Financial Review

24K Magic

Sinclair Noe — November 30, 2017

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

Subscribe: Android | RSS

DOW + 331 = 24,272 (Record)
SPX + 21 = 2647 (Record)
NAS + 49 = 6873
RUT + 1 = 1544 (Record)
10 Y + .04 = 2.42%
OIL + .08 = 57.38
GOLD – 8.80 = 1275.60

Cryptocurrency

• Number of Currencies: 1,361
• Total Market Cap: $297,611,083,181
• Volume (24h): $15,874,370,947

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Volume (24h)	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	9,621.2	$165.88B	$8.02B	50.52%	1	-2.89%	+22.45%
	Ethereum	ETH	422.70	$41.83B	$1.76B	11.10%	0.0444209	-2.24%	+5.17%
	Bitcoin Cash	BCH	1,276.60	$22.52B	$1.10B	6.94%	0.136491	-2.71%	-19.01%
	Ripple	XRP	0.23100	$9.46B	$243.48M	1.53%	0.00002497	-2.53%	-0.01%
	Dash	DASH	752.00	$6.05B	$489.20M	3.08%	0.079939	-0.84%	+38.02%
	Bitcoin Gold	BTG	277.95	$4.88B	$139.16M	0.88%	0.0298825	-2.98%	-4.96%
	Litecoin	LTC	84.410	$4.65B	$461.73M	2.91%	0.00876616	-1.75%	+15.77%
	IOTA	MIOTA	1.27000	$3.58B	$166.62M	1.05%	0.00013133	-3.13%	+64.12%
	Cardano	ADA	0.115385	$3.02B	$120.63M	0.76%	0.00001187	-0.94%	+321.83%
	Monero	XMR	166.19	$2.68B	$116.47M	0.73%	0.0176935	-5.17%	+7.76%

Record highs for the Dow, the S&P, and the Russell. The Nasdaq recovered nicely from a nearly 1.5% decline yesterday, but not enough for a record.

Well, it’s easy to see that the promise of a tax cut has been a big boost to Wall Street. Some estimates claim a corporate tax cut could boost S&P 500 earnings by 6%. The Senate convened at 10:30 a.m. this morning to continue discussing the bill after it passed a procedural vote on Wednesday. Republicans are using special procedures that shield the measure from a Democratic filibuster.

Debate on the legislation is limited to 20 hours. When the debate ends, it will be time for a vote-a-rama, a marathon of amendment votes. Eventually, the Senate would vote to pass the tax bill. But before then, the contents of that bill are expected to change. Republicans have been discussing significant revisions to their bill as party leaders try to secure the votes they need for passage.

The congressional Joint Committee on Taxation said Wednesday afternoon that the Senate tax bill would add $1 trillion to federal budget deficits over the next decade, even after accounting for additional economic growth, a major blow to Republicans’ contention that the $1.5 trillion tax cuts in the bill will pay for themselves through growth.

The committee, which serves as the scorekeeper for growth and revenue estimates in tax bills, estimated that the Senate bill would boost economic growth by 0.8 percent over a decade. Republicans have said they expect substantially stronger growth than that to result from the tax cuts.

Throughout the tax debate over the last month, Republican leaders have frequently cited other analyses by the committee to make their case for the bill. The committee said economic growth generated by the tax cut will offset losses by about $458 billion over the next decade. Over that same period, an additional $51 billion will be needed to pay interest on the additional debt the government will borrow to pay for the tax cuts.

The Joint Committee on Taxation calculates the budgetary effects of changes in economic growth are projected to reduce the deficit by $407 billion during the budget window, with the net deficit increasing by $1 trillion. That’s consistent with the findings of the Penn-Wharton model, which projects the Senate tax bill would increase growth by less than 0.1 percent a year, due largely to the drag from increased debt.

Congressional Republicans and the Trump administration have yet to produce an analysis supporting their claims that the $1.5 trillion tax cut would not add to federal budget deficits. Instead, they cite a ballpark estimate of the additional economic growth the tax plan will unleash, which, they say, should be enough to make the cuts pay for themselves.

While there are still many unresolved details to the Tax Plan, at its core it is legislation that will change major areas of American life, plus everything from education to health care. Corporate taxes, along with those on wealthy Americans, would be slashed on the presumption that when people in penthouses get relief, the benefits flow down to basement tenements.

Elements in both the House and Senate bills could constrain the ability of state and local governments to levy their own taxes, pressuring them to limit spending on health care, education, public transportation and social services.

The Congressional Budget Office warned the tax cut package could trigger rules mandating cuts to Medicare. Some 13 million people could lose health care via the elimination of a key plank of Obamacare.

Insurance premiums are also expected to rise by 10 percent. The House bill includes provisions that would end the deductibility of tuition waivers for graduate students and repeal the deduction for interest paid on student loans. Both chambers’ bills would tax investment earnings from university endowments.

Economists and tax experts are overwhelmingly skeptical that the bills in the House and Senate can generate meaningful job growth and economic expansion. Many view the legislation not as a product of genuine deliberation, but as a transfer of wealth to corporations and affluent individuals — both generous purveyors of campaign contributions.

According to the Joint Committee on Taxation and the Congressional Budget Office, by 2027, people making $40,000 to $50,000 would pay a combined $5.3 billion more in taxes, while the group earning $1 million or more would get a $5.8 billion cut.

In a recent University of Chicago survey of 38 prominent economists across the ideological spectrum, only one said the proposed tax cuts would yield substantial economic growth. Unanimously, the economists said the tax cuts would add to the long-term federal debt burden, now estimated at more than $20 trillion.

