Financial Review

Inured

Sinclair Noe — October 2, 2017

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DOW + 152 = 22,557 (Record)
SPX + 9 = 2529 (Record)
NAS + 20 = 6516 (Record)
RUT + 18 = 1509
10 Y + .01 = 2.34%
OIL – 1.04 = 50.54
GOLD – 8.90 = 1271.50

Cryptocurrency

• Number of Currencies: 882
• Total Market Cap: $148,926,975,795
• 24H Volume: $2,818,429,648

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Vol.	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	4,420.3	$73.44B	$1.30B	46.18%	1	+0.46%	12.92%
	Ethereum	ETH	299.82	$28.42B	$308.15M	10.93%	0.0678232	+1.01%	2.73%
	Ripple	XRP	0.20349	$7.83B	$56.94M	2.02%	0.00004621	+0.49%	12.18%
	Bitcoin Cash	BCH	419.09	$6.96B	$197.03M	6.99%	0.0946516	-0.19%	-7.21%
	Litecoin	LTC	53.400	$2.84B	$85.00M	3.02%	0.012095	+0.06%	3.41%
	Dash	DASH	308.12	$2.34B	$28.38M	1.01%	0.0697576	+0.01%	-10.12%
	NEM	XEM	0.23515	$2.09B	$3.82M	0.14%	0.00005271	+1.37%	1.07%
	NEO	NEO	36.100	$1.80B	$108.07M	3.83%	0.0081623	-1.64%	38.31%
	IOTA	MIOTA	0.57980	$1.61B	$12.98M	0.46%	0.00013081	+0.31%	5.57%
	Monero	XMR	90.50	$1.37B	$27.57M	0.98%	0.0204906	-1.38%	-2.74%

Once again, we saw records on Wall Street for the Dow, S&P, and Nasdaq. There will be no celebration today. The flags are at half-staff. By now, you all have heard about the mass shooting in Las Vegas. Here is the latest information. Last night, shortly after 10 p.m., at an outdoor concert in Las Vegas, gunfire erupted.

The gunman was on the 32^nd floor of the Mandalay Bay, firing into a field of 22,000 concertgoers, across the Las Vegas Strip. At first, the people at the concert didn’t realize what was happening or where the gunfire was coming from. The gunfire sprayed down in rapid fire, likely from fully automatic guns – machine guns. 59 people are dead and over 527 injured, several in critical condition.

Some of the injured were wounded, others hit by shrapnel, others were trampled in the chaos as they tried to escape. It ranks as the worst mass shooting in the US so far. Approximately 15 minutes later, police broke through the gunman’s hotel door. Stephen Paddock, a 64-year old from Mesquite, Nevada was dead of a self-inflicted gunshot. He was surrounded by 19 guns and hundreds of rounds of ammo.

To a certain extent, we have all become inured to this carnage that happens with sickening regularity. The reality is that mass murder is more and more common – even as violent crime has been on the decline. Since 1970, more Americans died from guns (either murder, suicide or accident) than the total of all the people who died in all the wars in American history, going all the way back to the American Revolution.

And while the event in Las Vegas is jarring, each day 92 Americans die from guns; more than 33,000 last year. After various times, I half expected there would be some action to address this problem: after Columbine, after Newtown, after Tucson, after Aurora, after Charleston, after Orlando. Nope.

Today, the shares of gun stocks went higher. No surprise. More people will buy more guns because they are afraid. More people will buy more guns because they think gun control advocates might sway someone to do something. There were calls for legislation. It won’t happen.

Even before today there was legislation in Congress to ease firearms rules and make it easier to purchase silencers. Nothing will happen after Las Vegas. Lives were shattered today. Daughters and sons, Moms and Dads, sisters and brothers – gone, permanently. In a week, or a month, or a year it will happen again and then again. I would like to say something hopeful but I have no expectations anything will change.

Looking at today’s economic data: Construction outlays jumped in August, led by a surge in spending for public works projects. Spending increased 0.5% during the month, and stood 2.5% higher than a year ago. Outlays were at a seasonally adjusted annual $1.22 trillion rate in August.

Private construction spending rose 0.4% in August, while public outlays jumped 0.7%, driven by a 3.5% increase in educational construction projects. Public construction spending has stagnated for years.

