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

Oh Canada

Sinclair Noe — April 25, 2017

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

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DOW + 232 = 20,996
SPX + 14 = 2388
NAS + 41 = 6,025
RUT + 13 = 1411
10 Y + .05 = 2.33%
OIL + .13 = 49.36
GOLD – 12.00 = 1265.00

This has been a very strong start to the week. The Dow Industrial Average has added about 460 points in the past two sessions and traded above 21,000. The S&P 500 has gained about 40 points. Both the Dow and the S&P are now back above their 50-day moving averages.

The Nasdaq Composite broke through 6,000 for a record high. To put this in perspective, the Nasdaq broke above the 5,000 milestone on March 9, 2000 – 17 years ago. Simple math tells you that the Nasdaq has returned just over 1% per year, on average, for the past 17 years. Of course, there was nothing average about the past 17 years.

The week started with somewhat positive news about the French elections, which translated to a risk-on trade for global markets; combined with easing geopolitical tensions; plus, the hope for some sort of tax cut measure to be announced tomorrow.

The threat of a US government shutdown this weekend appeared to recede after President Trump backed away from a demand that Congress include funding for his planned border wall with Mexico in a spending bill. However, even if the fight over wall funding is over, Republicans and Democrats still have some difficult issues to resolve as they face a Friday night deadline.

The big driver in the 2-day rally has been earnings, coming in much stronger than estimates. With half of the Dow 30 Industrial companies reporting earnings, with 11 beating earnings expectations, according to FactSet. That 73% beat rate is above the 5-year average of 68% for S&P 500 companies.

I know that is a little of an apples-to-oranges comparison, but still, it has been a good earnings reporting season so far.  The shares of the Dow companies that have revealed results have gained a combined total of $21.80 in price since the reports were released through Tuesday afternoon, with 10 winners rising a combined $36.33 and five losers falling $14.46.

The combined price gains are adding about 149 points to the Dow, which is a price-weighted index. That would represent about 36% of the Dow’s 417-point gain since earnings season started. The stocks of the five Dow companies that reported results today were adding about 125 points to the Dow’s price. Caterpillar and McDonald’s combined to add 100 points to the Dow today.

McDonald’s reported first-quarter earnings and sales that topped analysts’ most bullish estimates amid declining visits to restaurants industry-wide. McDonald’s cut prices and offered a smaller Big mac and a bigger Big Mac, plus they are doing well with all-day breakfast – that helped lift sales in the US by 1.7%. Global sales at stores open for at least one year — so-called comparable store sales — rose by 4%. Earnings and revenue beat estimates.

Caterpillar announced higher-than-expected earnings and revenue. In a press release, noted strong cost cutting measures, while downplaying guidance, writing: “While Caterpillar had strong first-quarter performance and is seeing signs of recovery in several of the industries it serves, geopolitical and market uncertainty along with volatility in commodity prices continue to present risks for the rest of the year.”

Coca-Cola reported a smaller-than-expected quarterly profit due to higher costs related to refranchising its North America bottling operations. Global soda sales fell 1 percent in the first quarter. Coke missed earnings estimates but beat revenue estimates.

AT&T’s quarterly revenue missed estimates on lower equipment sales, as customers held onto their phones longer and did not buy new replacement phones. AT&T lost 61,000 wireless subscribers who pay a monthly bill. Earnings also missed estimates. AT&T, which is in the process of acquiring Time Warner, also said it would no longer give a full-year revenue forecast due to the unpredictability of wireless handset sales.

3M, which makes Scotch tape and Post-it notes, raised its 2017 profit forecast and reported better-than-expected quarterly results, helped by growth across its major businesses. 3M beat earnings and revenue estimates.

Chipotle Mexican Grill reports same store sales rose almost 18 percent in the first quarter.  Sales by that measure had previously declined for five straight quarters following an E. coli outbreak and other food-poisoning incidents that began in 2015. Chipotle is still grappling with higher labor costs and a tight market for restaurant employees.

The chain raised menu prices at about 440 of its 2,200 locations earlier this month to cope with escalating expenses. Still, they managed to beat revenue and earnings estimates. Chipotle opened 57 new restaurants during the quarter, and it reiterated plans to add as many as 210 this year.

Panera Bread plans to hire 10,000 new employees by the end of the year as they expand their delivery services. Some 75 percent of the new hires will be delivery drivers, while the remaining 25 percent will be in-cafe jobs. Panera has already rolled out delivery to 15 percent of its system, including 20 percent of its company-owned locations.

By the end of 2017, it hopes to expand delivery to 35 percent to 40 percent of system-wide locations. The delivery option is expected to add about $250,000 in revenue per restaurant. Panera is in the process of being acquired by privately held JAB Holding in a deal valued at about $7.5 billion.

Earnings season kicked off with the big banks and today Wells Fargo and Citigroup held their annual shareholders’ meetings. It did not go well. Wells’ meeting ran nearly three hours, was repeatedly interrupted by angry shareholders seeking answers about how and why thousands of bank employees could open 2.1 million fake accounts in customers’ names without their permission.

Several shareholders were physically escorted out of the meeting. Proxy adviser Institutional Shareholder Services (ISS) argued the Wells Fargo directors failed in their oversight duties. All directors were re-elected but several, including Chairman Stephen Sanger, barely had a majority of votes. Hardly a show of confidence, and an indicator that we could see a shakeup in the board soon.

Citigroup is one of four lead banks in a group of 17 which have provided project financing for the Dakota Access Pipeline. The pipeline crosses land of the Standing Rock Sioux whose members are concerned about possible ground water contamination if the pipeline breaks.

Citigroup’s shareholder meeting was disrupted by protesters, prompting a rare apology from Chairman Mike O’Neill, who said, “We wish we could have a do-over on this.” CEO Mike Corbat said Citigroup had not given enough early consideration to the concerns of the indigenous people.

The Trump administration announced a 20% tariff on lumber imported from Canada, to be applied retroactively. The trade agreement that governed imports of Canadian lumber expired at the end of 2016, and prices have been on the rise since then. The National Association of Home Builders said higher input costs had already added almost $3,600 to the price of a new home, and the tariff will add $1236 to the price of the average single family home.

