Financial Review

No Reason Not To

Sinclair Noe — September 11, 2017

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

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DOW + 259 = 22,057
SPX + 26 = 2488
NAS + 72 = 6432
RUT + 15 = 1414
10 Y + .06 = 2.13%
OIL + .02 = 48.09
GOLD – 19.00 = 1328.00

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Vol.	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	4,339.6	$71.17B	$1.53B	40.05%	1	+3.28%	3.77%
	Ethereum	ETH	311.45	$29.12B	$534.46M	14.03%	0.0710035	+4.79%	7.09%
	Bitcoin Cash	BCH	573.89	$9.17B	$225.31M	5.91%	0.127718	+3.42%	10.61%
	Ripple	XRP	0.22044	$8.37B	$111.56M	2.93%	0.00005035	+3.08%	8.32%
	Litecoin	LTC	71.350	$3.67B	$350.88M	9.21%	0.0159996	+4.48%	8.86%
	Dash	DASH	328.60	$2.46B	$16.92M	0.44%	0.0751645	+3.25%	8.89%
	NEM	XEM	0.26571	$2.34B	$3.70M	0.10%	0.00006013	+2.18%	-2.35%
	Monero	XMR	115.67	$1.74B	$26.69M	0.70%	0.026558	+2.91%	11.34%
	IOTA	MIOTA	0.62399	$1.73B	$41.99M	1.10%	0.00014365	+10.80%	14.52%
	Ethereum Classic	ETC	15.9316	$1.46B	$123.91M	3.25%	0.0035291	+4.86%	-0.42%

The S&P 500 climbed to a record high close. North Korea did not test nuclear weapons over the weekend. Hurricane Irma did not destroy Florida. So, there is that.

Irma caused severe flooding in many Florida cities and left more than 6 million homes and businesses without power, but damage appeared to be less than expected. Shares of U.S. and European insurers jumped.

Shares of Florida insurers Heritage Insurance Holdings, HCI Group and Universal Insurance Holdings all rose about 15 percent, while property and casualty insurer United Insurance Holdings gained 10 percent. Shares of larger insurers Travelers and Chubb rose about 3 percent.

Shares of reinsurers Swiss Re and Scor rose more than 3 percent. Aspen Insurance Holdings shares rose 9.8 percent while Everest Re and XL Group were up more than 5 percent. Preliminary industry losses were estimated at $15 billion to $50 billion in the United States, and $5 billion to $15 billion in the Caribbean. Irma was bad but not as bad as first feared.

Irma roiled the markets for orange juice and cotton. Prices rose steeply last week on concern crops in Florida, the nation’s biggest citrus grower, would be destroyed while cotton areas in Georgia and South Carolina faced strong winds and flooding.

With the damage being assessed, orange juice dropped as much as 5.8 percent today after reaching a four-month high last week. Cotton dropped by the exchange limit of 3 cents. Irma may have damaged 10 percent to 20 percent of Florida’s orange crop. The storm’s swerve toward the state’s west coast was enough to save the crop from “potentially catastrophic” damage.

There’s a modern question that emerges when a massive storm makes its way towards a highly populated area: Is this the right moment to talk about climate change? Let’s settle that debate with a simple answer: Yes. It’s the right time to discuss climate change and how we’re going to adapt to it because we’re witnessing, firsthand, what could be the new normal.

And because, for the most part, we completely ignore the threats posed by climate change when there isn’t a big storm approaching. And the talk should include not just how to stop climate change – because we may be too late, but we can certainly adapt. Look at the destruction in Barbuda compared to Naples Florida – the difference – building codes.

And just a quick thought about the non-stop hurricane coverage – is it smart to have reporters standing out in hurricane force winds telling us they are standing in hurricane force winds? Do we really need that? The tradition of television crews standing in the middle of a dangerous storm goes back decades, reflecting the hunger to be on the scene for a nationally significant event.

But the news value of dangerous stand-ups — in which a correspondent is seen in the field talking to the camera — is increasingly being questioned. Even with all the photos of flooding and damage, many of the most indelible images from Harvey and Irma will be those of people helping people.

Now that Q2 earnings season has wound down, markets are increasingly more susceptible to forces that tend to be less directly connected to corporate results and guidance. And for now, the market is playing a game of “risk-on” and risk-off”.

A broader perspective shows a weak dollar aiding an already strong economy, and the Federal Reserve continuing to juice the works with low rates, even as they plan to slowly unwind their balance sheet.

And since Irma did not flatten Florida, the Fed may feel inclined to raise rates before the end of the year, but just sticking to the slow, incremental increases – meaning we are still in historically low interest rate environment.

Notwithstanding all the discussion of balance sheet reduction and tapering, the developed market central banks in aggregate are still very much in expansionary mode, with the G4 balance sheets still growing by more than $1 trillion per year on an annualized pace.

The dollar index, which tracks the greenback against a basket of six major currencies, was 0.56 percent higher at 91.8. The index had hit a more than 2-1/2-year low on Friday. A monthly survey of 73 economists conducted by Bloomberg News from Sept. 1 to Sept. 7 found that the median third-quarter growth estimate rose to 2.6 percent from 2.5 percent in the prior poll.

So, strong earnings, weak dollar offering an edge to US businesses, ultra-low rates; toss in stable and low energy prices – and there really is no reason why the stock market should not be strong. It’s been 14 months since the S&P 500 has seen a 5% sell-off and 19 months since a full-blown 10% correction.

Your next phone will probably cost about $1,000. It doesn’t matter whether you go Apple or Android. Tomorrow, Apple will introduce its latest top-of-the-line iPhone, and even the cheapest model is expected to cost about $1,000. A few days later, Samsung’s Galaxy Note 8 goes on sale for a comparable amount.

The iPhone is expected to be made from glass and stainless steel, while the Note has an exceptionally large, bright screen with a metal-and-glass case. New features for the iPhone will include upgraded cameras and the ability to unlock your phone with a 3D scan of your face. All that stuff has pushed up prices. Look for trade-in deals on old phones. You could also go the installment payment route.

And look for giveaways from the carriers. Free Netflix from T-Mobile. Verizon is offering free accessories and discounted tablets to customers who choose monthly payment plans and has introduced a reward program that offers such gifts as Starbucks cards or Apple Music discounts to customers who pay their bills on time.