Florida and Texas, the areas most impacted by Hurricanes Harvey and Irma, accounted for 22% of U.S. private nonresidential construction spending in 2016, and 15% of state-and-locally-owned construction spending. Meanwhile, residential construction spending was up only 0.5% for the month, but was 11.3% higher than its year-ago level.

The Institute for Supply Management said its manufacturing index jumped to 60.8 in September from 58.8%, hitting the highest level since 2004.

The Atlanta Federal Reserve’s GDP Now forecast model was revised to show third quarter GDP growth of 2.7%, up from an earlier estimate of 2.3% growth.

Treasury Secretary Steven Mnuchin on Sunday said one of the top goals of the Trump administration’s tax plan is to help the middle class, but he could not guarantee that every middle-class family would receive a tax cut.

President Donald Trump last week outlined his plan, which includes reducing the corporate income tax rate to 20 percent, establishing a new 25 percent tax rate for pass-through businesses and lowering the top income tax rate for individuals to 35 percent.

A report on Friday from the non-profit Washington-based Tax Policy Center found that taxpayers in the top 1 percent income bracket – above $730,000 – would receive about 50 percent of the total benefit from the overhaul, with their after-tax income forecast to increase an average of 8.5 percent.

The group said about 12 percent of taxpayers would face an average tax increase of roughly $1,800. This includes more than a third of taxpayers making between about $150,000 and $300,000, as most itemized deductions, including for state and local taxes, would be repealed.

The Spanish region of Catalonia attempted to hold a contested independence referendum on Sunday and Catalonia’s leadership has declared the region has “won the right” to independence. Catalan officials claimed that around 90% of votes cast were for independence with a turnout of around 43%. Spain’s central government does not recognize the referendum, with Prime Minister Mariano Rajoy saying it made a “mockery” of democracy and refusing to recognize that a vote happened.

Sunday’s referendum was marred by violent scenes as police were ordered to confiscate ballot boxes and prevent people from voting. Videos surfaced of officers forcibly dragging would-be voters from polling stations. Spain is the fourth largest eurozone economy. But what will happen if Catalonia does declare independence from Spain?

Declaring independence from Spain would automatically mean that Catalonia would have to leave the European Union, which would inevitably cause issues around its membership of the EU’s single market. The economic cost for Catalonia could proportionally exceed that of Brexit for the UK. Spain’s benchmark IBEX 35 stock index slid 1.8 percent, led by shares of banks. Spanish 10-year government bond yields climbed as much as 11 basis points.

The UK’s Civil Aviation Authority (CAA) is launching the biggest repatriation effort of Brits abroad since the Second World War after the bankruptcy of Monarch Airlines over the weekend. Monarch, which flies to the Mediterranean and other warm weather destinations, cancelled an estimated 300,000 bookings and an estimated 110,000 travelers were stranded.

Spectrem Group’s monthly confidence index of investors with at least $1 million to invest soared to 19 for September from 10 in August. The index, which is based on 250 interviews, has only been higher twice since the markets began recovering from the worst financial crisis since the Great Depression in 2009 — in April of this year and in September 2013.

General Motors is going all electric. GM will begin selling two new all-electric vehicles in the next 18 months, and will have at least 20 new zero-emission electric vehicles in its lineup by 2023. Chairman and CEO Mary Barra, making the announcement in Detroit, said the new cars are part of a sweeping plan to move toward an automotive world that includes zero emissions, zero congestion and zero crashes.

The two new cars will be based on technology derived from the company’s Bolt EV, the 238-mile-range electric sedan that Chevrolet introduced late last year. They will be plug-in electric vehicles or hydrogen fuel cell vehicles that have no internal combustion engines and do not burn gasoline or emit harmful vapors from their tailpipes.

GM, with its Bolt EV battery-powered car and its Volt plug-in hybrid, is pushing into an increasingly competitive space. Almost 50 new pure electric-car models will come to market globally between now and 2022, including vehicles from Daimler, Volkswagen, and Volvo. The car companies dragged their feet with electric. Now they are being dragged into it by Tesla and by regulations.

Though more than 350,000 people put down $1,000 deposits to get in line for the upcoming Tesla Model 3 BEV sedan, sales of the Bolt EV have not met analysts’ expectations. Tesla had record sales of its EVs last year — and still lost $675 million on $7 billion in sales. To date, in the United States, pure battery-electric vehicles account for fewer than 1% of all vehicles sold.

