Financial Review

Record High Close

Sinclair Noe — September 12, 2017

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DOW + 61 = 22,118.86
SPX + 8 = 2496
NAS + 22 = 6454
RUT + 8 = 1423
10 Y + .05 = 2.17%
OIL + .07 = 48.30
GOLD + 4.40 = 1332.40

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Vol.	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	4,090.9	$67.79B	$1.84B	39.05%	1	-1.41%	-7.54%
	Ethereum	ETH	290.01	$27.21B	$748.65M	15.85%	0.0699279	-1.32%	-9.75%
	Bitcoin Cash	BCH	531.44	$8.30B	$268.92M	5.70%	0.121699	-1.40%	-8.80%
	Ripple	XRP	0.20765	$7.94B	$95.49M	2.02%	0.00005036	-0.82%	-4.57%
	Litecoin	LTC	65.650	$3.36B	$462.01M	9.78%	0.0154368	-0.53%	-12.62%
	Dash	DASH	319.73	$2.43B	$27.77M	0.59%	0.0780748	-1.96%	-3.01%
	NEM	XEM	0.25413	$2.20B	$3.78M	0.08%	0.0000595	-1.16%	-16.76%
	Monero	XMR	109.25	$1.65B	$39.90M	0.85%	0.0266699	-2.43%	-7.19%
	IOTA	MIOTA	0.56000	$1.59B	$31.88M	0.68%	0.00013947	-5.37%	-8.24%
	Ethereum Classic	ETC	14.9243	$1.36B	$158.83M	3.36%	0.00346056	-0.63%	-16.68%

The last time the Dow hit a record high was August 7 at 22,118.42. Since then, the market has had a few startling declines. And yes, stocks are expensive at these levels, and you must think the market might be susceptible to Fed tightening, or some sort of exogenous event – but today, the world to not explode, so it’s all good – until it isn’t.

The monthly Job Openings and Labor Turnover Survey, or JOLTS, released by the Labor Department showed the labor market continued to tighten even as job openings rose to a record high in July. Skilled labor and experienced workers are in short supply.

Job openings, a measure of labor demand, increased by 54,000 to a seasonally adjusted 6.2 million. The highest level in 17 years. Job openings have now been above 6 million for two straight months. Hiring increased 69,000 to 5.5 million in July, lifting the hiring rate to a near 1-1/2-year high of 3.8 percent from 3.7 percent in June.

About 3.2 million Americans voluntarily quit their jobs in July, up from 3.1 million in June. The quits rate is a measure of job market confidence. People leave one job to take another, hopefully better job. Part of the problem with the labor market is that firms have not been willing to pay to attract workers, and so workers stay in their current job.

The JOLTS data signal that the labor market was in solid shape in July. However, we could see a drop in the monthly jobs report due to disruptions from Hurricanes Harvey and Irma. Still the JOLTS data should be enough to bolster the Federal Reserve’s position that the labor market has largely recovered.

A separate report from the National Federation of Independent Business showed a record share of small businesses in August ranked difficulties finding qualified workers as “their top business problem.” The rise in job vacancies in July bolsters views that August’ s moderation in job gains was largely because of a seasonal quirk.

The Census Bureau report median household income in America was $59,039 last year, surpassing the previous record of $58,655 set in 1999. The figure is adjusted for inflation. The Census said the uptick in earnings occurred because so many people found full-time jobs last year, rather than a big increase in wages.

America’s poverty rate fell to 12.7 percent, the lowest since 2007, the year before the financial crisis hit. The percent of Americans without health insurance for the entire year also dropped in 2016 to just 8.8 percent, the lowest ever, largely thanks to expanding coverage under the Affordable Care Act. Some 28.1 million people lacked health insurance in 2016, down from 41.8 million in 2013.

So, one of the big reasons why there is less poverty is because of safety net programs, not because of increased wages. Social Security, for example, reduced the number of people in poverty by 8.15 percent last year; refundable tax credits like the EITC reduced the number of people in poverty by 2.55 percent.

