Financial Review

State of Emergency

Sinclair Noe — August 1, 2017

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

Subscribe: iTunes | Android | RSS

DOW + 72 = 21,963
SPX + 6 = 2476
NAS + 14 = 6362
RUT + 2 = 1427
10 Y – .04 = 2.25%
OIL – .94 = 49.23
GOLD – .60 = 1269.20
BITCOIN + 0.29% = 2743.61 USD
ETHEREUM – 0.87% = 225.04

Another record session for the Dow; that’s 5 in a row. It’s the 31^st record high for the Dow in 2017. Between the scandals, the international gaffes, the disturbing handshakes, and a White House that has more turnover than a red-light district Airbnb, keeping up with the news is a full-time job. And through it all, Wall Street has shown an amazing ability to focus on other stuff.

With two thirds of S&P 500 companies having reported their second-quarter earnings, 72 percent have beaten Wall Street’s expectations. In a typical quarter about 64% of companies beat expectations. The S&P 500 is trading at about 18 times earnings estimates for the next 12 months, above its 10-year average of 14 times.

After the closing bell, Apple reported earnings and revenue topped Wall Street estimates. Apple jumped about 5% in after-hours trade. Apple also issued strong revenue guidance for its fourth fiscal quarter, suggesting strong sales growth year-over-year.

The strong guidance also hinted at the launch of a redesigned iPhone in September, which is expected to sell briskly. Although CEO Tim Cook had warned that iPhone sales might see a “pause” ahead of the expected September launch of the new iPhone, iPhone unit sales were in line with Wall Street expectations and in line with last year’s performance.

Apple posted earnings of $1.67 per share, up 17% year-over-year, vs expectations of $1.57. Third quarter revenue came in at $45.4 billion, up 7% year-over-year, vs expectations of $44.9 billion. Gross margin: 38.5%, up 1% year-over-year, vs expectations of 38.2%. Apple sold 14% more iPads than it did a year ago.

The Institute for Supply Management (ISM) said its index of national factory activity fell to 56.3 last month from 57.8 in June, which was the highest level since August 2014. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy.

The annualized pace of U.S. car and light truck sales in July fell to 16.7 million vehicles, down from 17.8 million vehicles a year earlier, according to Autodata Corp. Carmakers continued to trim low-margin sales to daily rental fleets in July as the overall pace of U.S. car and light truck sales fell for the fifth straight month

Automakers have used low-margin sales to rental fleets to avoid factory shutdowns. With more flexible labor agreements, the Detroit automakers have shifted course. They are quicker to idle factories to reduce supply, and they are demanding higher prices.

In a more troubling sign for Detroit, combined sales of large pickups fell 4 percent, and sales of large sport utility vehicles declined by 20 percent. Only the Ford F-series, up 6 percent, improved on year-ago results among major truck models. Ford fell 2.4% and General Motors lost 3.3% after they reported lower monthly sales.

The Commerce Department said consumer spending edged up 0.1 percent in June after a 0.2 percent gain in May. There was also little sign of inflation. The personal consumption expenditures (PCE) price index, excluding food and energy, increased at a 1.5 percent pace in the 12 months through June, after advancing by the same margin in May.

In June, personal income was unchanged. That was the weakest reading since a 0.1 percent dip in November 2016 and followed a 0.3 percent increase in May.

Wages and salaries rose 0.4 percent in June. There are plenty of jobs in the economy but wage growth is sub-par and with it both consumer spending and inflation are flat.

The long length of the economic recovery has created a problem for business. The U.S. has generated 16.6 million new jobs since 2010, squeezing the pool of available workers so much that many companies now complain of a labor shortage.

With job openings near record highs, companies either must pay more in wages, increase spending on training or buy more machines to take the place of workers to keep up with rising demand. For people looking for work, it’s the best time to find a job in more than a decade.

The ultra-tight labor market, however, begs the question: Just how long can companies continue to hire at the current rate of about 180,000 a month? The pace of hiring in the U.S. has already slowed sharply since hitting a post-recession peak of 250,000 a month in 2015. And economists expect hiring to slow even further because there’s fewer people looking for jobs. The July jobs report will be published Friday morning – looking for about 180,000 new jobs.

