Financial Review

Drifting Higher

Sinclair Noe — June 7, 2017

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DOW + 37 = 21,173
SPX + 3 = 2433
NAS + 22 = 6297
RUT + 1 = 1396
10 Y + .03 = 2.18%
OIL  – 2.10 = 45.88
GOLD – 6.80 = 1287.80
BITCOIN – 1.57% = 2736.57
ETHEREUM – 2.04% = 258.86

Major stock, bond and currency markets did little more than drift higher ahead of what many are calling Super Thursday. That’s when the U.K. holds a very important general election, the European Central Bank announces its decision on monetary policy, former FBI director James Comey testifies to the Senate about Russian meddling in the U.S. election, and Brazil’s Electoral Court may issue a decision on campaign corruption that could unseat President Michel Temer.

The Senate Intelligence Committee held public hearings today, with Director of National Intelligence Dan Coats and NSA Director Admiral Mike Rogers repeatedly said they would not discuss their private conversations with President Donald Trump.

Coats and Rogers said they did not feel the public setting of the Senate intelligence committee’s hearing was an appropriate venue to discuss their conversations with Trump. Acting FBI Director Andrew McCabe invoked the probe of special counsel Robert Mueller, when McCabe said he wouldn’t comment on issues in the special counsel’s lane.

Fired FBI Director James Comey is scheduled to appear before the committee tomorrow. Today, Comey released his written prepared opening remarks, saying the President had demanded his loyalty, pressed him to drop a probe into ex-national security adviser Michael Flynn and repeatedly pressured him to publicly declare that he was not under investigation.

The document provides a detailed account of Comey’s private meetings with the President, included direct quotes from Trump and revealed the former FBI chief’s discomfort with the President’s behavior.

President Trump took to Twitter early this morning to break the news about his pick for FBI director. The nominee is Christopher Wray, a private attorney specializing in the defense of individuals and corporations in white-collar criminal cases. He represented New Jersey Gov. Chris Christie during the “Bridgegate” investigation.

This afternoon, Trump traveled to Cincinnati to pitch his 10-year, $1 trillion infrastructure outline as part of a week’s worth of events emphasizing progress on the proposal, though it has yet to be fully fleshed out.

Over the past week, Trump has often undercut and confounded his own aides as they try to shift the conversation toward the infrastructure plan, he was tweeting out new attacks on the news media and feuding with his own Justice Department over its defense of his targeted travel ban.

So far, the infrastructure proposal is not much more than an outline, short on details and specifics, other than a plan announced this week to privatize the nation’s air traffic control. The plan, conceived by the commerce secretary, Wilbur Ross, and economic advisor Peter Navarro, calls on the federal government to spend $200 billion in cash and tax credits that would, they say, result in $800 billion in additional private investment.

In congressional testimony this year, the transportation secretary, Elaine Chao, predicted that a more detailed proposal would be released by late May. But last week she would say only that it was “coming soon.”

Russian hacking of the 2016 U.S. election included sophisticated targeting of state officials responsible for voter rolls and voting procedures, per a top-secret U.S. intelligence document that was leaked and published this week, revealing another potential method of attempted interference in the vote.

The month-old National Security Agency document outlined activities including impersonating an election software vendor to send trick emails to more than 100 state election officials. However, there is no evidence that hackers could manipulate votes, or the vote tally.

Analysts at the NSA believed the hackers were working for the Russian military’s General Staff Main Intelligence Directorate, or GRU. The document’s publication by The Intercept received attention because an intelligence contractor, Reality Winner, was charged the same day with leaking it.

According to Bill Gross, who manages the $2 billion Janus Henderson Global Unconstrained Bond Fund, markets are at their highest risk levels since before the 2008 financial crisis because investors are paying a high price for the chances they’re taking. Speaking at a Bloomberg Investors conference in New York, Gross said, “Instead of buying low and selling high, you’re buying high and crossing your fingers.”

Central bank policies for low and negative interest rates are artificially driving up asset prices while creating little growth in the real economy and punishing individual savers, banks and insurance companies. Despite being concerned about high asset prices, Gross said he feels required to stay invested and sees value in some closed-end funds.