The massive data breach at Equifax may be even larger than originally thought, according to an independent investigation by a cybersecurity firm. Mandiant, a cybersecurity investigations firm retained by Equifax to look into the breach, found that 2.5 million more U.S. consumers were potentially affected than originally estimated, bringing the total to 145.5 million.

The recently former CEO of Equifax, Richard Smith is scheduled to appear before four Congressional panels this week, beginning with the House Energy and Commerce Committee on Tuesday. In prepared remarks, Smith said Equifax was alerted to the breach by the Homeland Security Department on March 9 but did not act to patch the vulnerability.

The Interior Department’s inspector general’s office has opened an investigation into Secretary Ryan Zinke’s use of taxpayer-funded charter planes. The watchdog has “received numerous complaints” and launched its investigation late last week. Interior secretary Zinke has flown on government-owned or -chartered aircraft several times this year, including one $12,000 trip from Las Vegas to an airport near his hometown in Montana and another trip in the Caribbean

At Oracle’s OpenWorld conference yesterday, Larry Ellison announced a new autonomous database that can patch itself from cybersecurity flaws without having to go offline. While the idea of a human-free database maintenance is compelling on its own, Ellison spent the second half of his presentation comparing Oracle 18c to Amazon Web Service’s database product, Redshift.

The automated database, called Oracle 18c, can instantly patch itself while still running, which Ellison says is a big advantage over the current system, in which humans must schedule downtime for a database.

Upbeat Manufacturing Reports Boost Stocks

Charles Schwab: On the Market

Posted: 10/2/2017 4:15 PM EDT

Upbeat Manufacturing Reports Boost Stocks

 

U.S. stocks were higher to start the week, as favorable reads on manufacturing activity out of China, Japan and the eurozone were followed by a thirteen-year high in the U.S report. However, gains were tempered a bit, as attention turned to the deadly shooting in Las Vegas. Treasury yields were modestly higher and the U.S. dollar extended a recent run, while gold and crude oil prices were lower.

The Dow Jones Industrial Average (DJIA) increased 153 points (0.7%) to 22,558, the S&P 500 Index was 10 points (0.4%) higher at 2,529, and the Nasdaq Composite advanced 21 points (0.3%) to 6,517. In moderate volume, 754 million million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil lost $1.09 to $50.58 per barrel and wholesale gasoline was $0.03 lower at $1.56 per gallon. Elsewhere, the Bloomberg gold spot price declined $6.54 to $1,276.21 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.6% higher at 93.60.

Cal-Maine Foods Inc. (CALM $42) reported a fiscal Q1 loss of $0.33 per share, versus the $0.18 shortfall that the FactSet estimate called for, with revenues rising 9.6% year-over-year (y/y) to $263 million, but below the projected $264 million. The egg producer said it was pleased with higher sales in the quarter despite ongoing challenges and price volatility in the egg markets. CALM noted that it will not pay a dividend for Q1. Shares were higher.

American International Group Inc. (AIG $62) announced that it welcomed the decision by the Financial Stability Oversight Council to rescind the company's designation as a Systemically Important Financial Institution (SIFI) as it reflects the substantial de-risking that it has achieved since 2008. AIG was higher.

Biohaven Pharmaceutical Holding Co. Ltd. (BHVN $36) fell sharply after announcing that a study of its treatment for spinocerebellar ataxia did not differentiate from placebo on the primary endpoint.

Manufacturing activity hits thirteen-year high, joining plethora of positive global data

The Institute for Supply Management (ISM) Manufacturing Index (chart) for September unexpectedly jumped to the highest level since May 2004, after rising to 60.8 from 58.8 in August, compared to the Bloomberg forecast calling for a dip to 58.0. A reading above 50 denotes expansion. ISM said comments from the survey reflect expanding business conditions, with news orders (64.6), production (62.2), employment (60.3), order backlogs (58.0), and export orders (57.0) all growing, while customer inventories remained at low levels (42.0). Prices surged 9.5 points to 71.5.

The final Markit U.S. Manufacturing PMI Index was revised to 53.1 for September from the preliminary reading of 53.0, where it was expected to remain, and above the 52.8 level posted in August. A reading above 50 denotes expansion. The release is independent and differs from ISM's manufacturing report, as it has less historic value and Markit weights its index components differently.