Sprint offers a buy-one-get-one-free plan to people on monthly leasing plans who want last year’s iPhone. AT&T is matching that deal if customers also sign up for DirecTV. Bottom line – The phone makers and carriers are going to greater lengths to disguise the rising costs of their phones, which are about to cross a big psychological threshold.

The same day Amazon completed its acquisition of Whole Foods, it marked down items by as much as 43 percent. Those deep price cuts did more than bring a surge of publicity to the chain: It boosted customer traffic by 25 percent. The location data from Foursquare, culled from shoppers’ mobile devices, was compared with the same period a week earlier.

More than two dozen lawsuits have been filed in the United States against Equifax after the credit reporting company said thieves may have stolen personal information for 143 million Americans in one of the largest hackings ever. Don’t brush this data breach off.  We all have credit information maintained by Equifax. Take this seriously.

You should probably assume your data at Equifax has been compromised. So, there are some things you should do. Immediately obtain a credit report from one of the three credit bureaus (Trans Union, Experian, Equifax) and review it carefully to see if you have already fallen victim to abuse or ID theft. Resolve to obtain another credit report from a different bureau in 2 months and again in January 2018 (from the third bureau).

Consider accept any offer from Equifax to provide a year or two of credit monitoring but do not pay Equifax for costlier services if they try to up-sell you. Also, be aware that if you accept the free credit monitoring, you may not be able to sue Equifax.

Place alerts on your credit card accounts so that you are getting routine email updates about credit card balances and transactions. Read the updates as they come in and follow up if something doesn’t seem quite right. And you can go to the FTC website – consumer.ftc.gov to freeze your credit record and put an alert on your credit record.

Do an initial fraud alert with one of the other agencies which will be good for 90 days and they will alert the other two. If someone is trying to open a credit line in your name, the company opening the line must contact you before opening it.

If you aren’t needing credit for a while you may consider adding freezes to all three agencies. Add security passwords and three factor authentication to all your credit cards, bank accounts, and broker accounts. And file your taxes early, especially if you expect a refund.

Also send a nastygram to Equifax. There’s no excuse for this data breach. NO EXCUSE. We’ve entrusted our personal information to these kinds of private concerns, and if they abuse that trust by getting hacked, then they are to blame. And for investors in Equifax, sorry. Equifax lost about 7% today, wiping out about $3.5 billion in market cap.

China vowed to end fossil-fuel car sales. The world’s largest auto market is working on a timetable to end sales of vehicles powered by gasoline and diesel. The country’s industry ministry didn’t set a deadline for a complete changeover, but said it plans to strictly enforce rules that require hybrids to make up at least 8% of automakers’ output next year, and at least 12% by 2020. The UK and France have pledged to be fully electric by 2040.

The move leaves the US as the last major stronghold for cars powered by gasoline and other fossil fuels. China’s auto market is the largest in the world, with more than 23 million cars sold in 2016, greater than the 17 million sold last year in the US.

China already dominates the electric vehicle (EV) market, making more than 40% of EVs worldwide. China’s plan to go fully electric will upend the transportation and petroleum industries worldwide.

Financial Review

Getting Warmer

Sinclair Noe — August 8, 2017

Podcast: Play in new window | Download (Duration: 13:16 — 7.6MB)

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DOW – 33 = 22,085
SPX – 5 = 2472
NAS – 13 = 6370
RUT – 4 = 1410
10 Y + .03 = 2.28%
OIL – .23 = 49.16
GOLD + 3.40 = 1261.70
BITCOIN – 1.06% = 3416.49 USD
ETHEREUM + 7.34% = 286.39

President Trump said North Korea will be “met with fire and fury and, frankly, power the likes of which the world has never seen before” if Kim Jong Un’s regime continues to threaten the US. Trump was speaking with reporters in Bedminster, New Jersey.

Trump’s comments followed a report in the Washington Post, citing a Defense Intelligence Agency analysis, that North Korea successfully developed a miniaturized nuclear warhead that could fit onto its missiles. And it comes just days after the United Nations Security Council ratcheted up sanctions on North Korea, targeting about $1 billion of the nation’s approximately $3 billion in exports.

Those restrictions followed two intercontinental ballistic missile tests in July. The S&P 500 Index fell to session lows and the CBOE Volatility Index jumped 11 percent about a half hour before the end of the trading session on Wall Street. The 10-year Treasury yield rose. Crude retreated toward $49 a barrel.

The effects of climate change are already having an impact on the U.S. after average temperatures have risen dramatically over the last four decades. The U.S. Global Change Research Program Climate Science Special Report, compiled by a group of scientists from 13 federal agencies, found with high confidence that it was “extremely likely that more than half of the global mean temperature increase since 1951 was caused by human influence on climate.”

The report states: “Evidence for a changing climate abounds, from the top of the atmosphere to the depths of the oceans. Thousands of studies conducted by tens of thousands of scientists around the world have documented changes in surface, atmospheric, and oceanic temperatures; melting glaciers; disappearing snow cover; shrinking sea ice; rising sea level; and an increase in atmospheric water vapor.

Many lines of evidence demonstrate that human activities, especially emissions of greenhouse gases, are primarily responsible for observed climate changes in the industrial era. There are no alternative explanations, and no natural cycles are found in the observational record that can explain the observed changes in climate.”

The report is part of the National Climate Assessment, which has been congressionally mandated to take place at least every four years since 1990. A National Academies of Science committee reviewed the study and said it was “timely, accurate, and well-written.”

The report’s authors also described a link between climate change and severe weather events, citing: “A change in the frequency, duration, and/or magnitude of extreme weather events is one of the most important consequences of a warming climate,” with an increase in heavy precipitation, extreme heat events and tropical storms as a result.

The report says that the cost of extreme weather has exceeded $1.1 trillion since 1980. The National Academy of Sciences has signed off on the paper, and it is now awaiting approval from the Trump administration.

The New York Times released a draft of the report today. According to the Times, scientists fear that the Trump administration could either alter or suppress the findings, and for good reason. The report directly contradicts claims by Trump and members of his cabinet who say that the human contribution to climate change is uncertain, and that the ability to predict the effects is limited.