Consumer and business bankruptcies are rising again, after declining for years since the financial crisis. That’s not a propitious sign. For bankruptcy filings by businesses from large corporations to tiny sole proprietorships, the dance started in November 2015. At first it was the energy bust. But bankruptcies of energy companies have tapered off with new money surging into the oil & gas sector once again.

Now bankruptcies in the retail sector are steadily worsening, and other sectors too have picked up the slack. So here we go again. Total US business bankruptcies in May rose 4.7% year-over-year to 3,572 filings, according to the American Bankruptcy Institute. That’s up 40% from May 2015 and up 10% from May 2014.

And there’s another concern: Bankruptcy filings are highly seasonal. They peak in tax season – March or April – and then fall off. The decline in April after the peak in March was within that seasonal pattern. Over the past years, filings dropped in May. But not this year. This year, they jumped.

Sears is closing 72 more stores, in addition to the more than 180 closings that had already been announced this year.  The closings will bring Sears’ store count to about 1,200, down from 2,073 five years ago.

OPEC and other oil producing nations have cut back production in hopes of shrinking a global oil glut. Today, the U.S. government reported an unexpected increase in inventories of crude and gasoline. Crude stocks in the United States grew 3.3 million barrels to 513 million barrels, according to the U.S. Energy Information Administration.

Gasoline inventories also unexpectedly rose, imports increased, and exports dropped. The EIA report pegged total product demand at 19.340 million barrels a day. That included a drop of 505,000 barrels a day for gasoline demand and 520,000 barrels a day for distillate demand from a week earlier.

A 1.4 million barrel-per-day petroleum-demand drop is the kind of shift one associates with a catastrophic storm or economic plunge. Even more shocking, the rise for crude inventories came despite a decline in domestic production and the biggest weekly drop in Saudi imports ever.

Oil has traded below $50 for the past couple of weeks amid speculation that rising U.S. output will counter supply curbs by OPEC and its partners, including Russia. U.S. crude production will average more than 10 million barrels a day in 2018, breaking a record almost five decades old.

Low-cost, long-haul air travel has taken off across the Atlantic. Transatlantic routes are among the industry’s most popular and profitable, and budget carriers are trying to grab a slice of that business by boosting capacity on them by 68 percent this summer.

And that means the flying public may see price wars. Like Boston to London, round trip for under $300. Norwegian Air Shuttle and Icelandic rival Wow have grabbed headlines with one-way fares as low as $69 and $55 this summer, although Wow’s flights involve a stop in Reykjavik.

Lufthansa’s Eurowings budget carrier is in its second year of long-haul flying, while Air France is planning to launch a lower-cost long haul brand this fall in a project dubbed Boost. International Airlines Group launched low-cost long-haul brand Level on Thursday with surprisingly strong ticket sales.

Toshiba aims to name a winner for its prized semiconductor business next week. Sources told Reuters the choice has narrowed to one bid from U.S. chipmaker Broadcom and U.S. tech fund Silver Lake and another from Toshiba chip partner Western Digital and Japanese government-related investors.

Toshiba is rushing to find a buyer for the world’s second-largest producer of NAND chips, which it values at $18 billion or more, to cover billions of dollars in cost overruns at its now-bankrupt U.S. nuclear business Westinghouse Electric.

The British pound sterling gained ground today as the UK saw the final day of campaigning ahead of Thursday’s general election. Polls suggest that Theresa May’s Conservative Party hold a lead of around six points over Jeremy Corbyn’s Labour Party, although outliers suggest that lead could be as big as 12 points, or as small as one point.

While a big move in the price of sterling is expected once results start to come out on Thursday evening, investors in Britain’s currency were largely in wait and see mode ahead of the vote. The polls have been notoriously wrong in recent voting.

Yes, there’s a lot going on tomorrow, but don’t forget to keep an eye on Canada. The Bank of Canada will release its semi-annual Financial System Review and investors will be watching for what the central bank says about the nation’s red-hot housing market. Toronto home prices rose almost 30 percent last month from a year earlier.