Construction spending (chart) rose 0.5% month-over-month (m/m) in August, versus projections of a 0.4% advance, and following July's downwardly revised 1.2% drop. Residential and non-residential spending both rose 0.5%.

The manufacturing data joined upbeat reads on the sector out of China, Japan and eurozone, while adding to the backdrop of heightened December Fed rate hike forecasts and cautious optimism regarding last week's tax reform framework, which has boosted Treasury yields and the U.S. dollar. The reports also kick off a week that will bring another speech by Fed Chairwoman Janet Yellen and culminate with Friday's September nonfarm payroll report (economic calendar).

As noted in the latest Schwab Market Perspective: Fourth Quarter Fun…or Folly?, there may be some Fed-induced volatility in the fourth quarter and we believe a December hike is firmly on the table in light of the uptick in inflation along with the Fed’s stated intentions. If inflation begins to kick in in earnest, it could push the Fed to be more aggressive than currently believed. While pullbacks are normal and can happen at any time, the fundamental trends that powered the steady rise in global stocks this year remain intact. The latest round of global leading economic indicators, including the September purchasing managers index for many countries around the world, point to continued economic strength that is lifting earnings and supporting the bull market. Read more on the Market Commentary page at www.schwab.com.

Treasuries were modestly lower, as the yields on the 2-year and 10-year notes, along with the 30-year bond, all ticked 1 basis point higher to 1.49%, 2.34% and 2.87%, respectively.

Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, offers analysis of the global monetary policy front in his article, How the Shift by Central Banks May Affect the Stock Market, on the Market Commentary page at www.schwab.com. Also, Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend discusses the tax reform details his latest article, Tax Reform Framework Released, But The Road Ahead Is Long, on the Insights & Ideas page. Follow Schwab and Jeff on Twitter: @schwabresearch and @jeffreykleintop.

The stock market's resiliency in the face of a plethora of things to worry about is discussed by Schwab's Chief Investment Strategist Liz Ann Sonders in her article, Comfortably Numb? An Update on Investor Sentiment, on the Market Commentary page at www.schwab.com. Follow Liz Ann on Twitter: @lizannsonders.

Tomorrow's economic calendar will be void of any releases.

Europe and Asia mostly higher on data, but political concerns weigh on Spain
Most European equity markets gained ground, with some upbeat eurozone data joining favorable reports out of the U.S., Japan and China, while weakness in the euro and British pound supported the advance in the region. However, Spanish stocks fell amid political uneasiness as Catalonia said a large majority of people voted in favor of an independence referendum, but national authorities are calling the vote illegal. 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. Follow Randy on Twitter: @randyafrederick.

Markit's eurozone manufacturing activity report continued to suggest solid expansion and the region's unemployment rate held at a 2009 low. Switzerland's manufacturing growth unexpectedly accelerated last month, though U.K. output growth in the sector decelerated more than expected. The report put pressure on the British pound, which had spiked last month on signals from the Bank of England that it may begin to raise rates in the coming months. Bond yields in the region finished mixed. . For a look at the global markets, see Schwab's Jeffrey Kleintop's, CFA, article, U.S. vs International: What Do Earnings Tell Us About What May Be Ahead?, on the Market Commentary page at www.schwab.com.

Stocks in Asia finished mostly higher on the heels of some upbeat economic data, though volume was lighter than usual as markets in China, Hong Kong, India and South Korea were closed for holidays. Japanese equities advanced, with the yen losing some ground while the Q3 Tankan Large Manufacturing Index improved more than expected to 22 from 17 in Q2, above the expected tick up to 18, showing sentiment in the large manufacturing sector improved noticeably. However, the report did show that confidence in the sector is expected to decline to 19 in Q4. China reported over the weekend that growth in output from its key manufacturing and services sector accelerated in September, while South Korea also reported exports jumped more than expected last month. In the wake of the data, basic materials stocks gained ground, helping boost Australian stocks, along with strength in financials. Amid this backdrop, Schwab's Jeffrey Kleintop, CFA, and Randy Frederick note in the video, Is An Optimistic Outlook for Global Equities Warranted?, all of the world's top 20 economies are growing this year—a rare occurrence over the last decade. Read more on the Insights & Ideas page at www.schwab.com.

Tomorrow, the international economic calendar will offer the Reserve Bank of Australia's monetary policy decision, with no change to policy expected, consumer confidence from Japan, the unemployment rate from Spain, and PPI from the Eurozone.