This past week, the State Department began the formal process to withdraw from the Paris climate accord, officially notifying the United Nations. Trump has instructed the Environmental Protection Agency to scrap or change regulations aimed at reducing greenhouse gases, and has started to open more public land and waters to fossil fuel activity.

Mentions of the perils of climate change have been removed from the White House’s Web site and the Department of Interior and, in April, the EPA eliminated its online climate-change section pending a review that will be focused on “updating language to reflect the approach of the new leadership.” How the Trump administration decides to handle the report remains to be seen. The EPA and 12 other agencies have until Aug. 18 to approve the report.

Shortly after the Bureau of Labor releases the monthly non-farm payroll report, we get more details in a report called Job Openings and Labor Turnover Survey; the JOLTS report is on a one month lag. The number of advertised job openings rose to a record-high 6.2 million in June.

While the record high in job openings was good news, actual hiring declined in the month, and the number of workers quitting their jobs — a gauge of confidence in the jobs market — wasn’t significantly changed. The report shows that layoffs have become more and more rare in the past year, with about one worker in 100 getting laid off per month. With layoffs so infrequent, it doesn’t take much net job creation to keep the unemployment rate trending down.

Even though the unemployment rate dropped to 4.3%, there is ongoing concern about weakness in wage growth. The Labor Department reports that 7.6 million workers held multiple jobs last month, up 2% from 7.4 million in July 2016. That’s back to highs not seen in 20 years.

And it should not be mistaken as a sign of healthy entrepreneurship. The principal reason workers hold more than one position is that no single job provides a sufficient income. In a strong economic recovery, the number of full-time workers should be rising, and the number of workers employed part-time or holding multiple jobs, should decline.

Sentiment among small-business owners skyrocketed in July as customer demand improved, despite continued gridlock in Washington. The sentiment gauge from the National Federation of Independent Business rose 1.6 points to 105.2. That snapped a five-month streak of readings that either declined or remained the same, and easily beat the consensus forecast for a decline to 103.2.

The jump in the July survey reflected better views of the labor market: owners reported having more open positions now as well as plans to hire more in the future. Survey respondents also have stronger sales expectations, and expect better business conditions, thanks in part to resilient American consumers.

The NFIB said little about Washington in the release, except to note that “stronger consumer demand” came despite dysfunction among lawmakers.

The CoreLogic Home Price Insights report shows home prices nationwide, including distressed sales, increased year over year by 6.7 percent in June 2017 compared with June 2016 and increased month over month by 1.1 percent in June 2017 compared with May 2017.

The CoreLogic HPI Forecast indicates that home prices will increase by 5.2 percent over the next 12 months. The report finds inventories tight, with unsold inventory at 1.9 percent, the lowest second quarter reading in over 30 years.

As a result, prices are marching higher and affordability is deteriorating nationally. In Arizona, home prices climbed 6.1 percent over the past 12 months, and 0.7 percent from May to June.

Disney reported a near 9 percent fall in quarterly profit, pulled down by higher programming costs and declining subscribers at its flagship sports channel ESPN. Disney also announced it will stop providing new movies to Netflix starting in 2019 and launch its own streaming service.

CVS Health forecast current quarter profit below Wall Street estimates and said it has been ordered to cooperate with investigations into possible false claims submitted to a government healthcare program and drug pricing.

The No.2 US drug store chain reported quarterly profit above Wall Street estimates on strength in its pharmacy benefits management business, which helped to more than offset a 2.6 percent drop in same-store sales. The attorney general for the Southern District of New York has sought information on possible false claims submitted regarding reimbursements for Medicare Part D prescription drugs.

Minnesota’s attorney general wants info regarding a probe into pricing of insulin and epinephrine drugs. Sanofi, Eli Lilly and Novo Nordisk were named in a proposed class action lawsuit, which alleged the firms simultaneously hiked insulin prices by over 150 percent in the past five years.Mylan, the maker of emergency epinephrine injectors EpiPen, is facing investigations after it doubled the cost of its syringes used to treat severe allergic reactions.

On Monday, a class-action lawsuit was filed against CVS Health, which alleged the company colluded with third-party PBMs to raise generic drug prices. The suit claims that the pharmacy agrees with pharmacy benefit managers, or PBMs — the middlemen of the industry who manage the list of what drugs an insurer will and will not pay for — to sell certain drugs at a higher price if a customer is paying with insurance.

US News & World Report publishes and annual “Best Hospital Honor Roll”, ranking the 20 hospitals that outperformed all others in its review based on a variety of specialties. Mayo Clinic Hospital in northeast Phoenix ranked No. 20. It was the first time the Phoenix hospital had cracked the honor roll and the first time any Arizona hospital made the top 20.

The hospital also was ranked No. 1 in Arizona and the Phoenix metro area on the publication’s overall review. Mayo Clinic in Rochester, Minnesota, where the health system is headquartered, was ranked No. 1. The Phoenix hospital was cited for excelling in: cancer; cardiology and heart surgery; ear, nose and throat; gastroenterology and gastroenterologic surgery; geriatrics; nephrology; neurology and neurosurgery; orthopedics; pulmonology; and urology.

Right now, Earth is plowing through a cloud of tiny bits of comet dust, turning the rice-grain-size debris into what many call shooting stars.  Known as the Perseid meteor shower, this recurring astronomical event is easily the most watched — and beautiful — shower every year.

The peak viewing time will be this weekend – Friday, Saturday, and Sunday, enjoy.

Financial Review

Records Across the Board

Sinclair Noe — June 1, 2017

DOW + 135 = 21,144
SPX + 18 = 2430
NAS + 48 = 6246
RUT + 25 = 1396
10Y + .02 = 2.22%
OIL – .30 = 48.02
GOLD – 3.20 = 1266.40
BITCOIN (Undefined %) = 2452.09
ETHEREUM – 4.09% = 221.44

A record high close for the Dow Industrial average, taking out the last high from March 1^st. Also records for the S&P 500 and the Nasdaq Composite.

In many ways, the Dow is just playing catch-up with the other indexes that were already in record territory. While the Nasdaq is up 16% this year and the S&P 500 has rallied 8.5%, the Dow is up a more modest 7%.