Sprint jumped 11% after swinging to a quarterly profit for the first time in three years, while Xerox rose almost 6% after its profit beat expectations. Under Armour enjoyed stunning growth as it built up its footwear sales, but now sneaker sales have dropped and they say it will get worse. Under Armour fell 10.3% to a record low after the sportswear maker cut its full-year sales forecast.

Remember the big infrastructure proposals? Well, we still haven’t heard much about infrastructure – other than a proposal to privatize air traffic control. Privatization plus another proposal that would make it easier for co-pilots to get academic credit for certification have drawn congressional opposition and stalled efforts to reauthorize the Federal Aviation Administration, a must-do for Congress by Sept. 30.

Opponents of privatization now have the hero of the Miracle on the Hudson, retired Capt. Chesley “Sully” Sullenberger speaking out against privatization. Sully argues that privatization would allow a corporate monopoly heavily influenced by the major airlines to manage the nation’s skies. It would make key investment decisions that could put profits over safety and reduce access for the general aviation community, which includes company jets, recreational pilots and agriculture sprayers.

And he says the big airlines don’t always have the interests of the traveling public in mind. Exhibit A, he said, is the shrinking seat sizes that airlines are incorporating in their planes.

The White House Commission on Combating Drug Addiction and the Opioid Crisis issued a preliminary report stating that its “first and most urgent recommendation” is for the president to “declare a national emergency”. The Chris Christie-led White House Opioid Commission says, “With approximately 142 Americans dying every day, America is enduring a death toll equal to September 11th every three weeks.”

In 2015, according to CDC figures, heroin deaths alone surpassed gun homicides for the first time. More than 33,000 people died of opioid overdose, with another 20,000 dying from other drugs. A recent federal study found that prescription painkillers are now more widely used than tobacco.

In addition to declaring a national emergency, the commission’s first report includes several recommendations that public health experts and drug policy reformers have been advocating for years.

They include: Expanding capacity for drug treatment under Medicaid; Increasing the use of medication-assisted treatments, like suboxone, for opioid disorders; encouraging the development of new non-opioid pain relievers; Mandating that every local law enforcement officer in the nation carry naloxone, the drug that rapidly reverses opiate overdose; Broadening “good Samaritan” laws that shield individuals from prosecution when they report a drug overdose to first responders or law enforcement officials.

Notably absent from the report are a number of tough-on-crime measures that the President and his Attorney General, Jeff Sessions, have repeatedly help up as solutions to the opioid crisis, including building a wall on the Mexican border, expanding the use of mandatory minimum sentencing for drug crimes, and seizing more cash and property from individuals suspected of drug crimes.

Two of Venezuela’s leading opposition figures were taken from their homes in the middle of the night by state security agents, in President Nicolas Maduro’s first moves against his enemies since a widely denounced vote giving his government nearly unlimited powers.

A few hours earlier, Washington added Maduro to a steadily growing list of high-ranking Venezuelan officials targeted by financial sanctions, escalating a tactic that has so far failed to alter his socialist government’s behavior. For now, the Trump administration has not delivered on threats to sanction Venezuela’s oil industry, which could undermine Maduro’s government but raise U.S. gas prices.

Maduro called the constitutional assembly in May after a month of protests against his government, which has overseen Venezuela’s descent into a devastating crisis during its four years in power. Due to plunging oil prices and widespread corruption and mismanagement, Venezuela’s inflation and homicide rates are among the world’s highest

Financial Review

Stormy Weather

Sinclair Noe — April 3, 2017

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

Subscribe: iTunes | Android | RSS

DOW – 13 = 10,650
SPX – 3 = 2358
NAS – 17 = 5894
RUT – 16 = 1369
10 Y – .05 = 2.34%
OIL – .33 = 50.27
GOLD + 3.80 = 1254.00

The Institute for Supply Management (ISM) said its index of national factory activity slipped to a reading of 57.2 last month from 57.7 in February, which was the highest since August 2014. A reading above 50 indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy.

The U.S. Markit manufacturing purchasing manager’s index fell to 53.3 in March from 54.2 the previous month.

