic, however, about paying a premium for them. A Reuters/Ipsos poll finds 70 percent of Americans think it is “very important” or “somewhat important” to buy U.S.-made products. Despite that sentiment, 37 percent said they would refuse to pay more for U.S.-made goods versus imports. Twenty six percent said they would only pay up to 5 percent more to buy American, and 21 percent capped the premium at 10 percent.

California legislators have voted to extend the cap-and-trade emissions system a further 10 years until 2030. The emissions-lowering system, the second-largest of its kind in the world, aims to help the state reach its target of cutting planet-warming gases 40% by 2030, compared to 1990 levels.

The cap-and-trade program, established in 2006 under then governor Arnold Schwarzenegger, sets a limit on emissions and requires polluters to either reduce their output or purchase permits from those who have. As the limit steadily becomes stricter, it nudges businesses to take the more financially attractive option of cutting their pollution.

California’s pioneering attitude to climate change action was underlined by separate court action launched on Monday, aimed at holding fossil fuel companies accountable for global warming. Marin and San Mateo counties, along with the City of Imperial Beach, filed a lawsuit in the California superior court to complain that 37 oil, gas and coal companies knew burning their products would increase carbon pollution and cause sea levels rise.

The municipalities are claiming damages from the fossil fuel firms, echoing a strategy used against the tobacco industry in the 1990s that resulted in multi-billion dollar payouts. The companies targeted in the lawsuit include Shell, Exxon Mobile, Chevron and BP. According to the municipalities, these businesses have caused around 20% of all industrial carbon dioxide and methane pollution since the 1960s.

Bank of America and Goldman Sachs posted better than expected earnings today, one had record income from lending while the other had better-than-expected trading. The surprise is which was which. Goldman reported revenue from institutional clients was down 17% compared with a year ago, led by a whopping 40% decline in trading in fixed income, currencies, and commodities.

Investment banking fees were also down, by a more modest 3%. In a strange twist of events, Bank of America reaped more revenue from trading — $3.4 billion—than Goldman Sachs, which earned $3.1 billion. The banks haven’t totally swapped identities. Goldman’s interest income won’t be confused with Bank of America’s $11 billion anytime soon. And trading accounts for 16 percent of revenue at BofA, compared with 40 percent at Goldman.

Bank of America dropped 0.5% today, while Goldman was down 2.3%.

While Goldman was a drag on the Dow Industrials, Netflix helped to lift the Nasdaq Composite. After the close on Monday, Netflix reported a surprise jump in international subscriber numbers. Today the shares jumped 13% to a record high of $183.60, which puts the company’s price to earnings ratio at 197, which some people might consider a bit high, while other people might get a nosebleed at those heights.

Markets Mixed Amid Political Uncertainty

Charles Schwab: On the Market

Posted: 7/18/2017 4:15 PM ET

Markets Mixed Amid Political Uncertainty

The U.S. equity markets were mixed, as continued pressure on Treasury yields and a disappointing report from Goldman Sachs pressured financials, but a blowout quarter from Netflix gave consumer discretionary stocks a boost. Meanwhile, political uncertainty was elevated as the Senate's healthcare bill failed again and a read on home-builder sentiment disappointed. Crude oil, gold and the U.S. dollar were higher.

The Dow Jones Industrial Average (DJIA) fell 55 points (0.3%) to 21,575, the S&P 500 Index gained 2 points (0.1%) to 2,461, and the Nasdaq Composite increased 30 points (0.5%) to 6,344. In light to moderate volume, 694 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil rose $0.38 to $46.40 per barrel and wholesale gasoline was $0.02 higher at $1.58 per gallon. Elsewhere, the Bloomberg gold spot price gained $7.80 to $1,241.91 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 94.67.