The Institute for Supply Management’s manufacturing index inched slightly higher, hitting 54.9. This implies the overall manufacturing economy grew for the 96th consecutive month.

The Commerce Department announced that spending in the construction sector fell 1.4 percent for the month, the biggest drop since a 2.9 percent fall a year ago. Construction spending was forecast to have grown 0.5 percentage points in April, after falling 0.2 percentage points in March. The drop reflects significant weaknesses in home building, non-residential construction and government projects.

The number of Americans filing for unemployment benefits increased more than expected last week, but the rise probably does not signal a material shift in labor market conditions as claims for several states, including California, were estimated. Initial claims for state unemployment benefits jumped 13,000 to a seasonally adjusted 248,000 for the week ended May 27.

The ADP private sector employment report showed that 253,000 jobs were added in May. The report could signal a strong government payrolls report on Friday that includes hiring in both public and private sectors.

Forecasts are for 185,000 non-farm payrolls created in May. Mark Zandi, chief economist at Moody’s Analytics said, “The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force. Increasingly, businesses’ number one challenge will be a shortage of labor.”

The Federal Reserve’s latest Beige Book report, a collection of economic anecdotes from businesses across the country, indicated that employers everywhere are under pressure to both hire workers and pay them more. Economists in the Cleveland Fed’s district report, “Staffing firms noted an increase in the number of job openings and placements during the past two months, a situation which they attributed to an improving business climate.” These comments were echoed across the country.

Forecasts from Fed officials suggest that a median of two more hikes are planned before the end of the year – for a total of three. However, San Francisco Federal Reserve Bank President John Williams said that while he sees three interest rate hikes this year as his baseline scenario, four rate increases would also be appropriate if the economy got an unexpected boost.

Perhaps even more important than rate hikes, is what the Fed will say about trimming its $4.5 trillion balance sheet which expanded sharply in response to the Great Recession. The bank massively expanded that balance sheet by buying mortgage and Treasury bonds, as a way of helping keep interest rates low.

Jerome Powell, a Fed board governor, said on CNBC the impact of the Fed’s pullback from bond buying would be minimal. The Fed seems to be trying to have its cake and eat it too, arguing that its bond purchases, also known as quantitative easing or QE, were highly powerful when implemented but will make little difference when withdrawn.

President Trump announced the US will withdraw from the Paris climate agreement and will seek to renegotiate the pact in a way that treats American workers better. Trump is kicking off a withdrawal process that will take until November 2020 to unfold.

While the decision wasn’t exactly unexpected (it was a campaign promise, after all), in today’s announcement Trump said it will bring back clean coal jobs. It won’t. Much of America’s coal gets shipped to a fast-shrinking fleet of power plants that burn the fuel, and there’s no easy path to boosting demand from the sector.

The country’s use of natural gas and renewable energy to produce electricity is meanwhile gathering speed — and creating new generations of energy jobs. Low natural gas prices, at the end of the day, have decimated most of the U.S. coal production. Coal plants have closed and you’re not reopening them.

In a Rose Garden ceremony at the White House today, Trump said, “The bottom line is the Paris accord is very unfair,” citing the deal’s “draconian” financial and economic burdens and a litany of economic projections backing up his case. But the estimates at the heart of the debate varied so widely, some analysts viewed them as unreliable.

Supporting the pro-pullout side was one estimate saying $3 trillion in gross domestic product and 6.5 million in jobs will be lost over the next quarter century — numbers Trump cited without pointing out the timeline. Another view puts the GDP hit at more than $8 trillion through 2100 — but that’s the damage estimated if the U.S. exits the deal.

More worrisome than the long-term guesses could be the expected tariffs on U.S. carbon emitters slapped on by other countries. Twenty-five US companies signed on to a letter running today as a full-page advertisement in the New York Times and Wall Street Journal arguing in favor of the climate pact, and warning of potential “retaliatory measures” by other nations.

Trump said he would like to re-negotiate the Paris accord but today France, Germany, and Italy said they would not enter discussions to change the deal.

While there are still a large number of workers in the traditional fossil-fuel industries according to the Department of Energy, the number of Americans employed in energy-efficient and renewable-energy jobs is also huge.

For instance, 1.1 million Americans work in electric-power generation through traditional fossil fuels, but renewables follow closely with 880,000 employees. Additionally, from a long-term economic perspective, shifting toward renewable energy would likely be more beneficial for job growth.

The Department of Energy said the renewable sector is booming with solar employment growing by 25% and wind-generation employment growing by 32% in 2016. Add on the fact that 2.2 million people are employed in the “the design, installation, and manufacture of Energy Efficiency products and services,” and it’s clear that combating climate change is a big employment driver for the US.

Illinois paid the price for its ongoing budget impasse, with both S&P Global Ratings and Moody’s Investors Service dropping the state’s general obligation credit ratings to one step above junk. The rating downgrades came a day after Illinois’ spring legislative session ended without a budget deal.

S&P cut its rating on $26.3 billion of bonds one notch to BBB-minus, the lowest it has rated any state, and warned that Illinois could sink to the junk level unless it passes a budget that addresses a gaping structural deficit.

Moody’s downgraded Illinois to Baa3 from Baa2, citing the prolonged political impasse that has impeded progress in dealing with a nearly $130 billion unfunded pension liability and fueled growth in unpaid bills now approaching $15 billion, equal to 40 percent of the state’s operating budget.

The boards of Linde Group and Praxair voted to merge, creating a $73 billion global industrial gases leader. Linde’s shareholders will not vote on the deal but 75 percent must tender their shares to the new company for the deal to go through. The deal is expected to close in the second half of 2018.

Deere & Co said it would buy privately held German company Wirtgen Group for about $4.88 billion to expand its road construction operations as it looks to cut down its dependence on its slowing farm business. Deere makes equipment for part of the road-building process – loaders and dump trucks to load rocks into crushers from quarries, earth-moving tools at construction sites, and dozers and motor-graders that help grade roads.

Wirtgen makes crushers that break down large rocks, milling machines, plants to supply hot asphalt for road projects, and pavers and rollers. It has a network of company-owned and independent dealers in about 100 countries.