In a separate report, the Commerce Department said construction spending increased 0.8 percent to $1.19 trillion in February. That was the highest level since April 2006 and followed an upwardly revised 0.4 percent drop in January. Construction spending increased 3.0 percent from a year ago.

In February, private construction spending rose 0.8 percent to its highest level since May 2006 after being unchanged in January. Spending on residential construction surged 1.8 percent to its highest level since July 2007.

Investment in home-building has now increased for five straight months. Spending on private nonresidential structures fell 0.3 percent in February, declining for a second consecutive month.

The yield on the 10-year Treasury note fell 5 basis points to 2.34%. Over the first quarter, the yield curve became flatter, meaning the difference of rates between short-term bonds and long-term bonds narrowed, signaling concern over the economic outlook.

Among Federal Reserve speakers, Philadelphia Fed President Patrick Harker reiterated that he still backs two more rate hikes this year. Richmond Fed President Jeffrey Lacker is scheduled later this evening. The big event on the economic calendar this week is the Jobs Report on Friday.

After 238,000 people were hired in January and 235,000 in February, some analysts are looking for a pullback in hiring, possibly a number below 200,000, simply because the economy can’t keep up that kind of hiring pace nearly eight years into a recovery in which employment has grown by nearly 15 million jobs.

Senate Democrats appear to have enough votes to block Neil Gorsuch’s confirmation to the U.S. Supreme Court under current rules, a move that may lead to a unilateral rule change by Republicans known as the “nuclear option”.

While the GOP controls the Senate 52-48, current rules require 60 votes to move a high court nomination toward a final vote. Democrats say they have 41 votes to oppose advancing the nomination. Senate Majority Leader Mitch McConnell has guaranteed that the Senate will confirm the judge, a hint that the GOP is prepared to force a rule change this week.

The rule change could happen Wednesday with a full vote on Friday. Gorsuch’s confirmation would give the court five Republican-appointed justices, restoring a majority that had been in place for almost half a century before the February 2016 death of Justice Antonin Scalia.

Brexit could disrupt millions of expats’ lives. The more than 3 million EU nationals who live in Britain and the almost 1 million British citizens who live in other EU countries face uncertainty. With the free movement of citizens—a basic tenet of EU law—curtailed or restricted, theoretically they could see bank accounts closed, employment terminated or rental agreements revoked—not to mention deportation.

Passenger car sales dropped last month even as automakers offered some very juicy discounts. Ford suffered the biggest loss with a 7.5 percent drop in sales, followed by Fiat Chrysler at 5 percent, Toyota at 2 percent and Honda at just under 1 percent. Nissan sales were up over 3 percent, Volkswagen’s rose just under 3 percent and GM posted an increase of just under 2 percent.

The LMC Automotive consulting firm said incentives hit a March record, averaging $3,768 per vehicle and the highest amount since March of 2009. In addition, cars and trucks are sitting on dealer lots for an average of 70 days, the highest level for any month since July of 2009 during the sharp economic downturn.

Even some truck and SUV inventories are starting to climb. Ford, which saw a 24 percent decline in car sales, executives were happy with monthly numbers largely because of a 10 percent increase in sales of the F-Series pickup.

Tesla said it delivered a record 25,418 vehicles in the quarter ended March, a 69-percent increase from last year. Tesla shares climbed about 6%, giving Tesla a market capitalization of $48 billion – surpassing Ford Motor’s $45 billion value and just below General Motor’s value of $51 billion. Tesla sold about 40,697 vehicles in the U.S. last year. Ford delivers that many F-Series trucks about every three weeks.

The Tesla story is not about past year performance but growth potential. Ten years from now it will be difficult to buy a new gas powered vehicle. The future is electric; something Ford and GM have failed to fully embrace. Still, there are doubters.

Short interest in Tesla has risen to 29 percent of its free float from a 52-week low of 20 percent in mid-October, even as Tesla shares have jumped nearly 40% since the start of the year – meaning short sellers have lost more than $2.2 billion in the first quarter, at least on paper. Today Elon Musk tweeted: “Stormy weather in Shortville …”

Looking ahead, Tesla will introduce the Model 3, with a more realistic price of around $35,000; they expect to produce 500,000 a year by 2018. But Tesla is more than a car company. It’s a vertically integrated energy company that also makes vehicles.