Financial Review

Heading into the Holiday

Sinclair Noe — June 29, 2017

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DOW – 167 = 21,287
SPX – 20 = 2419
NAS – 90 = 6144
RUT – 9 = 1416
10 Y + .05 = 2.27%
OIL + .12 = 44.86
GOLD – 3.40 = 1246.40
BITCOIN – 0.21% = 2556.09 USD
ETHEREUM – 4.42% = 289.77

We had a nice trend so far, this year. The stock market has been moving forward in small, steady gains. Volatility has been low, almost imperceptible. The markets just kept moving higher. When we have had a pullback, it was followed the next day by a rally, even if there was no conviction.

That was the case this week. Down on Tuesday, back up on Wednesday. Today throws a wrench in the pattern, with the S&P 500 and the Dow industrials suffering their worst daily percentage drops in about six weeks. The tech sector was the worst performing group today. There’s a lot more volatility in tech this month and that’s in part due to stretched P/Es.

At this point, it’s just a couple of down days, and we are heading into a long holiday weekend, a good time to take profits off the table and enjoy a barbeque without worries. Still, valuations are high and it’s one of the longest bull markets in history. Bull markets don’t last forever.

June has not been kind to the FAANG stocks, – Facebook, Apple, Amazon, Netflix, and Google, which were market leaders and then hit a down draft. There is no question the FAANGs have become pricey. The market caps are so huge they dominate the indexes. But markets can stay exuberant and irrational for a very long time. And this is not the first time we have seen a sell-off in the FAANGs, only to watch them move higher.

Today, money was rotating from tech and into the financials after the big banks passed the Fed stress tests and now can offer bigger dividends and buybacks. JPMorgan, the nation’s largest lender, said it’s boosting its quarterly dividend 12 percent and may increase share repurchases to $19.4 billion over the next 12 months — roughly 90 percent more than in the prior year.

Citigroup plans to double its dividend and may purchase up to $15.6 billion. Bank of America hiked its dividend 60 percent and will buy back up to $12 billion. Shares of all three rose at least 2 percent in early trading in New York. They, along with Wells Fargo and Morgan Stanley, may collectively buy as much as $64 billion in stock. Goldman Sachs has yet to make an announcement.

The Commerce Department posted its third and sort of final revision to first quarter Gross Domestic Product, and the revision came in higher; up 0.2% to 1.4%, instead of the 1.2% reported last month. The government had pegged first-quarter growth at a paltry 0.7% in its first estimate in April.

First-quarter economic growth was boosted by an upward revision to consumer spending, which accounts for more than two-thirds of U.S. economic activity. Consumer spending rose at a 1.1 percent pace, the weakest reading since the second quarter of 2013 but almost double the 0.6 percent reported last month. A sustained average growth rate of 3 percent has not been achieved in the United States since the 1990s.

The U.S. economy has grown an average 2 percent since 2000 and it expanded only 1.6 percent in 2016, which was the weakest growth in five years. Initial signs that economic growth re-accelerated sharply in the second quarter have also faltered in the face of recent disappointing data on retail sales, manufacturing production and inflation. Housing data has also been mixed.

Exports for the period were revised to show a 7.0 percent rate of growth from the previously reported 5.8 percent. Exports in the fourth quarter fell at a rate of 4.5 percent. Business spending on equipment was revised to show it increasing at a rate of 7.8 percent in the January-March period rather than the 7.2 percent previously estimated.

The government also reported that corporate profits after tax with inventory valuation and capital consumption adjustments fell at an annual rate of 2.7 percent in the first quarter after rising at a 2.3 percent pace in the prior three months.

The Bank of International Settlements, or BIS, is the central bank for the central bankers of the world. According the BIS’s annual report, the global economy faces four risks, “(i) financial cycle risks for financial stability; (ii) risks to consumption growth from household debt; (iii) risks to investment from weak productivity growth and high corporate debt; and (iv) risks from rising protectionism.”

From the report:
“These risks may appear independent, but they are not. For instance, policy tightening to contain an inflation spurt could trigger, or amplify, a financial bust in the more vulnerable countries… Indeed, an overarching issue is the global economy’s sensitivity to higher interest rates given the continued accumulation of debt in relation to GDP, complicating the policy normalization process.