Financial Review

The Accord

Sinclair Noe — May 31, 2017

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

Subscribe: iTunes | Android | RSS

DOW – 20 = 21,008
SPX – 1 = 2411
NAS – 4 = 6198
RUT – 1 = 1370
10 Y – .02 = 2.20%
OIL – 1.03 = 48.63
GOLD + 5.80 = 1269.60
BITCOIN + 3.27% = 2406.36
ETHEREUM – 1.46% = 228.19

President Trump could pull the United States out of the Paris climate accord. Trump refused to endorse the landmark climate change accord at a summit of the G7 Saturday in Italy, saying he needed more time to decide.

The accord, which has been agreed to by 195 countries and ratified by 147 countries since it was signed in December 2015, established a specific set of tools to help countries cut greenhouse gas emissions over time.

Its goal is to hold global warming below 2 degrees Celsius and to avoid the worst risks of a warmer planet. While it’s certainly not the end-all, be-all scheme to reverse global warming, the agreement is the most comprehensive international effort yet to tackle the climate problem, even though compliance is voluntary.

Trump has been dithering on the decision for months, thanks to a tug-of-war playing out among his advisers. He’s already rolled back the policies that would ensure we might make our commitment to Paris, so effectively, he’s stepped out of the accord before officially doing so.

Scientists have been warning us for years that a rise in global average temperature more than 2 degrees Celsius will mean widespread stresses on food and water, sea level rise, and conflict and suffering. To try to avert the worst of these threats, countries agreed to dramatically cut emissions as part of the Paris accord.

But it is essentially a nonbinding agreement and wasn’t ratified by the Senate. So, leaving could be pretty simple, though it will take about four years to formally do it. In the meantime, US officials could stop participating in climate talks. And Trump could pull out of the underlying UN Framework Convention on Climate Change.

That could happen in a just a year’s time and would send the message that the US is done with international cooperation on climate change. A third option is that Trump could declare that the Paris deal is a legal treaty that requires Senate approval.

Such a vote would fail, and then Trump would have Senate backing to not abide by the deal, which he deems a treaty. A letter that 22 Senate Republicans sent to Trump this week urging him to withdraw from the deal, increases the odds of this happening.

Pulling out of the Paris accord could cause serious diplomatic damage. The countries of the world care about climate change. They see it as a profound threat. A decision to withdraw would also fly in the face of nearly across-the-board support for Paris among top American companies, in sectors ranging from oil and gas to retail, chemicals, utilities, agriculture, finance, information, and autos.

The CEOs of ExxonMobil, Apple, Dow Chemical, Unilever and Tesla were among those urging Trump to remain in the agreement, with Tesla’s Elon Musk threatening to quit White House advisory councils of which he is a member if the president pulls out.

Business leaders know climate change is real. They know Paris is an agreement they can work with. They know having US negotiators at the table to protect their interests on matters like intellectual property and trade is crucial.

They know that the transition to clean energy is one of the biggest economic plays of this century, that climate change is a major driver of this transition, that the United States is perfectly positioned to lead with our unmatched culture of innovation, but that opting out of Paris will undermine this opportunity to expand markets, create jobs and build wealth.

In late 2015, Exxon came under fire when New York’s attorney general opened an investigation into whether Exxon misled investors about the effects of climate change. Exxon’s scientists had allegedly been telling company leadership that climate change was an issue as early as the 1970s and ‘80s, but Exxon executives cast doubt on the idea publicly for decades.

Now, Exxon backs the Paris accord. Today, 62.3 percent of investors in Exxon Mobil voted for the company to produce an annual report on the impacts of climate change policies on the company’s business. According to a copy of the resolution, the investors want Exxon to “publish an annual assessment of the long-term portfolio impacts of technological advances and global climate change policies.”

They also instruct the company to annually assess the financial risks of “a scenario in which reduction in demand results from carbon restrictions and related rules or commitments adopted by governments consistent with the globally agreed upon 2-degree target.”

We are far past the point when we should be discussing whether climate change is a live risk. The Pentagon calls it a “threat multiplier” in vulnerable regions of the world. The National Intelligence Council says climate change “will almost certainly have significant effects, both direct and indirect, across social, economic, political, and security realms during the next 20 years.”

Firms like BlackRock, Goldman Sachs, Citigroup, and Shell, among others, have produced serious climate reports focused on the transition needed to meet the goals of Paris.

And just look at the signals from nature, at the dozens of “100-year” events—floods, superstorms, droughts, wildfires, record heat waves—taking place in the United States and around the world in recent years. Weather-related losses have tripled since the 1980s.

In the United States, the already strong efforts of our states and cities will loom even larger. States from California, Washington, and Oregon to Minnesota, Illinois, New York, New England, and many others are dedicated to strong climate action and will examine whether there is still more that they can do. Many more states, both red and blue, are charging ahead in developing wind and solar energy.

The dozen US cities that are part of the global C-40 group on climate change account for 25 percent of US population and 30 percent of US GDP. In Mexico City last December, they promised to deliver action, regardless of what the new Trump administration decided to do.

Business also has a crucial role to play in driving the clean energy transformation. The boom is well under way. Wind and solar accounted for two-thirds of all new electric capacity in the United States in 2016. Costs of wind and solar have dropped over 80 percent in the past eight years for solar PV and over 60 percent for wind.

And hi-tech advances are happening all the time, in battery storage, materials science, electric vehicles, and other key elements of the transition. It would be a mistake for companies to bet on a go-slow, “Trump” phase. The transition to clean energy is the smart bet for businesses and investors need to keep their eyes on the prize and not get distracted by the ideological wars of Washington.

While US withdrawal from the Paris accord might cause some other countries to pull back from their commitments to clean energy, it will likely encourage others to step up efforts to fill the void. China has just announced that electric cars are going to account for essentially all growth of car sales as of now.

China’s “road map” plans to have 20% (7 million) of new annual sales to be electric vehicles by 2025 (that is in 8 years), with 2 million electric car sales by 2020. In an extraordinary move China is seeking 8% of new car sales in China being electric vehicles in 2018 (next year). This is not only an emerging problem for the oil industry, it is also a big problem for foreign car makers without electric cars available in China next year.