Tesla plans to transform from its original state as a small, financially precarious manufacturer of luxury electric cars to the world’s dominant supplier of clean, autonomous transport, and an electricity source for millions of businesses and homes. Tesla can start to deliver on that promise by combining the solar energy firm SolarCity, its massive lithium-ion battery plants, a growing number of retail stores, and expanding commercial and residential energy storage business.

Tesla’s theory goes that it can innovate faster, engineer a seamless user experience and reduce costs through economies of scale. As a one-stop shop for clean energy and mobility at work, home and on the road, Musk has mused before that Tesla could be the world’s first $1 trillion company one day.

If Tesla succeeds, it will find itself as a major global player in two of the world’s largest markets: energy and transportation.  Of course, a lot needs to happen first, and Tesla will likely weather a few storms along the way.

Companies that provide oil and gas drilling services had to lower prices for their clients during the most recent oil crash. Some oil-field services providers lowered prices for offshore drilling by as much as 50%, toward levels that would have made their businesses unprofitable, according to Reuters.

Oil-field services giants like Baker Hughes and Halliburton lost pricing power because the oil crash hurt their clients’ revenue. That fiscal pain led clients to be more willing to find the cheapest driller. Separate from the oil crash, there has been a structural decline in the average cost of drilling for oil for the past few years.

Per a report from the Energy Information Administration last March, costs per well increased from 2006 through 2012 — a time of rapid growth in US drilling activity. But average costs have fallen since 2012 partly because of more efficient technology. That does not mean oil will trade much lower, but it likely helps define a trading range of about $40 to $60 a barrel.

The New York Federal Reserve announced that in 2017 total household debt will reach its previous peak of $12.68 trillion, which it reached in the third quarter of 2008. It’s already close: Total household debt in the fourth quarter of 2016 was nearly as high, at $12.58 trillion.

Compared with 2008, fewer borrowers have housing-related debt — including their first mortgages, or home equity lines of credit — and instead more have taken on auto and student loans. Although housing debt has decreased since 2008, mortgages still make up the bulk of the debt total, at 67%.

In 2016, borrowers with $100,000 in student loans or more make up just 5% of borrowers, but account for about 30% of total outstanding student debt. What’s more, these borrowers appear to be struggling more than they have in recent years.

But the default rates have spiked over the decade. Just 6% of borrowers with $100,000 or more in loans who left school between 2005 and 2006 defaulted on their debts five years later, per the NY Fed. More than 20% of borrowers who left school between 2010 and 2011 owing that amount defaulted within five years.

Over the past several years, higher education leaders have become most concerned about the fate of student loan borrowers with relatively low balances of about $10,000 or less. That’s because these borrowers are typically at the highest risk of defaulting on their debt, likely because their low balance is a signal that they didn’t complete much education.

Borrowers with six-figure debts, on the other hand, are less at risk of default because their high balances are often a sign that they’ve completed more schooling that’s made them valuable in the labor market.

Now it appears these borrowers are facing more challenges. While borrowers with high balances are still less likely to default than their counterparts with less debt, their default rates are catching up with the share of borrowers defaulting overall. The increased struggles of borrowers with six figure debts may reflect that it’s becoming more common to borrow $100,000 or more without getting a professional degree, like a medical degree, that typically assures good outcomes in the labor market.

In other words, $100,000 in student debt just doesn’t buy what it used to.

Financial Review

Beverly, Hills That Is

Sinclair Noe — September 1, 2015

Podcast: Play in new window | Download (Duration: 13:14 — 12.1MB)

Subscribe: iTunes | Android | RSS

DOW – 469 = 16,058
SPX – 58 = 1913
NAS – 140 = 4636
10 YR YLD – .03 = 2.17%
OIL – 4.99 = 44.21
GOLD + 5.40 = 1140.80
SILV – .01 = 14.72

Another rough day for stocks across the world after twin surveys showed China’s manufacturing sector in the grip of its worst slump in several years. Asian stocks slumped on the first trading day of September, with Japan’s Nikkei 225 index chalking up a near 4 percent loss into correction territory. The Stoxx Europe 600 Index dropped as much as 3.2 percent. The major US averages lost more than 6 percent each in August. The New York Stock Exchange invoked Rule 48 for the fourth time in two weeks.