The NAHB also says the proposed tariff could cost as many as 8,241 jobs and over $350 million in taxes and other revenues for U.S. governments in 2017 alone. The US lumber industry alleges Canadian wood is heavily subsidized and imports are harming U.S. mills and workers. Canada is the world’s largest softwood lumber exporter, and the U.S. is its biggest market.

Canadian lumber companies called the tariff unfair and Canadian prime minister Justin Trudeau vowed to fight back. International tribunals have considered the issue of whether Canada provides unfair subsidies to lumber exports and ruled that it does not. Log costs are lower in some parts of the US than in some regions of Canada.

The US does not produce enough lumber to meet domestic demand. Homebuilders such as Lennar, Pulte, and DRHorton all dropped today. May lumber futures dropped $10.00 at $385.10, go figure.

Meanwhile, on the southern border, Mexico and the US have been fighting for years over dolphin safe tuna. Mexico says its fisherman play by the rules. The US government disagrees. Today, the World Trade Organization ruled in Mexico’s favor, allowing it to impose trade sanctions worth $163 million a year against the US. The WTO says that’s how much money Mexico has lost from the US unfairly penalizing Mexican tuna.

A US judge has blocked President Trump’s executive order that sought to withhold federal funds from sanctuary cities. The ruling said Trump’s order targeted broad categories of federal funding for sanctuary governments and that plaintiffs challenging the order were likely to succeed in proving it unconstitutional.

The Conference Board said its consumer confidence index fell to 120.3 this month from 124.9 in March, which was the highest reading since December 2000. The index in April was the second highest reading since 2000. Consumers’ assessment of labor market conditions was slightly less favorable than in March. That measure closely correlates to the unemployment rate in the Labor Department’s employment report.

House prices continued to show no signs of slowing, hitting their highest in nearly three years. The S&P/Case-Shiller 20-city index rose 5.9% in the three-month period ending in February compared to the same period a year ago, an acceleration from its 5.7% yearly increase in January. This is the highest rate since July 2014. The 20-city index was up 0.4% for the month, or a 0.7% gain when seasonally adjusted. Phoenix saw a 0.4% gain in the last month, and 5.3% over the past year.

The Commerce Department said new home sales jumped 5.8 percent to a seasonally adjusted annual rate of 621,00 units last month, the highest level since July 2016. New home sales were up 15.6 percent compared to March 2016. They have now increased for three straight months.

Financial Review

Go Figure

Sinclair Noe — February 8, 2017

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DOW – 35 = 20,054
SPX + 1 = 2294
NAS + 8 = 5682
RUT – 2 = 1358
10 Y – .04 = 2.35%
OIL + .19 = 52.97
GOLD + 8.10 = 1242.50

Another record high for the Nasdaq Composite, its 12th all-time close of 2017.

The American Petroleum Institute reported crude supplies rose by 14.2 million barrels last week, undermining OPEC’s efforts to re-balance global markets. The Energy Information Administration said that the U.S. will pump the most crude next year since 1970, as OPEC cuts lift prices and benefit domestic producers.

And in its weekly report this morning, the EIA reported a larger-than-expected increase in crude-oil supplies—their fifth weekly rise in a row and the second-biggest on record, based on EIA data going back to 1982.

Crude inventories climbed by 13.8 million barrels in domestic crude-oil supplies for the week ended Feb. 3. Weekly crude stockpiles haven’t climbed by this much since the week ended Oct. 28. Crude oil prices reversed an earlier loss and eked out a gain on the day. Go figure. Best guess is that the report also showed gasoline supplies fell by 900,000 barrels. Sorry, but that’s about the best excuse I can come up with.

Intel will invest $7 billion to build a new chip factory in Arizona. Brian Krzanich (pronounced Krah-ZAN-nitch – you're welcome) the CEO of Intel says that tax cuts and deregulatory policies pushed by President Trump prompted the company to move forward with its plans to complete the Fab 42 plant.

The completion of Fab 42 in 3 to 4 years will directly create approximately 3,000 high-tech, high-wage Intel jobs for process engineers, equipment technicians, and facilities-support engineers and technicians who will work at the site. Combined with the indirect impact on businesses that will help support the factory’s operations, Fab 42 is expected to create more than 10,000 total long-term jobs in Arizona.

The 7-nanometer semiconductor manufacturing process targeted for Fab 42 will be the most advanced semiconductor process technology used in the world.

Japanese display maker Sharp Corp may start building a $7 billion plant in the United States in the first half of 2017, taking the lead on a project initially outlined by its Taiwanese parent Foxconn. Japanese Prime Minister Shinzo Abe is scheduled to meet President Trump in Florida this weekend. Abe will reportedly unveil a package of investments to create as many as 700,000 US jobs. The investment will be by a Japanese consortium that will also include manufacturing equipment makers.

Britain’s House of Commons gave its final approval Wednesday to a bill authorizing the government to start exit talks with the European Union, despite fears by opposition lawmakers that the U.K. is setting out on the rocky path to Brexit with a sketchy road map. The bill now goes to the House of Lords, which has the power to delay — but not to derail — the legislation; it should become law within weeks.

Volkswagen has launched a U.S. subsidiary designed to oversee $2 billion in investments to promote zero-emission vehicles, a commitment the German auto giant made in the wake of Dieselgate. The Electrify America unit will open more than 500 EV charging stations as it works toward building out a national network. VW will also launch a “Green City” initiative in a yet-to-be-identified California city to pilot future concepts.

According to a court filing, Takata will plead guilty on Feb. 27 to a single felony count of wire fraud to resolve a DOJ investigation into ruptures of its air bag inflators linked to at least 16 deaths worldwide. Last month, the auto parts firm agreed to the guilty plea as part of a $1 billion settlement in the world’s largest-ever recall.

Time Warner reported higher-than-expected fourth-quarter results, largely due to box office hits such as the “Harry Potter” spinoff “Fantastic Beasts.” Time Warner reported an 11.5% rise in quarterly revenue and said the planned $84 billion merger with AT&T remained on track to close later this year.