In Vancouver, the country’s most expensive real estate market, they’ve climbed 58 percent over four years. Meanwhile, household debt is at record levels, surpassing gross domestic product for the first time. Fitch said Wednesday that banks with greater exposure to those two cities are more sensitive to a market correction.

In the last FSR in December, the Bank of Canada listed elevated household indebtedness, housing market imbalances and fixed-income liquidity as the three main risks to the financial system, and the focus should be similar this time.

Financial Review

Hack Attack

Sinclair Noe — December 29, 2016

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

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DOW – 13 = 19,819
SPX – 0.66 = 2249
NAS – 6 = 5432
RUT + 2 = 1363
10 Y – .03 = 2.48%
OIL – .29 = 53.77
GOLD + 16.70 = 1159.40

As expected, the Obama administration is fighting back against Russia for its hacking efforts to influence the election. The operation was broad, involving not only hacking the Democratic National Committee but scanning and intruding into state voter databases. The hackers leaked the pilfered e-mails in a bid to damage Clinton’s campaign, per U.S. intelligence agencies.

The administration sanctioned 2 Russian intelligence services, ejecting 35 Russian intelligence operatives from the US. The FBI and Homeland Security Department also released a report with technical evidence intended to prove Russia’s military and civilian intelligence services were behind the hacking to expose some of their most sensitive hacking infrastructure; a more detailed report will be released in 3 weeks, including malware and computer addresses.

Members of both parties in Congress have expressed alarm about the campaign hacking and vowed to conduct hearings into Russia’s role.

The number of Americans who applied for unemployment benefits in the week before Christmas fell by 10,000 to 265,000 – the lowest levels since last summer. Initial claims have been under 300,000 for 95 straight weeks, the longest streak since 1970. Just a reminder, the December Non-Farm Payroll report from the Department of Labor will be published on Friday, January 6; with early estimates running around 170,000 net new jobs in December.

Jobs are the lifeblood of the economy, and will give direction to the Federal Reserve moving into the New Year. We remember that last year the Fed was predicting 4 rate hikes for 2016; we ultimately got one increase in December. Now the Fed is predicting 3 rate hikes for 2017 as the economy inches toward full employment. So, the jobs reports are crucial data.

The trade deficit increased 5.5% in November to a seasonally adjusted annual $65 billion. Exports rose 1.0% to $121 billion, while imports totaled $187 billion, up 1.2% from October. Wholesale inventories edged up 0.9% to a level of $594 billion; that was 1.2% higher than a year ago. A bigger trade deficit is negative for GDP growth.

Sprint confirmed it would “create or bring back to America” 5,000 jobs, mostly in customer care and sales. President-elect Trump campaigned on bringing jobs back to the US but the 5,000 Sprint jobs confirmed Wednesday aren’t exactly new — they are part of a previously announced initiative led by Japan’s Softbank to create 50,000 jobs in the US.

Splitting from an earlier ruling, a federal appeals court has found that in-house courts at the Securities and Exchange Commission are unconstitutional. That marks a heavy setback for the agency’s enforcement efforts as it uses five administrative-law judges to handle most routine cases. A spokesman said the SEC is reviewing the decision and wouldn’t immediately have further comment.

The Food and Drug Administration released cybersecurity recommendations today for companies that manufacture internet-connected medical devices. The FDA says unsecured devices are subject to hacking and could prove fatal.

Alere is appealing a decision by the Centers for Medicare and Medicaid Services to revoke Medicare billing privileges for the health-care provider’s Arriva Medical diabetes business. CMS had alleged that Arriva submitted Medicare claims for patients who had died. Alere has denied an impropriety.

Sears just announced a fresh round of store closures. The company told employees on Tuesday that it will close 30 Sears and Kmart stores in early 2017. Most of the stores will start liquidation sales on January 6 and go out of business between late March and mid-April. This latest round of closures will bring the total number of stores that Sears has closed this fiscal year to more than 200.