Many foreign manufacturers are paying attention to China. The latest news means that if you don’t have electric cars or Chinese electric car making partners, then the Chinese market is going to be challenging. BMW has announced that it is prepared to meet the Chinese Government targets. Daimler projects electric vehicles and hybrids will account for up to 35% of worldwide sales in the next 7 years.

And the story for Indian electric car/Internal combustion engine substitution is similar, if not more dramatic (all vehicles electrified by 2032). The scale of the projected changes is huge: 1 Gigaton of CO2 emissions saved and savings of $60 billion in annual petrol/diesel costs in 2030. India is projected to be the 3rd largest automotive market by 2026.

Oil giant BP’s 2016 future energy report barely mentioned electric cars (less than 1.5% penetration by 2035). In its 2017 Energy Outlook, BP had penetration of BEVs at ~4.5% by 2035. BP has projected that the expansion of future oil demand would be dominated by China and India. Now China is saying that it plans to have electric vehicle penetration at 20% of new sales in 2025. And that might be conservative.

Self-driving electric cars are ten times cheaper to run than fossil-based cars, with an expected lifespan of 1 million miles. The only thing holding them back is battery power. The “tipping point” could arrive over the next two to three years as EV battery ranges surpass 200 miles and electric car prices in the US drop to $30,000.

By 2022 the low-end models will be down to $20,000. After that, the avalanche will sweep all before it. What the cost curve says is that by 2025 all new vehicles will be electric, all new buses, all new cars, all new tractors, all new vans, anything that moves on wheels will be electric, globally.

Revolutions have a way of creeping up on you.

Financial Review

Cleaning Up

Sinclair Noe — March 28, 2017

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

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DOW + 150 = 20,701
SPX + 16 = 2358
NAS + 34 = 5875
RUT + 9 = 1367
10Y + .04 = 2.41%
OIL + .71 = 48.44
GOLD – 2.50 = 1252.30

Yesterday, we noted that the Dow Industrial Average had been down for 8 straight sessions – the longest losing streak since 2011. We also noted that the market seemed to be taking a break or a pause; the losses during that time were not big enough to reverse the uptrend.

Sure enough, the uptrend resumed today. Even though stocks wobbled out of the opening gate, they gained their footing with the help of some good economic reports.

Consumer confidence surged to a more than 16-year high in March. The Conference Board said its consumer confidence index jumped 9.5 points to 125.6 this month, the highest reading since December 2000.

Consumers’ assessment of both current business and labor market conditions improved sharply in March. They also anticipated an increase in their incomes. The survey’s so-called labor market differential, derived from data about respondents who think jobs are hard to get and those who think jobs are plentiful, was the strongest since 2001.

When consumers feel good about their jobs or job prospects, their confidence goes up. And then the hope is that the confidence translates into increased spending, especially for a retail sector that has been underperforming in the first quarter.

Separately, the Commerce Department said in its advance economic indicators report the goods deficit fell 5.9 percent to $64.8 billion last month as imports and exports fell. It also said inventories at retailers and wholesalers both rose 0.4 percent last month.

And another report showed the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas rose 5.7 percent in January on a year-over-year basis after increasing 5.5 percent in December. The 10-City Composite posted a 5.1% annual increase, up from 4.8% the previous month. The National Index was up 5.9% year-over-year in January, setting a 31-month high.

House prices are being driven by tight inventories. The recent interest rate hikes from the Fed didn’t seem to affect home buyers – at least not yet; 2 or 3 more hikes this year could pinch affordability.

Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over each of the last 12 months. In January, Seattle led the way with an 11.3% year-over-year price increase. In Phoenix, home prices were flat in January, but up 5.1% over the past 12 months.

Hospital stocks dropped today as Republicans in the House of Representatives said they were considering a renewed push to repeal and replace Obamacare, after the effort failed last week. Shares of Community Health Systems dropped 7.6 percent and Tenet Healthcare shares fell 4.8 percent. HCA Holdings, Universal Health Services and Envision Healthcare were all down around 2 percent.

A full-blown push at the repeal and replace is going to be extremely difficult to pull off, but there are other ways to attack the ACA. Health and Human Services Secretary Tom Price already stalled the rollout of mandatory Medicare payment reform programs for heart attack treatment, bypass surgery and joint replacements.

Hospitals and physician groups have been counting on support from Medicare – the federal insurance program for the elderly and disabled – to continue driving payment reform policies built into the ACA that reward doctors and hospitals for providing high quality care at a lower cost. Repeal may be difficult but death by a thousand cuts, that’s another story.

After failing to repeal and replace the Affordable Care Act, President Trump said it was time to move on; and he is. Yesterday, behind closed doors and without his typical fanfare, Trump signed Congress’s repeal of Obama’s Fair Pay, Safe Workplaces executive order that would have mandated that companies with substantial federal contracts be required to disclose past violations of federal labor laws – such as wage and hour laws and workplace safety standards.

The rule aimed at raising standards across the economy by leveraging the federal government’s purchasing power; companies with federal contracts employ roughly one in five American workers.

President Trump has signed an executive order to undo a slew of Obama-era climate change regulations. The decree’s main target is the Clean Power Plan that required states to cut carbon emissions from power plants – a critical element in helping the United States meet its commitments to a global climate change accord reached by nearly 200 countries in Paris in 2015.

The so-called “Energy Independence” order does not directly address the Paris accord, but it reverses a ban on coal leasing on federal lands, undoes rules to curb methane emissions from oil and gas production, and reduces the weight of climate change and carbon emissions in policy and infrastructure permitting decisions.

Trump has denied climate change, calling it a Chinese hoax. While Trump’s administration has said reducing environmental regulation will create jobs, some green groups have countered that rules supporting clean energy have done the same. The number of jobs in the US wind power industry rose 32 percent last year while solar power jobs rose by 25 percent, per a Department of Energy study.

The benefits of energy-efficiency rules and clean-power programs are passed to workers, too; clean-energy jobs surpassed oil and gas-drilling jobs in the US for the first time last year, and job growth in the solar energy sector was 12 times faster than that of overall economy. Several groups have already announced plans to challenge the order in the courts, so there will be a few jobs for attorneys.

The Clean Power Plan required states to collectively cut carbon emissions from power plants by 32 percent below 2005 levels by 2030. Some 85 percent of US states are on track to meet the targets despite the fact the rule has not been implemented.