Even though the median household income is at the highest level since 1999 and even though the number is adjusted for inflation, it may not mean that Americans are earning more because the Census Bureau has changed the methodology for calculating the data. The Economic Policy Institute crunched the Census data to account for the change. The 2016 median income figure remains 1.6% below its 2007 level and 2.4% below where it was in 1999.

There are still big disparities between race and class. Median income for African-American households was only $39,490 last year, far lower than $65,041 for whites. Asians fared the best, earning $81,431. The rich also continue to get wealthier, while the nation’s poorest families — the bottom 20 percent who earn $24,000 or less — remain worse off financially than they were in 1999.

The CoreLogic Home Price Index shows home prices nationwide, including distressed sales, increased year over year by 6.7 percent in July 2017 compared with July 2016 and increased month over month by 0.9 percent in July. In Arizona, home prices increased 6.2% year-over-year and 0.6% month-over-month.

While mortgage interest rates remain low, there are growing concerns about affordability as one-third of the top US cities are now considered overvalued. It is interesting to consider that home prices have been rising much higher and faster than incomes. It would be nice if we could switch that and have incomes growing faster than housing prices – or at least keep pace.

U.S. News & World Report released its new college and university rankings. Princeton University topped the national university list for the seventh straight year, and Williams College led the liberal arts list for the 15th straight year. Cal-Berkeley and UCLA shared top honors for public universities.

Some 16 million people in Florida have no electricity. While some homes may see power restored within days, utilities said that other customers may have to wait weeks. Florida Power & Light plans to send out 16,000 workers, including crews on loan from other utilities. The company has also deployed drones to assess problems from the air.

The storm brought havoc to Georgia and South Carolina as well. More than 500,000 people evacuated Georgia’s coastal communities, some of which saw storm surge running through their streets. Six deaths in Florida have been blamed on Irma, along with three in Georgia and one in South Carolina. At least 35 people were killed in the Caribbean last week.

Never waste a crisis. The thinking is that economic fallout from the Hurricanes Harvey and Irma would only raise the sense of urgency to bring some type of tax relief to businesses and consumers. Trump has pushed for slashing the corporate tax rate to as low as 15% from a top rate of 35%, but Congress is reportedly looking to split the difference. Negotiations between the White House and Congress appear to be focusing on a rate closer to 23%, according to the Washington Post. Or perhaps a bit higher.

Asked if a 15% goal was feasible, Treasury Secretary Steven Mnuchin said at a hedge-fund conference, “I don’t know if we will be able to achieve that.” The big question: How to pay for it?

The White House has floated the idea of killing of certain loopholes such as a tax break for Wall Street hedge-fund managers and even possibly ending the popular deduction for mortgage interest. Yet congressional leaders have told the White House the mortgage deduction is off limits. A major reduction in the corporate rate would increase deficits.

Apple unveiled the new iPhone X, but we are all expected to say “ten” instead of “X”. It is not the tenth iteration of the iPhone, but it will mark the tenth anniversary, even though it seems iPhones have been with us much longer. It will feature a faster processor, better camera, no home button, Face ID, wireless charging, an edge-to-edge display and augmented reality. And a $999 price tag. You do not have to pay full retail.

Apple also announced the iPhone 8 and 8 Plus will go on sale this month; they are also new phones or at least updated, and cheaper than the X, but it seems unlikely they will be the big sellers. Also, a new Apple watch and Apple 4K television. The iPhone X won’t be available for pre-order until October 27. It is expected to begin shipping by November 3.

Apple’s annual iPhone event also marked the public’s first look at Apple’s new “spaceship” headquarters in Cupertino. While the main campus wasn’t available to the press to tour, Apple hosted its iPhone keynote underground at the new Steve Jobs Theater, an all-glass enclosure that cost around $14 million to build.

Executives from JPMorgan Chase, Bank of America and Goldman Sachs warned that trading conditions during the third quarter were likely to be poor for their banks. Revenue from trading of stocks and bonds continues to suffer from decreased market activity and volatility. Bank of America sees revenue from trading stocks and bonds likely to decline around 15 percent in the third quarter compared with the year-ago period.