That means the retailer will have fewer than 1,500 stores left by early 2017. That’s down nearly 60% from 2011, when Sears had more than 3,500 stores. The unofficial list of new store closures does not include Arizona stores. CEO Eddie Lampert, a hedge fund manager and Sears’s biggest investor, will offer a $200 million letter of credit to the department-store chain through affiliates of his firm, ESL Investments Inc. The amount could be expanded to as much as $500 million with the consent of lenders.

Apple and Samsung dominated Christmas wish lists this year but both had a luckluster holiday season. Yahoo’s Flurry Analytics looked at new phone and tablet “activations” between Dec 19 and Dec 25. Both Apple and Samsung still dominated but Apple saw a fall in share while Samsung saw a slight increase.

This year, 44 percent of activations globally were Apple devices, a decline from the 49 percent seen in a similar period in 2015, and 51 percent in 2014. Meanwhile, 21 percent of activations were Samsung devices, a tiny rise from 19.8 percent last year.

AirPods remain in short supply. If you want to buy a pair of the wireless earbuds from Apple, you won’t find them in the local Apple store; there is a 6-week waiting list. That’s what happens when you eliminate the headphone jack on the iPhone. During a visit to the New York Stock Exchange yesterday, CEO Tim Cook called the wireless earbuds “a runaway success,” and said Apple was “making them just as fast as we can.”

Meanwhile, Indian officials are meeting early next week to evaluate the incentives sought by Apple to manufacture its products in the country. The government is trying to promote local manufacturing under Prime Minister Narendra Modi’s “Make in India” campaign, but it remains to be seen whether they would agree to more concessions for Apple.

Toshiba shares dropped another 17% in Tokyo on worries about the company’s financial stability. The stock has fallen by more than 40% after the firm warned this week it’s expecting billions of dollars in losses from its takeover of a US-based nuclear construction business.

Toshiba cannot raise cash by issuing shares because of restrictions imposed by the stock exchange after last year’s accounting scandal. It looks more and more likely that the only solution is to sell off the core of the company. Meanwhile, share price is in a death spiral.

German pharmaceutical company Boehringer Ingelheim agreed to divest five types of animal health products to settle charges that a proposed asset swap with Sanofi would harm competition. The proposed asset swap involved Boehringer Ingelheim’s acquisition of Sanofi’s $13.5 billion animal care subsidiary and Sanofi’s obtaining the Germany company’s consumer health care business unit, valued at nearly $8 billion, plus $5.5 billion in cash.

The City of Madrid says all privately-owned cars with even-numbered registration plates will be banned from the Spanish capital’s roads today to curb rising air pollution. The move follows a dry, sunny stretch of weather which sent levels of nitrogen oxide, a poisonous gas which can cause respiratory problems such as asthma, soaring above European-Union-set limits. The restriction could alternate between odd and even number plates if high levels of contamination persist.

The World Economic Forum (WEF) has determined that in many parts of the world, solar energy is now the same price or even cheaper than fossil fuels for the first time. While the average global LCOE [levelized cost of electricity] for coal and natural gas is around $100 per megawatt-hour, the price for solar has plummeted from $600 a decade ago to $300 only five years later, and now close to or below $100 for utility-scale photovoltaic. For wind, the LCOE is around $50.

According to the WEF, more than 30 countries have already reached grid parity—even without subsidies. (“Grid parity” is the point when an alternative energy source, say solar, can generate power at a LCOE that’s equal or even less than the price of traditional grid power.)

The WEF highlighted how the unsubsidized LCOE for utility-scale solar photovoltaic—which was not competitive even five years ago—has declined at a 20 percent compounded annual rate, making it not only viable but also more attractive than coal in a wide range of countries.

Countries that have already reached grid parity include Chile, Mexico, Brazil and Australia with many more countries also on the same track. The WEF projects that two thirds of the world will reach grid parity in the next couple of years, and by 2020, solar photovoltaic energy is projected to have a lower LCOE than coal or natural gas-fired generation throughout the world.