Swiss pesticides and seeds group Syngenta pushed back the expected closure of its agreed $43 billion takeover by ChemChina to the second quarter of 2017, but said it was making progress in winning regulatory approval for the deal.

Humana earned an adjusted $2.09 per share for its latest quarter, while revenue was slightly below projections. Humana said that it added members in its Medicare Advantage business, and that it would give an update on its transaction to be bought by Aetna by February 16. That deal was blocked in a court ruling last month.

Allergan earned an adjusted $3.90 per share for its latest quarter, beating estimates of $3.76 a share. Its revenue also came in above forecasts on increased sales of Botox and other therapeutic treatments.

Shares of Microchip Technology are up, continuing last night’s gains, after the chip maker yesterday afternoon beat fiscal Q3 expectations and topped consensus as well.

Shares of Panera Bread surged to a record high and the biggest one-day move in almost two years after the company gave an upbeat forecast and said technology investments at its restaurants were paying off.

Whole Foods Market reported revenues and comparable sales that fell short of Wall Street’s expectations. Whole Foods also lowered full-year sales and earnings guidance in wake of the weak results.

Alaska Air, the fifth-largest U.S. carrier, beat estimates by 16 cents a share, with adjusted quarterly profit of $1.56 per share. Revenue beat forecasts and the company also increased its quarterly dividend.

Canada’s government will provide $282 million in support for Bombardier to help fund two jet programs, including the C Series, the single-aisle plane that competes with Boeing and Airbus Group SE products. After landmark sales of the jetliner to Air Canada and Delta Air Lines in 2016, the company is now seeking new orders while also targeting the first delivery of the Global 7000, its largest business aircraft.

Bank of America is opening robo branches. The bank has opened three automated branches over the past month and has plans to roll out more over the next year. Customers can use ATMs and have video conferences with employees at other offices. BofA is set to open 50 to 60 new branches over the next year, but will also be closing some in certain markets, so they will not represent a net increase.

At its height, back in 2000, the US cash equities trading desk at Goldman Sachs’ New York headquarters employed 600 traders, buying and selling stock on the orders of the investment bank’s large clients. Today there are just two equity traders left. Automated trading programs have taken over the rest of the work, supported by 200 computer engineers.

The experience of its New York traders is just one early example of a transformation of Goldman Sachs, and increasingly other Wall Street firms, that began with the rise in computerized trading, but has accelerated over the past five years, moving into more fields of finance that humans once dominated.  Some areas of trading, like currencies and even parts of business lines like investment banking are moving in the same automated direction that equities have already traveled.

Today, nearly 45 percent of trading is done electronically, per Coalition, a UK firm that tracks the industry. Complex trading algorithms, some with machine-learning capabilities, first replaced trades where the price of what’s being sold was easy to determine on the market, including the stocks traded by Goldman’s old 600.

Now areas of trading like currencies and futures, which are not traded on a stock exchange like the New York Stock Exchange, are coming in for more automation as well. To execute these trades, algorithms are being designed to emulate as closely as possible what a human trader would do.

Goldman Sachs has already begun to automate currency trading, and has found consistently that four traders can be replaced by one computer engineer. Some 9,000 people, about one-third of Goldman’s staff, are computer engineers.

Goldman’s new consumer lending platform, Marcus, aimed at consolidation of credit card balances, is entirely run by software, with no human intervention. Next, will be the automation of investment banking tasks, work that traditionally has been focused on human skills like salesmanship and building relationships.

Though those “rainmakers” won’t be replaced entirely, Goldman has already mapped 146 distinct steps taken in any initial public offering of stock, and many can – and will – be automated. Reducing the number of investment bankers would be a great cost savings for the firm. Investment bankers working on corporate mergers and acquisitions at large banks like Goldman make on average $700,000 a year, per Coalition, and in a good year they can earn far more.

Financial Review

Let’s All Go to the Movies

Sinclair Noe — January 24, 2017

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

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DOW + 112 = 19,912
SPX + 14 = 2280
NAS + 48 = 5600
RUT + 21 = 1369
10Y + .07 = 2.47%
OIL + .31 = 53.06
GOLD – 8.90 = 1209.80

The S&P 500 and Nasdaq set record highs.

It was a busy first day for President Trump. Here are some of the highlights: Withdrew from TPP, promised to renegotiate NAFTA, placed a hiring freeze on federal employees, discussed slashing business regulations by 75%, reinstated the Mexico City policy on banning foreign aid groups from providing abortion counseling and vowed to stop the seizure of South China Sea islands. Trump had breakfast today with the heads of GM, Ford and Fiat Chrysler, as he pressures the Big Three car-makers to boost U.S. employment.

Australia has called for the Trans-Pacific Partnership to go ahead without the U.S. following President Trump’s withdrawal from the 12-nation trade agreement. China’s foreign ministry declined to say whether Beijing would consider any invitation to join the TPP, but a spokesperson instead cited rival trade pacts.

President Trump signed two orders today to move forward with construction of the Keystone XL and Dakota Access pipelines. Trump campaigned on promises to increase domestic energy industry production and before taking office indicated he supported completion of the Dakota pipeline and revival of the Keystone XL project.

Environmental activists broadly opposed the Keystone XL pipeline and campaigned against it for more than seven years. Shares of ETP, the company building the 450,000 barrel-a-day Dakota line, rose 3.5 percent. Trump owned ETP stock through at least mid-2016, per financial disclosure forms, and ETP’s chief executive, Kelcy Warren, donated $100,000 to his campaign. U.S. Energy Secretary nominee Rick Perry was until recently on ETP’s board.

Coincidentally, the Canadian government today reported a pipeline spill in the western Canadian province of Saskatchewan has leaked about 52,000 gallons of oil. The spill came seven months after another major incident in Saskatchewan, in which a Husky Energy Inc pipeline leaked 60,000 gallons into a major river and cut off the drinking water supply for two cities.

Trump’s administration has also asked the Environmental Protection Agency to temporarily halt all contracts, grants and interagency agreements pending a review.