Wind and solar accounted for more than half of the new capacity added to U.S. grids in the past two years, thanks to two economic trends. The first is low natural gas prices, which have driven down the price of electricity and forced record numbers of aging coal-fired generators to close. The second is that wind and solar farms have become much cheaper to build, making them an attractive replacement for shuttered fossil-fuel plants.

Power prices have already dipped to historic lows, forcing conventional power-plant owners including FirstEnergy and NRG Energy to write down billions in assets. Utilities know that coal and nuclear just aren’t competitive in this era of low gas prices and increasing renewables, absent special treatment to keep them running. And even then, it is not enough to build any new coal powered plants.

State laws requiring utilities to source a portion of their electricity from renewables play an important role. So do federal tax credits for wind and solar farms that were extended in 2015 with support from Republican lawmakers. And these policies remain intact, at least for now. Today’s executive order will probably have little impact on the US wind and solar industries.

After years of being supported by subsidies, prices have plunged so much that renewables can compete with fossil fuels. That’s why energy companies are pushing forward with long-term plans to generate power with clean alternatives, even as Trump vows to breathe life back into coal country. Nobody believes that coal is the future of energy.

Elon Musk has managed to start up an electric car company, Tesla. Then he bought into a solar power company and he’s building a gigantic battery factory, so he can capture power from the sun and store it. Then he started Space X, a re-usable rocket company to launch satellites, with eventual plans to colonize Mars.

And while all that is mildly entertaining, you are probably asking if he can come up with something new and innovative. How about this: Neuralink – what Musk calls “neural lace” technology, implanting tiny brain electrodes that may one day upload and download thoughts. In other words, hook your brain into a computer.

Business filings suggest that Neuralink would build devices designed to treat or diagnose neurological conditions, and conceivably augment human cognitive powers, maybe a way to alleviate brain disorders like epilepsy. In a Vanity Fair article published online today, Musk discussed the idea of merging biological intelligence with machine intelligence, saying: “For a meaningful partial-brain interface, I think we’re roughly four or five years away.”

Compared to neural lace, the debut of yet another new smartphone seems downright pedestrian, but it is still kind of a big deal for Samsung. Tomorrow they are expected to unveil the new Galaxy S8. Look for two different sizes; big and bigger; curved screens, fingerprint scanner, faster processor, and better camera. And a new AI assistant called Bixby. And while it is cool new technology, the most important thing is that the battery does not explode.

The Scottish independence referendum, could be facing a re-run as a direct result of Brexit. By a 69-59 vote, members of Scottish Parliament backed First Minister Nicola Sturgeon’s pursuit of a new independence referendum.

Sturgeon wants to hold a vote between fall 2018 and spring 2019, which she says would give enough time for Brexit negotiations (set to start Wednesday and likely to last for two years) to make substantial progress, but would also leave time for Scotland to leave the UK and still remain in the EU

Tomorrow, a letter personally signed by UK Prime Minister Theresa May will be deliver to European Union President Donald Tusk. The instant the letter exchanges hands marks the moment the UK has officially served its partner of four decades with divorce papers.

The invocation of Article 50 of the EU’s Lisbon Treaty triggers two years of negotiations to secure Britain’s departure from the bloc. May herself considers it “one of the most important documents” in Britain’s recent history. Exactly what is in the letter remains a mystery, at least until tomorrow.

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

2016 Review

Sinclair Noe — December 30, 2016

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

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DOW – 57 = 19,762
SPX – 10 = 2238
NAS – 48 = 5383
RUT – 6 = 1357
10 Y – .04 = 2.44%
OIL + .15 = 53.92
GOLD – 6.80 = 1151.90

It has been a good year for Wall Street. The Dow, S&P and Nasdaq partied like it was 1999 – the three markets all closed at historic highs for the first time in 17 years. The Dow Industrial Average gained 13.4% for the year, its best annual percentage gain since 2013.  The S&P advance is about 10%. The Nasdaq posted an annual gain of 8.5%.

Global markets have fared surprisingly well in a year marked by major political shocks. Britain’s blue-chip FTSE 100 index is up 23% from lows hit immediately after the June 23 Brexit vote to leave the European Union. MSCI’s world index, which tracks shares in 46 countries, has gained 13% since the end of June.

Oil prices posted their biggest yearly percentage gain since 2009, up 45%. The S&P energy sector was a market leader, up 23.7%

The U.S. dollar index remains near 14 year highs. The main trend for the greenback is higher and is likely to continue to be supported by a hawkish Federal Reserve. Of the major central banks, only the Fed is on track to increase interest rates in 2017.

The probability that the Federal Open Market Committee will increase its fed funds rate at its May 2017 meeting is 36%, and the probability of a rate hike at the June meeting is 75%.

The year is also notable for the growing chorus of voices calling an end to the three-decade bond bull run. With inflation on the rise, U.S. 10-year yields have hit two-year highs and the European Central Bank has signaled it will start trimming bond purchases.

Some of the highlights, or lowlights, from 2016 would have to include: Brexit, Donald, Dilma, the Panama Papers, Volkswagen’s Dieselgate settlement, Takata’s exploding airbags, Samsung’s exploding phones, the Italian referendum, the deadly spread of the Zika virus, the megabrew merger of AB InBev and SAB MiIller, the rise and fall of Theranos, the EpiPen price gouge, and of course, Pokemon Go transformed billons of people into mindless zombies.

We are still trying to figure out the Brexit vote, and the British politicians are still trying to figure it out as well. In Brazil, the President, Dilma Rousseff was impeached for corruption; her successor is also under investigation for corruption. In the US, we had our worst presidential election ever; that sounds like hyperbole but it isn’t; we ended up with two candidates that were the most flawed and disliked in our history – and then we picked one.

But 2016 was not just about politics – it was a banner year for terrorism as well. There were terrorist attacks in Brussels, killing dozens, wounding hundreds; a hijacked truck plowed through a Bastille Day celebration in France; a gunman shot up a gay nightclub in Orlando. Terrorist shot up the Istanbul airport. Another hijacked truck shredded a Christmas display in Germany. And then there was Syria and the indelible images of bleeding children pulled from the rubble, or the lifeless body on the beach.