This means that we have reached a tipping point for renewable energy, which is reflected in new installations. Through the end of September, solar accounted for 39 percent of all new electric generating capacity brought on-line in the U.S. Both utility-scale installations and residential installations grew strongly.

The United States solar market shattered all previous quarterly solar photovoltaic (PV) installation records. One megawatt of solar power was installed every 32 minutes in the U.S. from July to September, for a record total of 4,143 megawatts. That brings total installed solar capacity in the U.S. to 35.8 gigawatts, enough to power 6.5 million homes.

Financial Review

The Wall

Sinclair Noe — December 28, 2016

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

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DOW – 111 = 19,833
SPX – 18 = 2249
NAS – 48 = 5438
RUT – 16 = 1360
10 Y – .05 – 2.51%
OIL – .21 = 53.69
GOLD + 4.20 = 1142.50

The Dow Industrial Average is flirting with 20,000 but today it hit a wall. Stocks fell the most in two weeks in light holiday trading. Trading has been thin across the globe during the last week of the year, with volumes in crude oil, equities and currencies all below average. We have 2 trading days left in the year.

A jump in consumer spending in the final stretch of December significantly offset a slow start to the holiday shopping season, and is likely to help many retailers beat sales forecasts. The December spending boost contrasts with a muted November, when early holiday promotions and expectations among consumers that deals would always be available took a toll.

Spending over the Thanksgiving weekend in November fell 3.5 percent from a year ago, despite a strong jump in online sales, according to the National Retail Federation. Brick-and-mortar sales in the week ending Dec. 24 rose 6.5 percent year-over-year after having fallen for the rest of the month, according to data from analytics firm RetailNext.

Strong demand for furniture, home furnishings and men’s apparel from the start of November through Christmas Eve pushed U.S. retail sales up 4 percent, higher than the previously expected 3.8 percent, according to data from MasterCard’s holiday spending report. Official government data and results from retailers will not be available until next month.

Contracts to buy previously owned U.S. homes fell in November to their lowest level in nearly a year. The National Association of Realtors said its pending home sales index, based on contracts signed in November, dropped 2.5 percent to 107.3. The biggest slowdown was in the West, where pending contracts dropped by 6.7%. The NAR blamed the slowdown on higher mortgage rates and tight inventory.

The White House is getting ready to announce a package of sanctions and diplomatic censure to punish Russia for its attempts to meddle in the 2016 presidential election. The Washington Post reports several punitive measures were on the table, including “economic sanctions and diplomatic censure.” Other methods may include covert cyber-operations. An announcement describing the public portions of the response could come as early as this week.

Lloyds Banking Group is planning to establish a subsidiary in Germany or the Netherlands if the U.K. leaves the European Union without retaining access to its single market. The EU is in the process of tightening rules for subsidiaries of non-EU banks.

Britain looks likely to lose its financial passport in Brexit negotiations due to start next year. London’s 328-year old insurance market, Lloyd’s of London, is also planning to move some of its operations to the continent in reaction to the UK’s Brexit vote.

Barclays is refusing to settle with the US Department of Justice over allegations it deliberately sold mortgage bonds to investors that it knew were backed by loans “made to borrowers who were not creditworthy and which were supported by house appraisals it knew were inflated”.

By refusing to settle, Barclays is borrowing a page from the Deutsche Bank Playbook; Deutsche also refused to pay a $14 billion settlement for similar wrongdoing, and then eventually settled for $7.2 billion, but only about $3.1 billion of that is actual cash; the rest is loan forgiveness and credit relief.

If Barclays took the settlement as offered it would mean a hit to capital reserve ratios. So, Barclays is likely holding out for a better deal, but it could be a risky play – this is not their first offense.

Airbus is delaying the delivery of 12 double-decker A380 aircraft to Emirates Airline. This comes after the company warned this year that it would scale back production of the super jumbo because of weak demand. Meanwhile, Delta announced it has canceled a $4 billion order for 18 Boeing 787 Dreamliners that was inherited as part of its merger with Northwest Airlines.