Rex Tillerson has been cleared by the Foreign Relations Committee. President Trump’s pick for secretary of state received backing with an 11-10 vote along party lines that “all but assures Senate confirmation,” according to the Associated Press. Meanwhile, the Senate confirmed Representative Mike Pompeo as President Donald Trump’s CIA director.  A U.S. Senate committee swiftly approved Wilbur Ross,Trump’s nominees for commerce, and Elaine Chao for transportation secretary by voice vote, signaling that they will face little resistance to approval by the full Senate.

On Jan. 11, Tillerson said China should not be allowed access to islands it has built in the contested South China Sea. Today, China responded, saying it had “irrefutable” sovereignty over disputed islands in the South China Sea after the White House vowed to defend “international territories” in the strategic waterway.

China claims most of the South China Sea, while Taiwan, Malaysia, Vietnam, the Philippines and Brunei claims parts of the sea that commands strategic sea-lanes and has rich fishing grounds along with oil and gas deposits. China’s Foreign Ministry spokeswoman said “the United States is not a party to the South China Sea dispute”.

White House press secretary Sean Spicer met the press again today, hilarity ensued. Spicer says Trump will announce a pick for the Supreme Court next week. Spicer confirmed that President Trump believes millions of people voted illegally in November’s election, despite a total absence of evidence to support this view.

The dollar slumped to the weakest level in six weeks yesterday after U.S. Treasury Secretary nominee Steven Mnuchin said an “excessively strong dollar” could have a negative short-term effect on the economy. The Dollar Index has reversed those declines this morning, moving back above 100.

The UK government lost its Article 50 case. The decision handed down by the UK’s top court says the government must receive parliamentary approval before it can trigger Article 50, the mechanism that would begin the UK’s exit from the European Union.

The proposed merger of health insurers Aetna and Humana has been blocked on antitrust grounds. A federal judge said the tie up would threaten competition and would’ve resulted in higher prices and reduced services for seniors who buy Medicare Advantage. Aetna will owe Humana a $1 billion breakup fee.

You may recall that Aetna threatened the government last summer with pulling out of 11 of the 15 states where it participated in the Obamacare individual insurance markets, claiming it was a “business decision.” The threat was made while the Department of Justice was investigating the merger but before it filed its antitrust lawsuit. After the lawsuit was filed, Aetna followed through on its threat.

However, in an opinion on the case, the judge wrote that it wasn’t just a “business decision”, there was more to it: “Aetna tried to leverage its participation in the exchanges for favorable treatment from DOJ regarding the proposed merger.” Aetna then tried to cover up that connection between the threat to pull out of those markets and the antitrust investigation to the point where the “repeated efforts to conceal a paper trail about the decision-making process” bordered on “malfeasance,” he wrote.

US District Judge Bates determined that there was “persuasive evidence that when Aetna later withdrew from the 17 counties, it did not do so for business reasons, but instead to follow through on the threat that it made earlier.”

There is still a lot of uncertainty about the impact the Trump administration’s trade and business policies will have on the economy and markets. But all this was backdrop for earnings reports, which were pouring in throughout the session. Earnings are coming in generally better than expected.

Profits of S&P 500 companies are estimated to have risen 6.7 percent in the latest quarter, marking the strongest growth in two years. The S&P 500 is trading at about 17 times forward 12-month earnings, compared with the 10-year median of 14.2.

Powered by strong chip and display panel sales, Samsung Electronics’ operating profit jumped 50% to $7.9 billion in the fourth quarter, helping the company bounce back from its costly Note 7 debacle.

BT Group saw its stock drop as much as 19 percent this morning – wiping out $9 billion in market cap – after the company cut its outlook for the coming years and revealed “inappropriate behavior” in its Italian unit had forced a tripling of provisions for losses there.

DuPont reported fourth quarter earnings beat estimates, while revenue missed estimates. DuPont also said it expected its merger with Dow Chemical to close during the first half of the year.

Verizon missed earnings estimates by 3 cents a share. Revenue beat Street forecasts. Verizon saw year-over-year revenue fall 5.6 percent as it added far fewer wireless subscribers than analysts had expected.

After the closing bell yesterday, Yahoo reported better-than-expected quarterly profit and revenue, and said the sale of its core internet business to Verizon would be delayed but  should be completed in the second quarter.

Travelers insurance company posted earnings well above estimates. Revenue also beat forecasts. Travelers did see underwriting results fall in its auto insurance sector, but that was more than made up for by improvements in other lines.

Johnson & Johnson — J&J reported earnings of $1.58 per share for the fourth quarter, 2 cents a share above estimates. Revenue came in slightly below forecasts. The medical device maker also gave a full-year forecast that falls below analysts’ estimates.

3M reported quarterly profit of $1.88 per share, 1 cent a share above estimates. Revenue was in line with estimates. The company also affirmed its full-year forecast.

Alibaba Group posted a 54 percent rise in third-quarter revenue, beating analyst estimates, helped by higher sales during its Single’s Day shopping event and increased earnings in its cloud and digital media ventures.

Lockheed Martin beat estimates for fourth-quarter revenue and earnings, but last year delivered fewer-than-forecast F-35 jets. The Pentagon’s No. 1 weapons supplier also said internal controls for financial reporting were ineffective at its Sikorsky helicopter business.

D.R. Horton, the largest U.S. home-builder, reported its highest growth in orders in more than a year. Orders rose 14.6 percent to 9,241 homes in the quarter ended Dec. 31. The average selling price for the quarter was $297,000, up 2 percent from a year earlier. Horton reaffirmed its 2017 revenue forecast.

Homebuilders gained after a report showed that U.S. home resales fell more than expected in December as the supply of houses on the market dropped to levels last seen in 1999. The National Association of Realtors reported sales decreased by 2.8% at a seasonally adjusted annual rate of 5.49 million in December.

Lawrence Yun, NAR chief economist, wrote: “Housing affordability for both buying and renting remains a pressing concern because of another year of insufficient home construction… It’ll take more entry-level supply; continued job gains and even stronger wage growth for first-timers to make up a greater share of the market.”