If you want, you could blame it on the Fed, as good a culprit as any; they want to raise rates despite data. Or you could look to a global slowdown, as emerging markets struggle with lower and lower commodity prices. The High Frequency Traders certainly can be considered culpable, not for starting the fire but for splashing kerosene on the flames. But really, this is just what markets do. It’s not one thing that causes a market to tumble, it is the added weight of many things. And a market looking to sell is going to sell. The major averages ended in correction territory, down nearly 3 percent in their third-largest daily decline for 2015.

All the turbulence has created a fertile playing field for those who trade the market on a short-term basis, but otherwise has sent many to the sidelines. The recent market rout caught some star Wall Street traders by surprise, others not so much; not a hedge fund affiliated with “The Black Swan” author Nassim Nicholas Taleb that seeks to profit from extreme events in the financial markets. Universa Investments LP gained roughly 20% last Monday.

The gains, some realized, some just paper gains for now, amounted to more than $1 billion in the past week; largely on Monday, as its returns for the year climbed to roughly 20% through earlier this week. Meanwhile, David Einhorn’s Greenlight Capital told investors it lost 5.3% in August; widening Greenlight Capital’s loss for the year to 13.8%, or about $1.4 billion

U.S. construction spending in July rose 0.7%, to an annual rate of $1.08 trillion – its highest level in more than seven years, boosted by an increase in the building of houses, factories and power plants. Construction of single-family houses advanced 2.1 percent in July. Factories rose 4.7 percent, and power facilities increased 2.1 percent. Spending on government building projects slipped 1 percent. Total construction spending has risen 13.7 percent over the past 12 months.

Manufacturing grew at the slowest pace in August in more than two years. The Institute for Supply Management said its manufacturing index dropped to 51.1% last month from 52.7% in July. Readings over 50% indicate more companies are expanding instead of shrinking. The ISM’s new-orders index dropped 4.8 points to 51.7%, the lowest since May 2013. The employment gauge slipped 1.5 points to 51.2%. And the exports index fell 0.5 points to 46.5%.

Roller-coaster stock markets appeared to have no major impact on auto purchases. The six largest automakers in the U.S. market all beat the sales forecasts of industry analysts. The gains contributed to a total seasonally adjusted annual rate of 17.81 million, the highest rate since July 2005. GM, the No. 1 automaker in the U.S. market, reported that sales dropped 0.7 percent. Ford, the No. 2 U.S. automaker by vehicle sales, showed a gain of 5 percent, easily outdistancing expectations. Toyota, No. 3 in U.S. sales, reported an 8.8 percent decline in August. Fiat Chrysler showed a rise of 2 percent, boosted by Jeep SUVs, extending the auto maker’s streak of sales gains to 65 months. For the first time since 2012, Labor Day sales will be included in September results.

If you think the stock market is crazy, just look at the oil market. From Thursday through Monday, West Texas Intermediate crude oil posted its best 3-day gain in a quarter century. What was behind the move? Apparently not much. The fundamentals in the oil market didn’t really change; there is still an oil glut. The Energy Information Agency reported that US shale production was a little lower than previously thought, but it wasn’t a huge drop and there are still massive inventories, especially for refined petroleum, which then causes an inventory backup for crude.

There were rumors of slowing production from Saudi Arabia; rumors, not actual cutbacks. So, it looks like the big parabolic rally in oil was largely spurred by speculation that prices had hit a bottom, and then as prices started rising, it squeezed short sellers. Another way of saying it is – speculation; not exactly the stuff of bottoms. Sure enough, today oil prices dropped 10.1%.

Many see recent events in oil production as a straight battle between Saudi Arabia and the USA. The Saudis seemed intent on crashing American shale producers and for political reasons too intricate to detail in this moment, but it hasn’t really worked out that way. The US frackers have figured out how to keep the rigs pumping. The high priced oil phase of the shale revolution can be seen as the gold rush days of the industry’s history. Frackers paid millions for mineral rights and a whole new generation of Beverly Hillbillies came into being. And while the boom times in the oil patch didn’t last, oil industry insiders who predicted the death of shale oil in the United States got it wrong.