Qualcomm is facing an $865 million fine in South Korea. Qualcomm said the Korea Fair Trade Commission issued the penalty after finding it had violated the country’s competition law. The country’s antitrust regulator has accused the chipset designer of imposing unfair licensing fees on mobile device makers using its patents.

The company has faced similar hurdles in China and Europe, but South Korea is an important market: Samsung is Qualcomm’s second-biggest customer. The fine is the largest ever levied in South Korea.

Toshiba shares tumbled 20% overnight,  hitting the Tokyo exchange’s daily downward limit, wiping out about $5 billion in market capitalization over the past 2 days after the company said it could face a multi-billion-dollar charge on the nuclear power unit it acquired last year from Chicago Bridge & Iron. Toshiba executives declined to provide further details about the write-down, adding that the sum would be finalized by mid-February.

Japan’s Takata could be close to settlement with the US Department of Justice over its massive exploding-airbag recall. The Wall Street Journal reports Takata is expected to pay up to $1 billion to resolve allegations of criminal wrongdoing in handling its faulty airbags. At least 184 people have been injured in the United States in incidents involving potentially deadly Takata air bags. Worldwide, approximately 100 million vehicles have been recalled.

Kate Spade might be for sale. The Wall Street Journal reports the handbag and accessory retailer is working with investment bankers about a possible sale of the company; share price jumped nearly 20% on the report. Kate Spade reported lower-than-expected quarterly same-store sales last month and said pricing competition would likely dampen earnings during the holiday shopping quarter.

GNC, the chain of nutrition stores, has temporarily shuttered all 4,464 of its U.S. locations, as it rolls out its revamped pricing strategy. The one-day closures come two months after the retailer admitted that inconsistent prices on its website and in stores, as well as discrepancies over what it charged loyalty members versus casual buyers, were making its locations confusing to shoppers.

While GNC expects its new, simplified pricing structure will bring more shoppers into its stores, there will be repercussions — at least in the short term. When the company raised prices on its website to better align with what shoppers pay in stores, the changes sparked a 30 percent quarterly decline in same-store sales.

Germany is considering fining social networks such as Facebook up to €500,000-euro for each day the platform leaves a “fake news” story up without deleting it. The law would force the social networks to create offices focused on responding to takedown demands and would make the networks responsible for compensation if a post by individual users were found to slander someone.

Can Amazon Echo testify against you? In what may be the first case of its kind, Amazon has denied investigators voice data from an Echo owned by an Arkansas man who has been charged with murder, despite a police warrant. The tech giant refused to hand over the audio data on two separate occasions, although it did share suspect’s account information and purchase history.

Amazon’s Echo (and its main competitor, the Google Home) works by passively recording everything you say. When the Echo hears “Alexa” (or whatever your activation phrase is), it begins to actively record. That snippet of speech is then sent to Amazon’s cloud servers, where your recorded message is run through a speech-recognition neural network and a response is sent back to you, whether that’s playing a song or giving you the weather forecast.

Police in Arkansas think the Echo may have recorded audio of a murder, although that kind of audio probably did not end up in Amazon’s cloud memory.

Come the new year, millions of the lowest-wage workers across the country will get a raise. Some of those raises will be very minor — a cost of living adjustment amounting to an extra nickel or dime an hour. But in several places the jump will be between $1 and $2 an hour. The biggest minimum wage raises, percentage wise, will be in Arizona (up 24% to $10), Maine (up 20% to $9) and three Silicon Valley cities (up 20% to $12). All told, the minimum wage is set to rise in 21 states, at least 22 cities, four counties and one region.

Americans spent $2.1 trillion in 2013 on diagnosis and treatment of health problems, which amounts to more than 17 percent of the total U.S. economy. And spending on health care for 2015 is estimated to top $3.2 trillion; that means Americans pay more for health care than any other country.

A new study published in the Journal of the American Medical Association reveals what patients and their insurers are spending that money on, breaking it down by 155 diseases, patient age and category, such as pharmaceuticals or hospitalizations.