Rio Tinto — The mining company sold its Australian coal unit to Yancoal Australia for up to $2.45 billion in cash. Yancoal is an entity controlled by the Chinese government.

Nominations for the Oscars were announced this morning.  “La La Land” has landed a record-tying 14 Academy Awards nominations, matching it with “Titanic” and “All About Eve” for most nominations ever. The other nominees for best picture are: “Moonlight,” ”Arrival,” ”Manchester by the Sea,” ”Hell or High Water,” ”Lion,” ”Fences,” ‘Hidden Figures” and “Hacksaw Ridge.” Now, that I think about it – it might be good to go to the movies.

Financial Review

Meet the Press

Sinclair Noe — January 11, 2017

Podcast: Play in new window | Download (Duration: 12:16 — 5.6MB)

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DOW + 98 = 19,954
SPX + 6 = 2275
NAS + 11 = 5563
RUT + 2 = 1373
10 Y – .01 = 2.37%
OIL + 1.57 = 52.39
GOLD + 4.20 = 1192.50

The Nasdaq pushed to fresh record highs again. The S&P and Dow are very close to records. The S&P 500 index was unchanged yesterday – not a small move – unchanged.

So, we did a little digging. The last time the index ended a trading day flat was Jan. 3, 2008. Before 2008, the benchmark index had gone nearly 11 years without posting an unchanged day. Since 1980, the S&P has recorded just 10 unchanged sessions.

There were no top-tier U.S. economic reports, nor any Fed speeches. President-elect Trump held his first press conference since the election, and yes, it moved the markets.

The healthcare sector dropped after Trump said the country needs more competitive drug bidding. He said pharmaceutical companies are “getting away with murder” by charging high drug prices. Health care dropped more than 1.5 percent as the worst performer in the S&P 500, with the pharmaceuticals sub-sector down more than 1.5 percent and the biotechnology sub-sector off nearly 3 percent.

Lockheed Martin dropped about 1 percent after Trump said the F-35 fighter jet project “is way behind schedule and billions over budget.” Mexico’s peso weakened to a historic low of 22 per dollar, then bounced higher. Gold gained and the Dow dropped.

The dollar dropped as Trump talked about trade but then rebounded when Trump said: “There will be a major border tax on these companies that are leaving and getting away with murder and if our politicians had what it takes they would’ve done it years ago.”

Trump insisted he will not divest himself of his businesses as he assumes the presidency; he will turn over operations to his two oldest sons and will not be involved in operations. The Trump Organization will not enter into any new deals with foreign partners.

Prior to the press conference a Trump lawyer said any profits from foreign government payments to his hotels will be donated to the US treasury. The press conference probably raised as many questions as it answered regarding conflicts of interest.

Trump first said he thinks Russia directed cyberattacks on Democratic Party targets, but later made his view less clear. He said the hacking activity “could be others” and repeatedly deflected attention to attacks by China and other foreign countries and institutions.

He contended that Russia will no longer hack the U.S. when he is president but did not answer questions about whether he will uphold Obama administration sanctions in response to suspected interference in the 2016 election.

Trump blasted BuzzFeed for reporting on unverified allegations that Russia put together compromising information on him. Trump called BuzzFeed a “failing pile of garbage,” arguing the online media outlet “will suffer the consequences.” He also took CNN to task for “going out of their way to build it up,” before refusing to take a question from CNN’s Jim Acosta; saying, “Your organization is terrible. I am not going to give you a question, you’re fake news.”

This story about a possible Russian dossier of compromising info about Trump also raises more questions than it answers, not just about Trump, or the media, but also about the intelligence community. Strange days indeed.

So, it was an interesting and unique press conference. It also shifted focus off the confirmation hearings, which continue on Capitol Hill.

The World Bank says global growth will pick up slightly in 2017. The World Bank has lowered its 2017 global growth forecast to 2.7% from its June outlook of 2.8%, but that would still be ahead of the 2.3% growth that was experienced in 2016.

The World Economic Forum told us what to worry about. WEF’s Global Risks Report, which sets the agenda for the annual confab of global heavyweights in Davos next week, identified rising nationalist sentiment, economic inequality, technological disruption (i.e., jobs becoming obsolete), and climate change as the biggest risks in 2017.

The environment is now considered not just more likely to cause global disruption, but also more capable of generating the biggest impact. The report concludes that the biggest risk for 2017 is “extreme weather events.” It’s not as if the economic risks have just magically melted away. It’s just that environmental problems are considered more urgent than before. Solutions will be discussed by world leaders and corporate bigwigs in Davos next week.

Some of those ideas were echoed in research from Wells Fargo Investment Institute which says we are in the “age of discontent” and we should invest accordingly. The report says households across the country have felt economic recovery to very different and uneven degrees post-financial crisis, according to the report, which attributes such “discontent” for market participants to frustration across economic classes, along with increased political uncertainty on the horizon.

The stark differences in economic recovery might be found in the employed versus the unemployed, savers versus consumers, and small business versus large corporations. What’s more is economic growth is not improving quickly enough for many, the report added, citing wage and real income stagnation as forces “fueling protectionism and geopolitical unrest.”

US oil output is expected to rise in 2017 and 2018. A report released by the US Energy Information Administration on Tuesday showed US crude-oil production was expected to increase by 110,00 barrels a day in 2017 to 9 million and by another 300,000 barrels a day in 2018.

Bill Gross of Janus Capital, who was once referred to as the “Bond King,” says the 2.60% level on the 10-year Treasury yield is what everyone should be watching, as a breakout above that level would mark the end of the 30-year bull market in bonds.

Gross says the 2.6% level is “much more important than Dow 20,000. Much more important than $60-a-barrel oil. Much more important that the dollar/euro parity at 1.00. It is the key to interest rate levels and perhaps stock price levels in 2017.”

Jeff Gundlach, CEO of Doubleline Funds (sometimes called the NEW “Bond King”) says the bond bull market is dead if the 10-year hits 3.00%. During the presentation of his 2017 outlook, Gundlach said a move to 3.00% and above would have “a real impact on market liquidity in corporate bonds and junk bonds.”  If the 10-year moves back above 3% it will be the end of lower-highs in the recent trend and signal, finally, the end of an era.