The Justice Department battled Apple in court over access to its customers’ locked, encrypted iPhones. Microsoft sued the U.S. government over its access to customers’ emails and files without their knowledge.

Yahoo confirmed that over half a billion user accounts had been hacked. Police departments across the country continued to use Stingray devices to collect cellphone data in real time, often without a warrant.

A six-hour system shutdown resulted in hundreds of Delta flights being cancelled and thousands of people stranded. Doctors announced the birth of the first healthy three-parent baby created with DNA from three separate people.

Elon Musk outlined his plan to populate Mars. Cars started to drive themselves. Google’s artificial intelligence program, AlphaGo, defeated its human opponent in a DeepMind Challenge Match. So, this was the year when the robots finally began to assert their dominion over mere humans.

We lost some bright stars this past year; a few dark stars as well. Among the ranks of the notable deceased: Fidel Castro, Supreme Court Justice Antonin Scalia, Israel’s former president Shimon Peres, the first female Attorney General Janet Reno, and Arizona’s first female governor Rose Mofford, and former first lady Nancy Reagan.

Phoenix lost its most famous resident – Muhammad Ali, whose fast fists and outspoken personality made him one of the most recognizable people in the world. Other sports figures included: golf great Arnold Palmer, Gordie ‘‘Mr. Hockey’’ Howe, basketball players Dwayne ‘‘Pearl’’ Washington and Nate Thurmond, and coach Pat Summitt.

We lost many celebrities, including: authors Harper Lee and Umberto Eco and Edwar Albee, actors Gene Wilder, Abe Vigoda, Florence Henderson, Alan Rickman, Robert Vaughn, Garry Shandling, Doris Roberts, Alan Thicke, George Kennedy, Patty Duke, Gloria Dehaven, Carrie Fisher – followed by her mom, Debbie Reynolds.

And it seemed to be a particularly fatal year for musicians: David Bowie, Prince, Leonard Cohen, George Michael, Merle Haggard, Glen Frey, Paul Kantner, Gato Barbieri, Pete Fountain, Leon Russell, Mose Allison, and Buckwheat Zydeco.

The business world lost Andy Grove, a refugee from postwar Europe who started Intel; Forrest Mars Jr., the billionaire co-owner of candy maker Mars; Dwayne Andreas, who built Archer-Daniels-Midland into the world’s largest processor of agricultural products; and Roger Enrico, who led PepsiCo in its battle against Coca-Cola.

Financial leaders who died included ex-Salomon Brothers executive John Gutfreund, known as the King of Wall Street; Thomas Perkins, the venture capitalist who helped finance Amazon.com and Google; Robert H.B. Baldwin, who led Morgan Stanley during a period of rapid growth; and E. Lee Hennessee, who started a hedge-fund advisory firm when few women worked in that part of the industry.

Futurist Alvin Toffler, journalists Morley Safer and John Mclaughlin; pollster Luis Harris. Reinhard Selten, who won the Nobel for his work on game theory; Also, Nobel Peace Prize winner and historian Elie Weisel; astronaut Edgar Mitchell – Apollo 14, and the first American in space – John Glenn.

That’s just a partial list of those we lost this year, with no disrespect intended for those not mentioned here.

Through all the changes of the past year, there was one constant – bankers behaving badly. And that brings us to our annual Worst Bankster of the Year Award. We start with a couple of runners-up: Deutsche Bank, which remains on top of the IMF’s list of the most systemically dangerous financial institutions in the world – if any bank can meltdown the global financial system in 2017, look for Deutsche; next on the list is Banca Monte dei Paschi, the world’s oldest continuously operating bank is now in the process of being bailed out by the Italian government – this is a bank that survived world wars and the plague and it is now on the edge of the abyss.

The winner, or the loser, of the Worst Bankster of the Year Award goes to Wells Fargo, which over a several years’ period managed to open more than 2 million customer accounts and credit card accounts – only problem – they were all fake.

CEO John Stumpf groveled before congressional investigators and said he would take full responsibility and then he blamed 5,000 rank and file employees who were fired for going rogue trying to fill their sales quotas. Whistleblowers were also fired. Customers credit was destroyed. It was ugly, and stupid, and greedy. In other words, the epitome of Banksterism.

2016 will go down as the hottest year on record; breaking the record set in 2015; which broke the record set in 2014. The last 10 years are the hottest ever recorded, breaking the record set 10 years prior.

In September, a month in which atmospheric carbon dioxide — a heat-trapping greenhouse gas —is usually at its lowest, the monthly value failed to drop below 400 parts per million. The 400 ppm mark has sad significance in the climate community, as it has long been considered a point of no return for the atmosphere by scientists.

Temperatures in parts of the Arctic were 36 degrees F above normal in November, according the US National Snow and Ice Data Center. Sea ice in the Arctic and Antarctica is at record lows. Climate scientists say that a portion of sea ice approximately the size of India melted in 2016 due to a worldwide increase in temperatures.

Deforestation in the Amazon increased over 29% from 2015 to 2016. Australia’s Great Barrier Reef, a 1,430-mile-long world heritage site visible from space, suffered the largest loss of corals ever recorded this year.

Preliminary data through October shows that global average temperatures are 2.2 degrees F (1.2 degrees C) above pre-industrial levels, driven by the El Niño phenomenon. That is perilously close to the limit adopted in the Paris Agreement, which calls for limited temperature rise since the industrial revolution to 2 degrees C.

Half the planet must endure 2016 for an extra moment. On Dec. 31, the world will experience its 28th “leap second.” That means that after 4:59:59 pm on December 31, the clock will not tick to 5:00:00 pm on December 31.

Instead, time will officially read 4:59:60 before incrementing to 5:00:00, the result of a quirk in global timekeeping that’s more useful to astronomers than everyday people. We call it the leap second. The reason is that there are not exactly 24 hours in a day, and an occasional small adjustment keeps the clocks aligned with the position of the Sun.

2016 was not all hot and horrible, sometimes it was just weird – that’s the only way to explain Bob Dylan winning the Nobel Prize for Literature and the Chicago Cubs winning the World Series.

Shakespeare said the past is prologue. Wishing you the very best for 2017.