Dow member Goldman Sachs Group Inc. (GS $223) reported Q2 earnings-per-share (EPS) of $3.95, compared to the FactSet estimate of $3.38, as revenues dipped 1.0% year-over-year (y/y) to $7.9 billion, versus the projected $7.6 billion. GS topped estimates for most of its business units, but its fixed income currency and commodity unit's activity noticeably missed expectations. The company said a mixed operating environment persisted into Q2 as conditions continued to support underwriting and M&A, while also constraining certain market-making activity. Shares were lower.

Bank of America Corp. (BAC $24) posted Q2 profits of $0.46, above the projected $0.43, as revenues increased 7.0% y/y to $22.8 billion, versus the expected $21.9 billion. Trading revenues were slightly ahead of forecasts, while its net interest income and margin came in a bit shy of estimates. BAC lost ground.

Dow component Johnson & Johnson (JNJ $134) announced Q2 EPS of $1.40, or $1.83 ex-items, compared to projections of $1.79, with revenues rising 1.9% y/y to $18.8 billion, just below the $19.0 billion estimates. JNJ raised its full-year guidance, and shares were higher.

Dow member UnitedHealth Group Inc. (UNH $185) reported Q2 earnings of $2.32 per share, or $2.46 ex-items, versus the projected $2.38, as revenues grew 8.0% y/y to $50.1 billion, compared to the expected $50.0 billion. UNH raised its full-year EPS outlook, and shares were higher.

Netflix Inc. (NFLX $184) posted Q2 EPS of $0.15, one penny shy of estimates, as revenues increased 32.3% y/y to $2.8 billion, roughly in line with expectations. The company's net subscriber additions easily topped expectations. NFLX issued Q3 guidance that was well above estimates. Shares of NFLX rallied.

With Q2 earnings season ramping up and the stock markets at record highs, Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, offers his latest article, Where's the Next Bubble?, and Schwab's Director of Market and Sector Analysis, Brad Sorensen, CFA, provides analysis of the major market sectors in his latest Schwab Sector Views: Christmas in July! (Status of the Consumer) on the Markets & Economy page at www.schwab.com. Be sure to follow us and Jeff on Twitter: @schwabresearch and @jeffreykleintop.

Homebuilder sentiment falls

The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment this month dropped to 64 from June's downwardly revised level of 66, and below the Bloomberg forecast calling for a 67 reading. This was the lowest since November but remains well above the 50 mark, the point of separation for good versus poor conditions. The NAHB said its members are telling it they are growing increasingly concerned over rising material prices, particularly lumber.

Tomorrow, housing construction activity will be in focus, with the release of June housing starts and building permits (economic calendar). Starts are projected to snap a three-month streak of losses, rising 6.2% month-over-month (m/m) to an annual rate of 1,160,000 units, while permits are expected to increase 2.8% to an annual rate of 1,201,000 units, after posting back-to-back monthly declines. Weekly MBA Mortgage Applications will also be reported.

Schwab's Brad Sorensen, CFA, paints a pretty positive picture for the American consumer in his latest Schwab Sector Views, but adds that there are some concerning things that keep us from being overwhelmingly bullish on the consumer. Brad notes that while confidence remains high according to surveys, actions have been slower to come around as housing formations have only just started to tick higher, retail sales growth has been relatively tepid, and auto purchases have shown signs of rolling over. Read more on the Markets & Economy page at www.schwab.com.

The Import Price Index (chart) decreased 0.2% month-over-month (m/m) for June, matching the Bloomberg projection, and compared to May's upwardly revised 0.1% decrease. Compared to last year, prices were up by 1.5%, above forecasts calling for a 1.3% rise and following May's upwardly revised 2.3% increase.

Treasuries were higher, as the yield on the 2-year note dipped 1 basis point (bp) to 1.35%, while the yields on the 10-year note and the 30-year bond dropped 5 bps to 2.27% and 2.86%, respectively.