“As another example, a withdrawal into trade protectionism could spark financial strains and make higher inflation more likely. And the emergence of systemic financial strains yet again, or simply much slower growth, could heighten the protectionist threat beyond critical levels.”

Of all those risks, protectionism is the only one a government can fully control. A government can choose to engage in global free market capitalism, or it can aggressively try to distort the market by blocking competing goods and services. It can either work amicably with neighbors and allies, or it can create tension felt across the globe.

A revised version of President Trump’s travel ban approved by the Supreme Court is set to take effect at 8:00 p.m. ET on Thursday. The justices implemented an exemption for travelers from six-Muslim majority countries with a “bona fide relationship” to people or entities in the US.

The Trump administration has adopted a narrow definition of “bona fide relationship.” According to guidelines the Trump administration has sent to US embassies and consulates, only a family member who is a parent, spouse, child, adult son or daughter, son-in-law, daughter-in-law, or sibling of US residents will be allowed to enter the country.

Fiancées, grandparents, grandchildren, aunts, uncles, nieces, nephews, cousins, and other extended family members are not considered to have “close familial ties”. And if you think this might lead to mass confusion, well…

The Congressional Budget Office has come out with a long-term analysis of Senate Republicans’ health-care legislation found that the bill would slash spending on Medicaid by about 35 percent over the next 20 years. The analysis follows a 10-year look by the agency released earlier this week.

The new CBO estimate doesn’t include a projection of how many people would be covered under the Republican bill. The CBO estimate shows that states would be forced to make trade-offs in how to allocate their far more limited funds.

Drugstore chain Walgreens Boots Alliance scrapped its deal to buy Rite Aid after failing to win antitrust approval, but said it would instead buy nearly half of the smaller rival’s U.S. stores for $5.18 billion. Rite Aid’s shares plunged about 28 percent to $2.85, while Walgreens shares were up 1 percent at $77.97.

Walgreens also ended a related deal to sell as many as 1,200 Rite Aid stores to Fred’s, sending Fred’s shares down 19 percent. Walgreens’ plan to buy 2,186 Rite Aid stores accomplishes many of the same goals as the merger – including eliminating Rite Aid as a rival – but does so in a way that makes it harder for the FTC to take the companies to court to stop the transaction.

The FTC will review the new deal. Walgreens also reported better-than-expected profit and sales for the third quarter, helped by a rise in prescription volumes in its U.S. pharmacy business. The company also authorized a $5 billion buyback program and raised the lower end of its full-year profit forecast.

Nike reported quarterly revenue and profit that topped Street estimates as the company kept a lid on costs and saw greater demand in Western Europe, China and emerging markets. Shares of the Dow component were up nearly 3 percent.

Britain intends to subject Rupert Murdoch’s takeover of European pay-TV group Sky to a lengthy in-depth investigation after finding that Twenty-First Century Fox’s $15 billion deal risks giving the media mogul too much power over the news agenda.

The proposed entity would have the third largest total reach of any news provider – lower only than the BBC and ITN – and would, uniquely, span news coverage on television, radio, in newspapers and online. Regulators will make a final decision on July 14, giving Fox two weeks to address concerns.

Blue Apron shares debuted today. The IPO stumbled but did not fall. Blue Apron’s 30-million share offering was priced at $10 per share late on Wednesday, after the company slashed its valuation expectations by a third. Shares gained 1% in the first day of trading.

Blue Apron spent roughly 18 percent of its $795 million revenue in 2016 on marketing, posting a net loss of $54 million. It has also faced steep costs of building out delivery infrastructure for fresh food. The biggest problem for Blue Apron might be Amazon-Whole Foods, which looks well-positioned to offer competition.

This should be a very interesting Fourth of July celebration in Las Vegas. Recreational marijuana becomes legal to buy Saturday in Nevada. That doesn’t mean it can be smoked everywhere only in private homes, yards or porches.

It’s prohibited in casinos, bars, restaurants, parks, concerts and on any federal property. You can’t walk down the street, or the Strip, smoking a joint. Also, prohibited in all forms at airports. No driving while stoned. And what’s smoked in Vegas stays in Vegas.

The Second Quarter T.K.O.