JPMorgan CEO Jamie Dimon gave an even more downbeat forecast for his bank, predicting a 20 percent drop in trading revenue. Goldman execs said conditions for fixed-income trading have not improved much since the beginning of the year, but he declined to be specific.

Financial Review

The Deadline Is Near

Sinclair Noe — May 28, 2015

Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)

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DOW – 36 = 18,126
SPX – 2 = 2120
NAS – 8 = 5097
10 YR YLD + .01 = 2.14%
OIL + .46 = 57.97
GOLD – .02 = 1188.20
SILV + .01 = 16.76

The National Association of Realtors’ index of pending home sales increased in April for the fourth consecutive month to reach the highest level in nine years, signaling that upcoming deals could pick up. The pending home sales index climbed 3.4 percent to 112.4 last month. The index now is at its highest since May 2006.Lawrence Yun, NAR’s chief economist said: “Realtors are saying foot traffic remains elevated this spring despite limited – and in some cases severe – inventory shortages in many metro areas.”

The number of Americans filing new claims for unemployment benefits rose last week, but remained at levels consistent with a strengthening labor market. Initial claims for state unemployment benefits rose 7,000 to a seasonally adjusted 282,000 for the week ended May 23. Today’s report from the Labor Department shows companies are laying off the fewest number of employees since the government began keeping track several decades ago.

Median household income is showing improvement. According to the latest data from Sentier Research, which derives the results from government figures, the median annual household income rose 0.6% in April to $54,578. That’s 3% higher than the same month of 2014, and 6.2% higher than Aug. 2011. However, median income is still 2.9% worse than before the recession in Dec. 2007.

Federal Reserve Bank of St. Louis President James Bullard has joined the chorus of Fed policymakers calling for a rate hike later this year. Bullard said a prolonged accommodative stance is a “recipe for asset-price bubbles and a lot of mischief to happen. Asset price bubbles have been a devastating feature for the U.S. economy in the last 15 years.” Still Bullard says he is waiting for economic data to show the economy is getting stronger. Tomorrow we’ll get the revision to first quarter GDP, which was initially reported at 0.2% growth; the revision is expected to show contraction.

The Shanghai Composite has ended a seven-day winning streak with a bang, wiping out 6.5% to record its second-worst session of 2015, while the tech-heavy Shenzhen Composite lost 5.5% – its third biggest fall in five years. Until Thursday China’s benchmark index had surged more than 50% this year, despite widespread concerns that the market was in bubble territory. The plunge also highlighted the warnings Credit Suisse gave clients earlier this week: “At some point, there will be a massive correction of these stocks, in our view. Avoid this space!!!”

Japanese shares rose for a 10th session today as the yen traded at its lowest level since 2002. The Nikkei closed up 0.4% at 20,551 – marking its longest winning streak since a 15-day run that ended in March 1988. Meanwhile, Japan’s retail sales rebounded modestly in the year to April following three straight months of falls, bolstering the case that consumer spending is reviving.

The dollar rose to its highest level against the yen in more than 12 years today. The euro weakened slightly against the dollar, as investors waited for more information on the status of a deal between Greece and its creditors, (which is still up in the air.)

The G-7 is meeting in Germany today. The official topics for the summit range from the state of the global economy, to financial regulation, fighting tax evasion and ways stopping funding for terrorist groups like ISIS. The big unofficial conversation was about Greece. The ECB warned that the Greek crisis could pose a risk to financial stability in the euro area in the future. Germany’s finance minister said there were no significant breakthroughs. The Greeks are drafting an accord with creditors, and hope to have something substantive by Sunday. Something is about to happen with Greece, they face a June 5 deadline to make a payment of $235 billion and as we all know, they don’t have the money. US Treasury Secretary Jack Lew is at the G-7 summit and he said: “It’s a mistake to think that a failure is of no consequence outside of Greece. We don’t know the exact scope.”