Bond yields and the U.S. dollar have slipped as of late following brief rebounds, pressured by continued subdued inflation data, exacerbated by Fed Chair Janet Yellen's dovish semi-annual monetary policy testimony last week. Schwab's Chief Fixed Income Strategist Kathy Jones notes in her Bond Market Mid-Year Outlook: Redefining the Borders of 'Lower for Longer' in the second half of 2017, we expect 10-year Treasury yields to remain in a 2% to 2.5% range, consistent with the eight-year "lower for longer" theme in the bond market. Read more on the Fixed Income page at www.schwab.com, where Kathy also discusses, Dollar Decline: Time to Shift to International Bonds? Maybe Not, on the Markets & Economy page. Follow Kathy on Twitter: @kathyjones.

The political front remains in focus as the highly scrutinized revised Senate healthcare bill appears to be getting scrapped again, and focus appears to be shifting to repealing Obamacare instead of replacing it. This adds credence to Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend's Washington Midyear Update: 4 Key Issues for Investors to Watch, where he points out dysfunction, drama and ethical issues in the White House have combined with Republican infighting on Capitol Hill to bog down the policy agenda. There's growing concern among congressional Republicans that the much-anticipated policy changes will need to be significantly scaled back—or that they may not happen at all. Read more on the Insights & Ideas page at www.schwab.com.

Europe sees pressure on political uncertainty and data, Asia mixed

European equities finished broadly lower, with another setback for the U.S. healthcare bill and the continued U.K. Brexit negotiations adding to political uncertainty. For analysis of the political front see Schwab's Jeffrey Kleintop's, CFA, and Vice President of Trading and Derivatives, Randy Frederick's video, Political Risk: How Should Investors Respond? on the Insights & Ideas page at www.schwab.com, where you can also find our article, Brexit Begins: What's Next for the U.K?. Follow Randy on Twitter: @randyafrederick. Technology issues led to the downside as the markets digested ramped up earnings season on both sides of the pond. In economic news, German investor confidence declined for a second-straight month, while U.K. inflation data came in mostly below forecasts. The British pound saw some pressure versus the U.S. dollar on the data. The euro rose versus the greenback, ahead of this week's monetary policy decision by the European Central Bank, while bond yields extended a recent slide to weigh on financials, along with a negative reaction to earnings reports from the sector out of the U.S. Basic materials came under pressure.

Stocks in Asia finished mixed to mostly lower, following flared-up U.S. political uncertainty, while the yen gained ground to pressure Japanese equities after returning to action following yesterday's holiday break. The markets are also eyeing this week's monetary policy decision by the Bank of Japan. Australian securities fell sharply amid a broad-based decline among sectors, while those traded in South Korea finished flat, holding at a record high. Stocks in India dropped, retreating from a record high. With these markets at or near all-time highs, Schwab's Jeffrey Kleintop, CFA, offers his article, The Long Period of Underperformance for Emerging Market Stocks May Finally Be Over on the International Investing page at www.schwab.com. However, stocks in mainland China and Hong Kong advanced, with property-related issues leading a late-day charge as an upbeat property price report joined a recent string of stronger-than-expected data, headlined by yesterday's Q2 GDP report. In the wake of the data, Schwab's Jeffrey Kleintop, CFA, offers his 2017 Mid-year Global Market Outlook: Broader Growth, Narrower Risks on the International Investing page at www.schwab.com.

Tomorrow's international economic calendar will be very light, with the lone report of note being PPI from South Korea.

Financial Review

Not Happening

Sinclair Noe — July 17, 2017

Podcast: Play in new window | Download (Duration: 13:15 — 7.6MB)

Subscribe: iTunes | Android | RSS

DOW – 8 = 21,629
SPX – 0.13 = 2459
NAS + 1 = 6314
RUT + 2 = 1431
10 Y – .01 = 2.31%
OIL – .54 = 46.00
GOLD + 5.30 = 1234.70
BITCOIN – 1.51% = 2210.29 USD
ETHEREUM + 6.95% = 187.67

Sen. John McCain revealed over the weekend that he had surgery to remove a blood clot from above his eye. His doctors also said the surgery went “very well,” and the senator is resting at home. As a result, he will not be returning to Washington this week and there is no guarantee he’ll be back after this week, and his absence has suddenly brought consideration of the Senate health care bill to a halt.