Friday morning the big number, the BLS Employment Situation, landed with a thud. The unemployment rate drifted down to 9.5%, private sector jobs increased by 83,000, the non-farm payroll employment loss was 125,000 and the birth/death rate adjustment figure was 144,000. Government jobs shed 90,000 and 652,000 job seekers left the market. Two-hundred twenty-five thousand temporary census workers were let go. The average workweek fell 0.1% to 34.1 hours and the average earnings also fell 0.1%.

Before we pick up our swords and shields in the third quarter to do battle for gains and profits with a rising Euro, a weakening dollar, massive state and local spending cuts, possibly minimum wage wages for California state employees, a chronically ill housing market, fugitive employment and falling consumer confidence, let’s review the barrel we found ourselves spinning in throughout the second quarter.

The second quarter was one of the most brutal trading quarters I have seen in 27 years, in investing. Here are a few second quarter headline stats from the WSJ MarketBeat Blog: for the DJIA - down 1082.61 points, or 9.97% to 9774.02, the worst quarterly performance since 1st Quarter 2009; S&P 500 Index - down 138.72 points, or 11.86% to 1030.71, the worst quarterly performance since 4th Quarter 2008; and NASDAQ - down 288.72 points, or 12.04% to 2109.24, the worst quarterly performance since 4th Quarter 2008.

These loses are comparable to those we experienced when we were in the thick of the meltdown. Unlike the express elevator to hell we were trapped in the last half of 2008 and the first quarter of 2009, this was a Six Flags rollercoaster ride that took our cash, our lunch, and our sanity. Investors should not hold their heads down in shame. Professionals did not trade this quarter well either. If this quarter had been a boxing match they would have stopped it. This was not an investors’ market and the last week in the quarter told the story.

Referees stop fights when fighters can no longer protect themselves in the ring. Boxers cannot block punches, jab, counterpunch, move on their feet, or throw a combination. Their eyes have a glassy stare. They are unaware of their circumstance.

The last week of the month and quarter is for profit taking and window dressing. Markets are purposely traded. This market, this week, responded not at all based on its whereabouts. Compare the first quarter to the second quarter.

In the first quarter, the market rallied from the start of the year until January 19th. It sold off until the first week in February. Then, it counterpunched and fought it way back to new yearly highs to end the quarter. The beginning of April saw the same fight in the market. A rotation in sectors kept the market moving forward. Traditional punches landed but did little damage to the rally.

Before the second quarter bell ranged, on March 29th, the 7-year Greek auction bombed. On April 19th, the yield spread between Greek and German bonds hit 469 basis points. Then, on April 20th, the BP oil spill occurred. These events rocked the market. On May 6th, the flash crash occurred and markets never really recovered. The market staggered for the rest of May. Investors should have exited the market here. Money managers were tightly clenched throughout June by FinReg negotiations in Washington. Markets and investors set themselves up to win the second quarter on points with improving economic data being released this week. The improvement in the economy did not materialize.

A market hurt and running out of gas whose only hope of surviving was avoiding any more blows and to catch a break. Luck turned out not to be a lady, but rather, a loud, nasty, violent drunk. The oil spill worsened with failed attempts to cap the well, accompanied by pictures of gulf coast estuaries being damaged, innocent wildlife being murdered, and the first hurricane to enter the Gulf of Mexico in June in 15 years. Also, actions of austerity around the world by governments – our allies - were counterproductive to the US economy recovery narrative. The Euro’s fall reversed. The unemployment picture did not improve.

The rally from the spring of 2009 was predicated on the assumption that economic recovery would support higher valuations. Without significant improvement going forward, the markets were overvalued. The only market that withstood the shots of international governmental policies, macroeconomic trends, and supply/demand curves was the mellow yellow – Gold. Au – 196.9665, which refused to be knocked out.

One of the most stunning championship fights in history was the 1965 rematch between, then, current Heavyweight Champion Mohammed Ali and former Heavyweight Champion Sonny Liston. For years, boxing fans argued about the “phantom punch” which knocked out Liston in the first round. Today, we’re still debating what caused the May 6th flash crash. The bottom line is that the explanation or truth for either event is moot; history has recorded Sonny Liston’s loss in a small auditorium in Lewiston, Maine and the 1,000 point drop within minutes did grave technical and psychological damage to the markets.

This third quarter market is no longer the same cyclical bull rally that began in the spring of 2009. The bell has rung, the secular bear is advancing across the ring and he is fighting mad.