U.S. oil production has begun to drop in response to low oil prices, but not as dramatically as many had anticipated. Oil companies have cut back spending significantly in response to the fall in the price of oil. The number of rigs that are active in the main U.S. tight oil producing regions– the Permian and Eagle Ford in Texas, Bakken in North Dakota and Montana, and Niobrara in Wyoming and Colorado– is down 58% over the last 12 months.

Nevertheless, U.S. tight oil production continued to climb through April. It has fallen since, but the EIA estimates that September production will only be down 7%, or about 360,000 barrels/day, from the peak in April. Shale oil producers are getting more oil out of fewer wells and that factor is keeping the industry alive. Adjustments were made. Analysts now estimate that the breakeven point of new shale oil wells is $27.50 per barrel, not counting financing costs.  Recent oil price falls did not lead to the extinction of fracking, it promoted efficiency in the sector, which heralds further price falls.

Meanwhile, the Saudis probably never suspected that Green Energy could flourish amidst low oil prices. The U.S. Navy has invested an undisclosed amount in the Mesquite solar farm about 40 miles west of Phoenix Arizona, allowing for an expansion of the facility that is anticipated to make it the world’s largest solar farm. The farm will provide 210 megawatts of direct power, a third of the energy needed to power 14 Navy and Marine Corps sites. The solar farm, slated to go online next year, is expected to save the Navy “at least” $90 million in energy costs over the course of the 25-year contract with Sempra U.S. Gas and Power, which operates it.

The Mesquite facility, which completed its first phase of buildout in late 2012, has a potential capacity of 700 megawatts, which would power up to 260,000 homes. It requires no water to operate and reduces greenhouse gas emissions.  The investment marks a big step toward the Department of Defense’s Congress-mandated goal to either produce or procure 25 percent of its total energy needs from renewable sources by 2025.

General Electric announced it has won more than $1 billion in orders from customers in the Asia Pacific region, as energy generators look for ways to improve efficiency and reduce costs and environmental damage. GE is providing six new gas turbines in Thailand, two steam turbines and generators for Vietnam, and starting a large-scale replacement project in Japan. The company made the announcement at the start of the Power-Gen Asia conference.

The White House is considering sanctions against both Russian and Chinese companies and individuals as it tries to stop its alleged cyber theft of commercial and economic information. The move comes as the U.S. grows increasingly frustrated at efforts to steal commercial secrets. President Obama signed an executive order in April declaring a national emergency over cyber-attacks, which “constitute an unusual and extraordinary threat.”

You might want to send Google a Thank You note. Starting today, Google Chrome, the browser of choice for a majority of desktop users, will be effectively cutting off Flash advertising at the knees, ignoring those intrusive, battery-sucking, fan-spinning, auto-play videos and banners. Now people will have to click on the ads to see them in Flash, but if you just want to read something on the internet without being distracted by an advertisement masquerading as a slot machine on meth, well, you have that option. Google’s move follows a similar anti-Flash play by Mozilla, the third-most-used browser, and Amazon’s recent decision to ban Flash-based ads from its ad network. Facebook also recently called on browser makers to stop supporting Flash altogether.

After years of sticking with Flash for desktop browsers, the big software firms and advertisers are suddenly getting scared straight by the prospect of ad blocking. People have been increasingly turning to browser add-ons that block advertising (and the creepy tracking and security vulnerabilities that come along with many of the ads). By preventing people from seeing ads, blocking software will cut off $22 billion in advertising revenue this year, up 41% from last year.

Financial Review

The Lights Are On

Sinclair Noe — March 3, 2015      

 

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

Subscribe: iTunes | RSS

DOW – 85 = 18,203
SPX – 9 = 2107
NAS – 28 = 4979
10 YR YLD + .04 = 2.12%
OIL + 1.00 = 50.59
GOLD – 2.40 = 1204.50
SILV – .13 = 16.33

Just a few economic reports today.

Corelogic reports home prices jumped 1.1% in January to take the year-over-year gain to 5.7%. CoreLogic said 27 states and the District of Columbia are at or within 10% of their peak.