Here’s what McCain’s absence does to McConnell’s whip count: There were already two Senate Republicans who have said they would vote “no” on motion to proceed on this bill — Sens. Rand Paul and Susan Collins. McCain’s absence means there is not a Republican majority on the healthcare legislation.

Leadership was pushing for a first procedural vote on the Senate health care bill for as early as Tuesday. That’s no longer happening. We were expecting an updated score from the Congressional Budget Office on the revised Senate bill today. That is also not happening. No guidance from the CBO on when we’ll see that score.

Regardless of the timing, Republicans hope the report will look better than an earlier version, which said the Republican plan would cause 22 million Americans to lose insurance by 2026. It’s not guaranteed, though, that the fresh analysis will show dramatically better effects.

Meanwhile, the delay on healthcare legislation is likely to spill over to tax reform. It would be difficult to address taxes without understanding the potential impact of healthcare.

Before the opening bell, Blackrock, the world’s largest asset manager reported second-quarter adjusted earnings per share of $5.24 on revenue of $2.96 billion, missing estimates on both the top and bottom lines. The firm’s second-quarter assets under management rose 16 percent year over year to $5.689 trillion, topping analyst expectations.

BlackRock also said assets under management for its exchange-traded fund business iShares topped $1.5 trillion, helped by record net inflows of $74 billion.  Blackrock dropped over 3% today.

After the closing bell, Netflix reported earnings – although for Netflix the attention is on subscribers, rather than traditional top line, bottom line numbers. Netflix added more than 5 million subscribers in the June quarter, bringing its total subscriber base to about 104 million. Most new subscribers — more than 4 million — came from its overseas markets.

In fact, Netflix’s international subscriber base is now larger than the U.S. for the first time. The strong growth beat Netflix’s own estimates and caused the stock to spike 10% in after-hours trading. Oh yeah, revenue came in at $2.79 billion, a little better than estimates. Earnings were 15 cents per share missing estimates of 16 cents.

A moat is a deep, wide ditch surrounding a castle or fort, typically filled with water and intended as a defense against attack. An economic moat refers to a business’ ability to maintain competitive advantages over its competitors to protect its long-term profits and market share from competing firms.

Blue Apron Holdings does not have a moat. Shares of the meal-kit delivery company sank as low as $6.51, a 35 percent drop since its initial public offering. Amazon filed a July 6 trademark application for “prepared food kits composed of meat, poultry, fish, seafood, fruit and/or vegetables . . . ready for cooking and assembly as a meal.”

Blue Apron has been telling investors that its offering is different than basic grocery delivery. Amazon’s interest in meal kits directly undermines that pitch. The barbarians are at the drawbridge.

A mix of financial services, entertainment, transportation and technology companies are reporting earnings this week. JPMorgan Chase, Citigroup and Wells Fargo all posted higher-than-expected second-quarter earnings on Friday, even though they had weak trading revenue. That trend is expected to continue this week when Bank of America and Goldman Sachs post results.

The FAANG stocks (Facebook, Apple, Amazon, Netflix, and Alphabet-Google) are expected to be an overall drag on second quarter earnings growth despite their stock performance. The FAANG companies’ earnings growth is expected to be 6 percent for the second quarter. But the overall earnings growth for the S&P is expected to be north of 8 percent. The overall earnings growth for FAANG stocks contrasts with their stock performance.

The market cap of the FAANGs increased by $119.85 billion during the second quarter, or about 22.2 percent of the overall increase in market cap of the S&P 500. Each of the FAANG stocks has significantly outperformed the S&P 500 this year.