What we do know, or at least have seen is that the Troika, which is the ECB, the IMF, and the Euro Monetary Union represent the Euro banks and other financial institutions, and their position has been intractable; they demand austerity, even though it has not worked and will not work. The Greeks have already made big cuts in the budget, pensions slashed 40%, health care and public services cut back, payrolls reduced, public works programs shuttered; and the result is unemployment has climbed to more than 25%, runs on the banks, increased infant mortality, increased suicides, and the debt to GDP rate has skyrocketed despite massive cuts in spending. Apparently starvation does not result in prosperity.

And yet the Troika remains inflexible, and the likely reason is that if Greece gets a break and some of its debt is forgiven, the problems will spread to Spain, Portugal, and Italy. IMF Director Christine LaGarde says a comprehensive solution is very unlikely in the next few days. There is a very good chance that the Greek situation could end in default, which could end in exit from the Euro Union, which could end the Euro Union. So, this is serious stuff. I know we’ve been talking about this for quite some time, but the deadline is now just a few days away.

Chip maker Avago Technologies agreed to buy rival Broadcom for $37 billion in cash and stock. Avago makes chips for wireless-communications and corporate-data-storage markets. Broadcom supplies the vast majority of chips used in the latest networking switches found in corporate data centers, a fast-growing business that could enhance Avago’s communications-focused revenue stream.

Amazon wants to make your impulse buys even more impulsive. The e-commerce powerhouse is offering free same-day delivery service in some cities to its Prime loyalty club members. Amazon says starting Thursday more than 1 million items including books, electronics and vacation gear will be eligible for same-day delivery in 14 metro areas including New York, Los Angeles, the San Francisco Bay Area, Philadelphia, Atlanta, and Phoenix. Orders over $35 are eligible for the service. They need to be placed by noon and will be delivered by 9 p.m. Orders under $35 can still have one day delivery, it just costs $5.99.

You probably use Google for searches on your computer. But you don’t take your computer with you the same way you take your phone with you. You spend lots of time on your phone jumping from one app to another trying to find whatever it is you’re trying to find. Users are engaging more and more with programs that have no attachment or they need to search on the broad web, and as a result Google’s position as the owner of our habits, interests, and needs on the internet has looked increasingly at risk. So, Google came up with a new idea to help you find what you want, no matter where you are on the phone. They call it Now on Tap, and it hovers above any app on your phone or tablet. An example: You’re writing an email to a friend about catching a movie. Tap and hold the phone or use a voice command, and a card with information on the movie pops up inside the email app.

Now this is important for Google because it reasserts their dominance over your digital life away from your computer; it also gives Google access to user behavior and needs. And to go a step further, it allows Google to act as the glue, or the connector between apps. And that means that Google Now could tap into the core functions of your apps and then predict what you want and execute on what you most likely need, in a seamless sort of fashion. At least that’s the idea.

Meanwhile, Apple is readying a major new iOS initiative codenamed ‘Proactive,’ which will leverage Siri, Contacts, Calendar, Passbook, and third-party apps to create a viable competitor to Google “Now”.  Like Google Now, Proactive will automatically provide timely information based on the user’s data and device usage patterns. During a Code Conference yesterday, Apple’s operations boss Jeff Williams dropped a hint that the company is working on an electric vehicle, declaring the car to be “the ultimate mobile device.”

Also at the Code Conference: GoPro CEO Nicholas Woodman said his company is working on a quad-copter drone and will introduce a sixteen-camera device to capture 360-degree spherical video, which will allow recording for video and pictures for virtual reality. It could be available in the second half of this year. Google built the rendering technology for the camera array, which means the 3-D videos will live on YouTube. Some of YouTube’s top video makers will be the first to get access to the camera, starting in July. And Google will have a virtual reality headset starting at about $20, to bring 3-D to the masses. And if you would like to order a VR headset, you can use Android Pay, which is the updated version of Google Wallet, and meant to compete with Apple Pay.

And one more thing, Google is coming out with its own platform for the internet of things, a very small operating system called “Brillo” that requires very little power. For example, it might be connected to the front door of your home. When the door is locked, it would also lock your home computer or TV or phone or make sure the lights are turned off. It would also position Google as the ‘invisible backbone of tomorrow’s smart home’.