About half of all health-care spending in the US goes to treat a small group of diseases, and diabetes is leading the pack, costing $101 billion in diagnosis and treatment in 2013. Heart disease, the second-largest source of expenses, cost a total of $88 billion that year. Medical spending increases with age — except for newborns. About 38 percent of personal health spending was for people over age 65.

More and more Americans are retiring outside of the United States, according to the Social Security Administration. The number increased 17 percent from 2010 to 2015, and about 400,000 American retirees are now living outside the country. The countries they have chosen most often: Canada, Japan, Mexico, Germany and the United Kingdom.

Financial Review

Very Close

Sinclair Noe — December 27, 2016

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

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DOW + 11 = 19,945
SPX + 5 = 2268
NAS + 24 = 5487
RUT + 6 = 1377
10 Y + .02 = 2.56%
OIL + .63 = 53.65
GOLD + 10.00 = 1139.30

The Dow Jones industrial average marked its seventh straight week of gains on Friday. Today, the Dow Jones Industrial Average once again flirted with the widely-watched 20,000 level… and once again failed to make it through. The index hit an opening peak of 19,980, just a few points shy of last week’s record highs, but went sideways thereafter, with volume about 50 percent below the 30-day average (typical of the final trading week of the year.)

Treasury yields rose the most in almost two weeks. U.S. crude prices were up over 1% and briefly moved above the $54 a barrel level.

Gasoline prices are at $2.28 a gallon, national average. That’s four cents a gallon more than a week ago, today. Oil markets adopting a wait-and-see approach before the first “OPEC and non-OPEC” output cut deal in 15 years goes into effect. The accord, which kicks in on Jan. 1, is designed to bolster oil prices by lowering production of all the parties involved by almost 1.8M barrels per day.

The focus of today’s trading was the retail sector, as investors tried to figure the strength of the holiday shopping season. Amazon.com said this was the best holiday season ever as they shipped more than 1 billion items. More than 72 percent of Amazon’s customers worldwide shopped through mobile devices and Dec. 19 was the busiest shopping day this holiday season.

Prime customers spent twice as much as other consumers using Amazon. Sales of voice-controlled Echo devices were nine times more than they were during last year’s holiday season. Other best sellers on Amazon included 72-pack Keurig K-Cups, the movie “Finding Dory,” Samsung’s Gear VR virtual reality headset and Nintendo’s Pokémon Sun and Pokémon Moon role-playing video games.

The day after Christmas is always a little hectic at shopping malls but yesterday was wild. Fights, disturbances and false reports of gunfire caused chaotic scenes and shut down several malls across the country. Eight to 10 people suffered minor injuries during a melee in the food court at The Mills at Jersey Gardens in Elizabeth, New Jersey. And then similar disturbances unfolded in other cities.

Consumer confidence surged in December to the highest level since 2001. The Conference Board’s consumer confidence index jumped to 113.7 from a revised 109.4 in November. A measure of how confident Americans feel right now, known as the present situation index, dipped to 126.1 from 132. That’s still near the highest level in nine years, however. An index that tracks expectations over the next six months rose to 105.5 from 94.4, marking the highest level since 2003.

Donald Trump took credit for the surge in consumer confidence, tweeting: “The world was gloomy before I won – there was no hope. Now the market is up nearly 10% and Christmas spending is over a trillion dollars!”

Actual holiday spending is instead on track to reach a combined $656 billion in November and December, according to National Retail Federation. Meanwhile, research firm Customer Growth Partners raised its holiday sales estimate to a 4.9 percent gain over last year to $637 billion. That would be the biggest increase since 2005. Customer Growth had previously predicted a 4.1 percent advance.

Online sales grew an estimated 15 percent, up more than a percentage point from the firm’s previous forecast. The Trump campaign didn’t provide a source for the $1 trillion figure, but it appears to come from a Deloitte study that was released in September, more than six weeks before Trump won the election. The study forecast that holiday spending would exceed $1 trillion in the three months from November to the end of January, representing a 3.6% to 4% increase over last year’s. There’s no evidence that spending has already hit that level.