Business activity grew modestly in New York State. The July 2017 Empire State Manufacturing Survey general business conditions index fell ten points to 9.8. The new orders index moved down to 13.3, and the shipments index fell to 10.5, suggesting that orders and shipments continued to grow, though at a somewhat slower pace than in June.

China’s gross domestic product grew 6.9% in the second quarter, according to government data released Monday, the same figure as the previous quarter and marginally higher than most forecasts. The latest numbers position the economy above Beijing’s stated growth target for 2017. But China’s speedy growth – an uptick from the 6.7% it recorded last year –  will be difficult to sustain in the months to come.

The Chinese government announced last week it would change the way it calculated economic growth for the first time in 15 years, adding healthcare, tourism and the “new economy” to the overall figure. It was not immediately clear whether those additions had an impact on growth.

The latest growth numbers will also likely reinforce skepticism among analysts about the reliability of official statistics. But, there’s a bigger story, which is that emerging-market finances are their best in years, bolstering confidence that they can withstand monetary policy tightening in developed economies.

The 12-largest emerging-markets now have foreign-exchange reserves totaling $3 trillion, up from $2.92 trillion in late 2015 and the most since 2014. Emerging-market stocks posted their best performance in a year last week, gaining 4.45 percent as the MSCI Emerging Markets Index rose for five straight days. So, time for a breather, right? Not exactly. The market for developing-nation stocks plowed ahead again on Monday, bringing its year-to-date gain to 21.9 percent.

Brexit negotiations between the UK and the EU officially kicked off today. Over the course of the next few years the UK’s entire relationship with the rest of Europe is likely to be totally reshaped. Nowhere is that truer than in British industry, where firms are almost certain to have to adjust to life outside the European Single Market and to an entirely new trading relationship with what is for most industries, their biggest trading partner.

The Office for National Statistics dropped a whole heap of data about the British industries that are likely to be most impacted by Brexit, as well as where those industries are clustered. This helps to create a reasonable picture of the parts of the UK where Brexit could have the largest impression.

For example, one of the industries likely to suffer most at the hands of Brexit is the UK’s automobile industry. Financial services are another area where the Brexit negotiations could cause trouble, causing problems for London, where the sector is heavily concentrated.

Tens of thousands of people who took out private loans to pay for college but have not been able to keep up payments may get their debts wiped away because critical paperwork is missing. The troubled loans, which total at least $5 billion, are at the center of a protracted legal dispute between the student borrowers and a group of creditors who have aggressively pursued them in court after they fell behind on payments.

Judges have already dismissed dozens of lawsuits against former students, essentially wiping out their debt, because documents proving who owns the loans are missing. A review of court records by The New York Times shows that many other collection cases are deeply flawed, with incomplete ownership records and mass-produced documentation.

Some of the problems playing out now in the $108 billion private student loan market are reminiscent of those that arose from the subprime mortgage crisis a decade ago, when billions of dollars in subprime mortgage loans were ruled uncollectable by courts because of missing or fake documentation.

And like those troubled mortgages, private student loans — which come with higher interest rates and fewer consumer protections than federal loans — are often targeted at the most vulnerable borrowers, like those attending for-profit schools.

One of the nation’s largest owners of private student loans and one of the most aggressive at collecting delinquent loans, the National Collegiate Student Loan Trusts, is struggling to prove in court that it has the legal paperwork showing ownership of its loans, which were originally made by banks and then sold to investors.

Judges throughout the county, including recently in cases in New Hampshire, Ohio and Texas, have tossed out lawsuits by National Collegiate, ruling that it did not prove it owned the debt on which it was trying to collect.

The White House is highlighting products Made in America. They have compiled a list of products from each state. Some are obvious: wine from California and Stetson cowboy hats from Texas. Other picks were less obvious: North Carolina’s product is Cheerwine soda. I’ve never heard of Cheerwine soda.

Meanwhile, Georgia’s product is Chik-fil-a sandwiches, not Coca-Cola.  So, go figure. Arizona’s Made in America product is Ping golf clubs.