The Thomson Reuters/PayNet Small Business Lending Index fell to 120.9 from an upwardly revised December reading of 133.5.  Small businesses cut back on borrowing. Cold weather may be part of the reason.

Car companies reported February sales figures. Ford Motor sales dropped 2%. Ford was projected to report a 5.8% increase in sales but deliveries of F-Series pickups, Escape sport-utility vehicles and Fusion family cars all declined last month. General Motors sales rose 4.2 percent but they still fell short of estimates as sales of light trucks rose and sedans fell. Toyota, Fiat Chrysler, Honda and Nissan all reported deliveries that increased less than analysts had estimated. Industry-wide, the annualized selling rate, adjusted for seasonal trends, rose to 16.2 million cars and light trucks, from a 15.4 million pace a year earlier.

Chief executives of large U.S. companies see the economy accelerating modestly in 2015. According the Business Roundtable’s first-quarter survey the CEOs expect gross domestic product to advance 2.8% this year; just slightly more optimistic than most estimates. Among the CEOs, 40% said their firms would increase hiring over the next six months, while 23% expect to cut staff; while 80% expect their company’s sales to increase in the next six months.

The House of Representatives has approved funding for the Department of Homeland Security through Sept. 30 without any immigration restrictions, ending a standoff that had threatened a partial shutdown for the agency.

Israeli Prime Minister Benjamin Netanyahu delivered a speech before a joint session of Congress today. He warned the United States was negotiating a bad deal with Iran that paved the way to a “nuclear nightmare.” Delivering dueling messages within hours of each other, Netanyahu made his case against Obama’s Iran diplomacy in a speech to Congress that aligned himself with the president’s Republican foes. Obama responded in the Oval Office, that Netanyahu offered “nothing new.”

As Netanyahu spoke, the price of oil increased $1 per barrel. For the past seven weeks, the United States has been producing and importing an average of 1 million more barrels of oil every day than it is consuming. That extra crude is flowing into storage tanks, especially at the country’s main trading hub in Cushing, Oklahoma, pushing US supplies to their highest point in at least 80 years. US crude stocks rose 8.4 million barrels last week to a record 434 million. Gasoline stocks fell by 3.1 million barrels. The national average price of gasoline is $2.44 a gallon. That’s $1.02 cheaper than last year at this time, but up 37 cents over the past month.

We’ve talked about the European Central Bank’s $1.2 trillion bond-buying plan to try and stimulate the economies of the Eurozone. The ECB is expected to announce further details of its asset-purchase program after it meets in Cyprus Thursday. Standard & Poors thinks there might be a problem with Euro QE; S&P estimates that the anticipation of quantitative easing in Europe squashed bond yields so much that the liabilities of defined-benefit pension plans rose by up to 18% last year.

Meanwhile, we check in on Greece. The Euro deal done six days ago was supposed to stabilize the Greek debt crisis. In return for a bit of fiscal autonomy the Syriza government recognized its debts as legitimate and gave its lenders a running veto on any measures taken that might impact on the economy, the banks or the budget balance. But the situation in Greece is still critical. First because Greece gets no new loans from the deal, because it is pledged to run a budget surplus it has to finance the state from tax receipts, but these have reportedly slumped by 22% since December. Normally the government could bridge the gap by issuing short term bonds but the ECB has capped that move. And now Greece faces some imminent debt repayments.

It appears the Euro Monetary Union has thrown a lifeline to Greece, with bricks attached. Greece does not want default, nor an exit from the Euro Union; and so they have not embraced the lifeline. Greek Finance Minister Yanis Varoufakis perceives that the Eurozone will tolerate the “creative ambiguity” in the deal; that there is scope for a long-term settlement in June; and that he can keep both the Greek state and its banks solvent until then. The hope is that the rest of the Eurozone will soften on its insistence on austerity, become more tolerant of debt forgiveness, and give growth a chance. The longer they can drag it out, the better their chances.