The consumer confidence index also showed that the share of households anticipating higher equity prices a year from now surged to 44.7 percent in December from 30.9 percent a month earlier. The last time Americans’ optimism about the stock market registered such a dramatic one-month surge was during the dot-com boom; so, consider the idea that the confidence index might be a contrarian play.

Also, consumer confidence does not necessarily carry over to business. John Williams, president of the Federal Reserve Bank of San Francisco said his meetings with business leaders in recent weeks have been dominated by uncertainty about the economic plans of President-elect Trump. Excitement about tax cuts and regulatory relief has been tempered by worries about the impact of less trade and less immigration.

The S&P CoreLogic Case-Shiller 20-City Composite Home Price Index rose by 5.1 percent in October from the same time last year. Home prices in many markets have reached the highest levels since the financial crisis. Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over each of the last nine months. Seattle and Portland home prices were up over 10% in the past 12 months. The Phoenix market was up 0.4% in October and up 5.2% over the last 12 months through October. Home prices have been rising as a healthy jobs market and historically low mortgage rates have increased demand for homeownership since the financial crisis.

Also, constrained supply helped to bid up the prices of existing homes, especially in desirable East Coast and West Coast cities. David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices noted that “mortgage interest rates rose in November and are expected to rise further as home prices continue to out-pace gains in wages and personal income.” Adding, “With the current high consumer confidence numbers and low unemployment rate, affordability trends do not suggest an immediate reversal in home price trends. Nevertheless, home prices cannot rise faster than incomes and inflation indefinitely.”

The world’s oldest operating bank — Monte dei Paschi — continues to work on securing a bailout from the Italian government. But it will need more cash than previously thought. The bank disclosed late Monday that the European Central Bank has said €8.8 billion-euro ($9.2 billion) will be required to fill the hole in its finances; that’s about twice as much as previously anticipated. At the same time, subordinated bonds held by the bank’s institutional investors are expected to be converted to shares to raise an additional €2 billion-euro to €2.3 billion-euro.

The central bank also warned that Monte dei Paschi’s financial position has deteriorated rapidly in recent weeks. Trading in Monte dei Paschi shares has been suspended since Friday. Meanwhile, the Italian government has approved a €20 billion-euro rescue fund to help prop up Monte dei Paschi and the country’s other struggling banks.

Toshiba said it may have to book several billion dollars in charges related to a U.S. nuclear power acquisition, a shock warning that sent its stock tumbling 12 percent and rekindled concerns about its accounting acumen. Toshiba said cost overruns at U.S. power projects handled by a nuclear construction business newly acquired from Chicago Bridge & Iron would be much greater than initially expected, potentially requiring a huge write-down.

Panasonic will invest more than 30 billion-yen (or about $256 million) in the Buffalo, New York production facility of Elon Musk’s Tesla Motors to make photovoltaic (PV) solar cells and modules. The plan is part of the solar partnership that the two companies first announced in October, but which did not disclose investment details. The two companies said they plan to start production of PV modules in the summer of 2017 and increase to one gigawatt of module production by 2019.

The announcement underscores deepening ties between Tesla and Panasonic. The two are building a $5 billion lithium-ion gigafactory east of Reno, Nevada, to produce batteries for both electric cars and energy storage products. In October, Tesla revealed plans to work with Panasonic to make solar cells and modules. Tesla acquired solar installer SolarCity for $2 billion. Musk revealed plans for a new solar-roof made of glass tiles in late October.

The U.S. Food and Drug Administration on Friday approved a new drug developed by Biogen to treat spinal muscular atrophy, the leading genetic cause of death in infants.

Seattle Genetics reports four people died in test trials for its experimental cancer drug, prompting the FDA to impose a clinical hold on the company’s early-stage trials.

Healthcare company Abbott Laboratories has won U.S. antitrust approval for its proposed purchase of medical device maker St. Jude Medical. Abbott has agreed to divest two medical device businesses to settle FTC charges that the $25 billion acquisition of St. Jude would likely be anti-competitive.

Abbott has said the deal would help it compete against larger rivals Medtronic and Boston Scientific as hospitals look to cut the number of their suppliers.