Gundlach also covered high yield or junk bonds; the major points from his presentation: defaults are high, the rally is entirely predicated upon rising oil prices but seems overdone because the last time spreads were this tight oil was at $80.

Gundlach said: “Many people seem to think that because junk bonds had a great 2016 that they’re somehow not vulnerable to interest rate hikes. Nothing could be further from the truth. The junk bond market has decent interest rate risk on it, it’s just that they were depressed with commodities so low.”

As for stocks, Gundlach says they are overvalued on almost every metric. Looking at forward price/earnings ratios Gundlach says we would need a combination of buybacks funded by repatriated cash, plus lower taxes and some pro forma magic to justify valuations.

Looking to stoke demand for electric cars, BMW, VW, Ford and Daimler are aiming to build a network of ultra-fast charging stations across Europe. The 400 next-generation 350 kilowatt chargers would be nearly three times as powerful as Tesla’s, reloading an electric car in minutes instead of hours.

Airbus’s productivity surged in December, allowing it to record a full year delivery of 688 planes, but it still fell short of rival Boeing, which rolled out 748 jets to customers. But in the race for new business, Airbus recorded 731 net orders in 2016, compared with the 668 of Boeing. Still, the combined book-to-bill ratio of the two giants dipped below 1 for the first time since 2009, placing a dent in record industry order backlogs.

Canada’s largest alternative-asset manager has submitted proposals regarding its interest in buying the yieldcos of bankrupt solar company SunEdison. Brookfield Asset Management would purchase all of TerraForm Power for $11.50 per share in cash, or a total consideration of $1.6B, and may even raise its offer to $12.50 per share if it can also buy TerraForm Global.

Financial Review

Undo Send

Sinclair Noe — June 23, 2015

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DOW + 24 = 18,144
SPX + 1 = 2124
NAS + 6 = 5160
10 YR YLD + .05 = 2.41%
OIL + .33 = 61.01
GOLD – 7.90 = 1179.00
SILV – .33 = 15.94

This was a flat day on Wall Street. Most of the session saw the major averages hovering around breakeven. The Nasdaq Composite eked out another record high. The economic news was mixed; durable goods orders were weak but new home sales were fairly strong. While stocks have been trading in a very tight range to start the year, some might call it boring. The Standard & Poor’s 500 index hasn’t posted a gain or loss of 2 percent or more for 126 days, the longest streak since one ending in February 2007. Meanwhile, the bond market has been pretty exciting but not in a good way. Longer-dated Treasuries have been jumping all over the place, posting some of the biggest back-to-back gains and losses on record as the Federal Reserve talks about raising interest rates and European leaders act out a Greek tragedy.

The bond market is supposed to be a safe haven, and so bond investors have pulled $327 million from exchange-traded funds focused on this longer-dated debt in the past week alone, and $1.4 billion year-to-date.

The Commerce Department says non-defense capital goods orders excluding aircraft rose 0.4 percent last month. Overall orders for durable goods fell a seasonally adjusted 1.8% last month, but the decline stemmed mostly from a 35% plunge in bookings for commercial aircraft. Apart from transportation, there were increases in demand for primary metals, fabricated metal products, machinery and computers and electronic products. Orders for electrical equipment, appliances and components fell. Although the May report on durable goods was generally positive, businesses still aren’t spending and investing at a pace that would suggest they have full confidence in the economy. Business investment in the first five months of 2015, for example, was 2.6% lower compared to the same period in 2014.

New single-family homes sold at an annual rate of 546,000 in May, up 2.2% from April, and up 19.5% from a year earlier. That’s the fastest pace since February 2008. The median price of new homes, meanwhile, fell 1% to $282,800 compared with May 2014.  The S&P Homebuilders ETF (XHB) touching a new eight-year high intraday. There are several positive factors for the homebuilders, including some M&A activity; last week Ryland Group and Standard Pacific announced a merger.

But the big news in housing is first time buyers. The latest Census Bureau report in April marked the fastest back-to-back gains in household formation since the second half of 2005. Confirmed by yesterday’s report from the National Association of Realtors showing first time buyers accounted for 32 percent of purchases this month, up from 30 percent in April and 27 percent a year ago. Excluding November 2009, when demand spiked from the expiration of the first-time homebuyer tax credit, sales last month were the strongest in more than eight years for this group.  If you look at people between the ages 18 and 34, nearly a third of them are at home with their parents; if they move out, that would be 4 million households that would be created.

Atlanta Federal Reserve’s GDPNow forecast model shows the US economy is on track to grow 2.0% in the second quarter, up from earlier forecast of 1.9% growth.

Euro zone leaders welcomed new budget proposals from Athens as a basis for further negotiations to unlock billions of euros in frozen aid and avert a default. But it’s not a done deal. Greek lawmakers reacted angrily to concessions Athens offered, and parliament’s deputy speaker warned the proposals might be rejected.

While Americans are the biggest foreign owners of Greek stocks, it’s not much. Overseas investors hold 59 percent of the Greek stock market, and of that U.S. traders have about 25 percent. That comes out to $5.7 billion, about the size of doughnut maker Dunkin’ Brands Group, the 110th weighting in the S&P Midcap 400 Index. U.S. investors kept sending money to Greek stocks even as the market tanked. An exchange-traded fund tracking the shares has had inflows every week this year and received $9.5 million last week. Its market cap reached a record this month. We have clearly been programmed to anticipate bailouts. While there might not be much direct exposure to a Greek default, the spillover could still be problematic. Greece may be small but it is important geographically, geopolitically, and there is always the risk of contagion.

European shares climbed to three-week highs on today, extending the previous session’s rally on expectations that Greece was getting closer to a debt deal. Greece’s ATG share index rose 6.1 percent, adding to a 9 percent jump in the previous session. The pan-European FTSEurofirst 300 index gained 1.1 percent to touch its highest level in three weeks.