Hoping to secure a fresh bailout from the IMF, Ukraine lawmakers passed a raft of austerity measures, including pension cuts and tax increases, during a lengthy parliament session yesterday that lasted late into the evening. The $17 billion bailout package, aimed at averting the country from financial collapse, will be considered by the IMF’s executive board on March 11. Russia and Ukraine have a temporary gas deal in place. The overnight agreement will supply Ukraine with gas for the month of March. “Under the deal sealed in Brussels, Ukraine’s Naftogaz will pre-pay and order sufficient quantities of gas to ensure all domestic consumption for March and guarantee undisrupted supplies to the EU.” Ukraine’s central bank raised its benchmark interest rate to 30% from 19% to “stabilize lending markets.”

 Citigroup said it has agreed to sell its consumer finance unit OneMain Financial Holdings to subprime lender Springleaf Holdings for $4.25 billion in cash. Springleaf is a former subprime lending division of American International Group, AIG. OneMain is part of Citi Holdings, which Citigroup created during the financial crisis to park assets that it wanted to eventually divest or wind down. OneMain had filed for an initial public offering in October, but an outright sale was always Citigroup’s preferred choice. Springleaf was apparently able to get OneMain at an attractive price because it was the most logical strategic buyer and Citi was a highly motivated seller.

The resulting company will now be, by far, the biggest lender to consumers with lower credit scores in the country. It will have nearly 2,000 branches in 43 states, through which it provides personal and auto loans at high interest rates to customers with little access to other forms of credit. A recent investor presentation by Springleaf showed that the average interest rate on its outstanding loans has been around 26% to 27%. Losses for bad loans have been trending below 5%, leaving an effective yield earned by Springleaf near 22%. Springleaf personal loans average $4,000 to $5,000 in size and 40 months in term. Typical uses are for debt consolidation, home or car repair or medical bills.

There is certainly plenty of irony in these companies coming together six years after a credit meltdown rooted in subprime lending – the same meltdown that resulted in the near failure of their former parent companies, AIG and Citi, which combined required more than $100 billion of US government bailout money to survive.

Barclays, the British bank, reported a pretax profit of $8.5 billion for 2014, up 12% from a year earlier and better than expected. That includes setting aside an extra $1.2 billion for potential fines relating to allegations of foreign exchange manipulation—even though the bank could face up to $8 billion in fines over the next two years. If you put the legal reserves back in the mix, Barclays reported a loss in the most recent quarter.

Barclays has not yet settled any currency-rigging cases, which is why its reserves continue to pop up in earnings reports. If you look at the other banks’ FX-rigging settlements so far, they seem to cover behavior dating from 2008 through 2013, more or less. That is, mostly post-crisis behavior. We all know the banks behaved badly leading up to the financial crisis, and we hear about settlements covering the pre-crisis acts, and we think the banks are being punished and must surely be conducting current business with some slight measure of probity, even if the facts do not bear out any substantive change in behavior.

Google has confirmed its plans to offer wireless phone service “in the coming months”, promising the service will be small-scale and not intended to compete with the four big U.S. national carriers. Earlier media reports suggested that Google’s service would sift through cellular connections from Sprint, T-Mobile  and Wi-Fi “hot spots” to pick the best signal for routing calls, texts and data.

Apple sold the most smartphones globally in the fourth quarter, overtaking Samsung for the first time since 2011. According to research firm Gartner, Apple sold 74,832 smartphones to end users worldwide, ahead of the 73,032 phones sold by Samsung.

Once upon a time, Blackberry was the big name in mobile phones; half the phones sold in the US were Blackberrys. Within a matter of about 6 years, the company has gone from leader to has-been; they changed their business model to focus on mobile phone software management, and now they are trying to get back in the phone business again. A few months ago they introduced a square smart phone, and today they introduced a 5-inch touchscreen phone that will retail for $275.

About 8 years ago NASA launched the Dawn spacecraft, that’s D-A-W-N; and over the past 8 years the solar powered craft has traveled about 260 million miles; it is now closing in on a far-flung asteroid belt and it has been focusing on a little dwarf planet called Ceres. The dwarf planet looks like a big cratered rock, with one exception; in one of the craters, 57 miles wide, there is a light, a bright light.

The Dawn spacecraft is still too far away to determine the source of the light. It could be the reflection of water vapor or reflective salts, which would be interesting, or it could be something else, which would be even more interesting. With any luck, the spacecraft will fly closer over the next few months and we will learn if the bright lights of Ceres are a natural phenomenon, or if someone left the light on for us.