Economic activity in the Eurozone grew at the fastest pace in four years in June, providing the latest sign that a recovery in the region is gaining traction. Markit’s Composite Flash Purchasing Managers’ Index rose to 54.1 from 53.6 in May, boosted by momentum in Germany and France, the bloc’s two largest economies. The data adds to the evidence that the ECB’s massive stimulus program is taking effect.

The fast-track trade bill cleared a key procedural hurdle today in the Senate, all but ensuring it will win final passage this week and be sent to the White House for the president’s signature. Fast-track, or trade promotion authority, would allow the president to assure potential trade partners that the deals they negotiate with the U.S. will be presented to Congress for a yes-or-no vote without amendment.

Samsung Group heir apparent Lee Jae Yong apologized in a nationally televised address on Tuesday for failing to stop the spread of MERS at a Seoul hospital run by a group foundation. About half of the 175 MERS cases in South Korea have been traced to Samsung Medical Center. The outbreak has prompted travel restrictions and scared off tourists, dealing a blow to the country’s economy.

Nearly 30 percent of Americans are one emergency away from financial ruin; 29 percent of people don’t have money set aside to cover  emergencies, up from 26 percent last year, according to an annual survey from Bankrate.com. Many of the people who had savings didn’t have enough money to get them through a serious emergency or prolonged period of unemployment. About 20 percent of people said their savings would not last longer than three months. At the same time, the number of people with substantial savings is falling. About 22 percent of people had enough cash to cover six months of expenses, the lowest level in five years.

South Carolina Gov. Nikki Haley called for the removal of the Confederate flag from the grounds of the state Capitol. The flag wasn’t lowered to half-staff along with the other flags at the Statehouse after the shooting at Emanuel African Methodist Episcopal Church Wednesday because doing so is under the authority of the state’s General Assembly — and so is taking it down. The South Carolina legislature is convening to consider the proposal. Other states are also looking at taking down the flag, including Mississippi, and Virginia’s governor is calling for removing the flag from license plates. Wal-Mart, Sears, Amazon.com, and eBay all said they would stop selling products bearing the Confederate flag. Meanwhile, a chorus of corporate CEOs, from Tim Cook to Mitt Romney, are calling for the flag to be taken down.

General Mills said it would stop using artificial flavors and colors in almost all of its cereals, joining the food industry’s move towards products perceived as healthier. The packaged foods maker said it plans to have 90 percent of its cereals free of artificial flavors and colors by 2016, up from about 60 percent currently.

If you go to a restaurant there is a good chance the food comes from Sysco or US Foods; they are the two largest food distributors. Earlier this year, Sysco bid $3.5 billion to take over US Foods. The Federal Trade Commission sued to block the deal on antitrust grounds. Today, a federal judge ruled that there is a reasonable probability that “the proposed merger will substantially impair competition in the national customer and local broadline markets and that the equities weigh in favor of injunctive relief.” And that effectively kills the deal.

Netflix has approved a 7-for-1 stock split. In soaring almost 100 percent this year, Netflix shares have reached nearly $700. As of last week, Netflix was the third-most expensive stock in the S&P 500. The split will come in the form of a dividend of six additional shares for each outstanding share. It is payable on July 14 to stock owners of record at the July 2 close. Trading at the post-split price will start July 15.

Starting next month, Amazon will overhaul the way it pays royalties to self-published authors on its e-book platform, by rewarding them based on the number of pages read, rather than the number of times their book has been borrowed. The move applies to books published via the Kindle Direct Publishing service, which follows the pay-per-track model of music streaming services like Spotify.

Have you ever sent an email to the wrong person? Gmail has come up with an option to “Undo Send”. Here is how to set it up. Once in Gmail, click on the “General” tab on the top right of the screen — the one that looks like a little gear. Choose “Settings,” scroll down, click “Enable Undo Send,” and choose a cancellation period of between five to 30 seconds. That is how much time users have to hit “Cancel” above an email while it’s sending. Once pressed, users will get a chance to edit or delete their email. The only question is why did it take so long?

Financial Review

A Spidey Monday

Sinclair Noe — June 22, 2015

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

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DOW + 103 = 18,119
SPX + 12 = 2122
NAS + 36 = 5153
10 YR YLD + 9 = 2.36%
OIL + .07 = 59.68
GOLD – 14.40 = 1186.90
SILV + .09 = 16.27

The Nasdaq Composite set a new closing and intraday record, topping the highs set on Thursday. The Russell 2000 gained 7 to close at 1292, a record high. The S&P 500 is a stone’s throw from record highs at 2130.

Eurozone leaders are held an emergency summit today to “urgently discuss the situation of Greece at the highest political level.” The summit comes just eight days before Athens needs to make a crucial €1.6-billion-euro payment to the IMF. Over the weekend, Greek PM Alexis Tsipras submitted a new reforms package to foreign creditors, signaling eleventh-hour concessions to avoid a possible default. The Greek government said its proposals included steps to eliminate early retirement options, hike the sales tax, increase tax surcharges that middle- and high-income earners pay and to introduce a levy on companies with annual net income of more than about $570,000.

Eurozone finance ministers welcomed the Greek proposals for a cash-for-reform deal but said they required detailed study and it would take several days to determine whether they can lead to an agreement to avert a default. The ministers agreed to reconvene later this week. And even if there is a deal between Greece and the Troika, Tsipras still faces a hard sale with his own parliament and Greek voters.

The European Union has extended sanctions against Russia by six months to the end of January, keeping up pressure on the Kremlin to bring peace to eastern Ukraine. The restrictions outlaw financing for major Russian banks, ban the export of sophisticated energy-exploration equipment, and prohibit the sale of weapons and some civilian goods with military uses. Debt-stricken Greece, which has been courting Russian economic aid, shied away from a veto.

The National Association of Realtors reports existing home sales increased 5.1 percent to an annual rate of 5.35 million units, the highest level since November 2009. The increase unwound April’s surprise drop in purchases. First-time buyers accounted for 32 percent of transactions, the largest share since September 2012. Relatively low borrowing costs are still supporting would-be buyers who can qualify for credit. The average rate for a 30-year fixed mortgage reached 4.04 percent in the week ended June 11. While that was the highest rate this year, it’s below the average 4.17 percent for all of 2014.The NAR said the median price of an existing home rose 7.9 percent from May 2014 to $228,700.

According to the NAR, sales of U.S. residential real estate to overseas buyers between April 2014 and March 2015 reached a record $104 billion, or about 8 percent of total existing home sales. While the number of properties sold slowed to 209,000 from 232,600 last year, buyers acquired more expensive properties, which brought up the sales total. Chinese were far and away the top foreign buyers of real estate last year, accounting for $28.6 billion in sales. Canada ranked second, with $11.2 billion, followed by India with $7.9 billion. Florida was the top state for overseas real estate buyers, accounting for 21 percent of all U.S. sales to foreign buyers. California ranked second, with 16 percent, followed by Texas with 8 percent and Arizona with 5 percent.

The Senate is scheduled to end the debate on “fast-track authority” for trade deals tomorrow, with a vote that will likely send the Trans-Pacific Partnership to the President’s desk. TPP would create a free trade zone covering 40% of the world economy – making it the largest trade deal since NAFTA.

Big decisions from the US Supreme Court. Rulings on 11 cases are expected to be announced this week, as the highest court in the US approaches the end of its spring term.

The Supreme Court this morning denied Google’s appeal and Google will have to defend claims that its Street View mapping software violates patents held by Vederi. The high court’s decision not to hear the case leaves intact a March 2014 ruling by the U.S. Court of Appeals for the Federal Circuit, which threw out a district judge’s finding that Google had not infringed on four different patents. The case will now return to lower courts for further proceedings.

In another case, the Supremes sided with a renegade raisin farmer in his battle against a federal program designed to keep excess raisins off the market. A majority of justices ruled that the Agriculture Department program, which seizes excess raisins from producers in order to prop up market prices during bumper crop years, amounted to an unconstitutional government “taking.” But they limited their verdict to raisins, lest they simultaneously overturn other government programs that limit production of goods without actually seizing private property.

In a 5-4 decision the Supremes boosted privacy rights by striking down as unconstitutional a Los Angeles city ordinance requiring hotel operators to show a list of registered guests to the police on demand.The court held that the guest-registry law violated the Fourth Amendment’s protection against unreasonable searches because the legislation gave hotel managers no chance to seek a ruling from a judge or magistrate before complying with a police request.

And in the case of Kimble v Marvel, aka, the Spider Man case, the court ruled that patent holders may not collect royalties on a patent after it expires. The case dealt with a toy that shoots out fake webs, à la Spider-Man. Justice Kagan, writing for the majority said, the parties set no end date for royalties, apparently contemplating that they would continue for as long as kids want to imitate Spider-Man (by doing whatever a spider can). Patents endow their holders with certain superpowers, but only for a limited time.

Things will get more serious later in the week with big announcements on the fate of gay marriage and Obamacare.

There is a merger and acquisition scramble going on in the healthcare insurance sector. Cigna’s board of directors has rejected a $47 billion takeover offer from Anthem, saying in a letter Sunday they were “deeply disappointed” in Anthem’s actions. The Cigna board was unanimous in their decision, which they called “inadequate” in their letter. Anthem announced its $184 a share offer on Saturday.

Others have been quietly maneuvering as well. UnitedHealth Group, the biggest American health insurer by revenue, recently made a preliminary approach to Aetna. And a number of companies (including Cigna) have indicated their interest in buying Humana, one of the smaller major insurers but one with a valuable Medicare franchise. It is still early to say how this will play out, but there is a good chance the Big 5 health insurers will soon be the Big 3.

Williams Companies has rejected an unsolicited buyout offer worth $48 billion from Energy Transfer Equity, but has hired banks to explore alternatives, including a merger, a sale of the company or simply continuing on its current path. Williams said the $64/share bid, a 33% premium to Friday’s closing price, “significantly undervalued” the company and would not deliver value commensurate with what it “expects to achieve on a standalone basis.”

Sequential Brands Group has reached a deal to acquire Martha Stewart Living Omnimedia for $353 million. The deal marks the end of Martha Stewart’s run as an independent company. (It went public in a 1999 IPO.) In recent years, it has suffered from sagging sales related to its core publishing business, as licensing and merchandising emerged as the company’s prime driver.

Over the last year, Facebook’s stock has jumped roughly 30% as the broader S&P 500 has barely managed to keep its head above water. The climb has added more than $65 billion to Facebook’s market value, and it is now bigger than Walmart. Market cap leapfrogging like this happens all the time. But this one might feel particularly ridiculous to many. If we size up Facebook and Walmart, there’s no contest as to which one has the larger economic footprint. By revenue, Walmart is the largest company in the world, with annual sales clocked in at $476 billion last year. Facebook recorded revenue of roughly $12.5 billion, bringing its market cap to more than $236 billion, just above Walmart’s $235 billion.

It represents a shift in the economy, from brick and mortar and industrial to technology. Of the 5 largest US companies in terms of market cap, 3 are tech companies; in order: Apple, Microsoft, Exxon Mobile, Berkshire Hathaway, and Google. The information sector’s share of economic output has stayed remarkably flat, at about 5% of GDP in 2014, roughly where it was in 1997. This is largely because GDP, the benchmark measure of “the economy”, is calculated by adding up monetary transactions. So while Facebook’s advertising sales contribute to GDP, the millions of users logging on for free each day don’t register at all. (The same goes for Google searches and visits to Wikipedia.) That benefit is what’s known as a “consumer surplus,” a benefit to well-being that’s not captured in traditional economic statistics.

Apple is about to launch a new $9.99 monthly music subscription service, Apple Music, on June 30, and to get folks to try it out, Apple will offer free three-month trial subscriptions. At the same time, Apple has told musicians it won’t pay royalties during this period because no money is coming in. At least that was the deal until Taylor Swift stepped up. Swift wrote a blog to Apple, saying: “We don’t ask you for free iPhones. Please don’t ask us to provide you with our music for no compensation.” Apple changed its tune and now says it will pay artists during the free three-month trial.