Consumer spending slowed in October as the hurricane-related boost to motor vehicle purchases faded, while a sustained increase in underlying price pressures suggested that a recent disinflationary trend had probably run its course.

The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.3 percent last month after surging 0.9 percent in September. The jump in spending in September was the largest since August 2009 and was spurred by some drivers in Texas and Florida replacing automobiles destroyed when Hurricanes Harvey and Irma slammed the states.

Spending on long-lasting goods like autos fell 0.1 percent last month after accelerating 2.9 percent in September. Spending on nondurable goods such as prescription drugs and recreational items rose 0.2 percent. Outlays on services increased 0.3 percent.

The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, rose 0.2 percent in October after a similar gain in September. The so-called core PCE increased 1.4 percent in the 12 months through October.

The Labor Department said initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 238,000 for the week ended Nov. 25. Last week marked the 143rd consecutive week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent.

The White House is contemplating a scenario to replace Secretary of State Rex Tillerson with CIA Director Mike Pompeo within the next few months, according to multiple reports. There’s no decision yet on the timing of Tillerson’s departure, which has been expected for months. But multiple sources close to the White House and across government said Pompeo is the leading candidate to take over at the State Department.

Shares of the retail-pharmacy giant CVS and health insurer Aetna jumped in trading on Thursday after The Wall Street Journal reported that the two companies were nearing a deal. CVS was reported in late October to be in talks to buy Aetna in a deal worth about $66 billion. According to the latest report, CVS is nearing a majority-cash purchase of Aetna of $200 to $205 a share. Aetna’s stock gained 2% on the news. CVS rose by as much as 5%.

Aetna previously agreed to buy rival insurer Human for $34 billion, but the Department of Justice blocked that deal. A judge ruled in favor of the DOJ in January, saying a combination of the two companies would be anticompetitive.

For CVS, the acquisition is a way to fend off competition from Amazon, which has been speculated to be interested in the healthcare industry. It would allow the retailer to keep a greater share of each drug sale and to direct more Aetna clients into its stores.

OPEC members and other oil-producing countries agreed to extend production cuts until the end of 2018. Crude prices rose.

Kroger jumped more than 6 percent after the company forecast strong same-store sales for the four quarter and posted better-than-expected earnings.

Meanwhile, Costco shares climbed 3.9 percent after the company reported a 7.9 percent rises in same-store sales for November.

This weekend, for the several billionth or so time in Earth’s history, the Moon will be in the part of its orbit around Earth where it’s a little closer, 16,000 miles closer than usual, and it looks a teeny amount larger. Call it a Supermoon or whatever, you should look at the moon – this weekend, tonight, every night. It helps keep things in perspective.

Financial Review

GDP

Sinclair Noe — March 30, 2017

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

Subscribe: iTunes | Android | RSS

DOW + 69 = 20728
SPX + 6 = 2368
NAS+ 16 = 5914
RUT + 10 = 1382
10 Y + .03 = 2.42%
OIL + .86 = 50.37
GOLD – 10.90 = 1243.50

We are nearing the end of the month and the first quarter. The Dow Industrial Average is on track for a small loss in the month of March, but after a strong rally in February, the Dow is still looking at year-to-date gains of 4.75%.

The S&P has risen 10.3 percent since the U.S. election. The S&P 500 moved into positive territory for March, up 0.2%, while the Dow remains down 0.4% for the month.

The Nasdaq is up 1.5% in March.

The rapid climb in equities has raised concerns regarding valuations, with the S&P 500 trading at nearly 18 times earnings estimates for the next 12 months against its long-term average of 15 times. The market will be looking at quarterly earnings to see if the lofty valuations can be supported. First-quarter earnings for S&P 500 companies are expected to rise 10.1 percent, per Thomson Reuters I/B/E/S.

Today, the market found a catalyst in the form of slightly stronger GDP numbers. Economic growth slowed less than previously reported in the fourth quarter. Strong consumer spending provided a boost that was partially offset by the largest gain in imports in two years.

Gross domestic product increased at a 2.1 percent annualized rate instead of the previously reported 1.9 percent pace. The economy grew at a 3.5 percent rate in the third quarter. Despite the upward revision to the fourth quarter, the economy grew only 1.6 percent for all of 2016, its worst performance since 2011, after expanding 2.6 percent in 2015.

The government also reported that corporate profits after tax with inventory valuation and capital consumption adjustments increased at an annual rate of 2.3 percent in the fourth quarter after rising at a 6.7 percent pace in the previous three months.

Imports increased at a 9.0 percent rate. That was the biggest rise since the fourth quarter of 2014 and was an upward revision from the 8.5 percent growth pace reported last month. Exports fell more than previously estimated, leaving a trade deficit that subtracted 1.82 percentage point from GDP growth instead of the previously reported 1.70 percentage points.

Robust domestic demand and import growth meant stronger inventory investment than previously estimated. Business investment was revised lower.

Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, was revised up to a 3.5 percent rate in the fourth quarter. It was previously reported to have risen at a 3.0 percent rate. Consumer spending is being supported by a tightening labor market. A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits fell 3,000 to a seasonally adjusted 258,000 for the week ended March 25.

The Atlanta Federal Reserve is forecasting GDP rising at a rate of 1.0 percent in the first quarter. Of course, there is always a chance that first-quarter growth could surprise the doubters.  For all of 2017, the economy is expected to expand by roughly 2 percent; meaning activity is expected to show much stronger growth in the second half.

In other words, it looks a lot like a repeat of 2016. And the forecast for 2018 is in the 2 to 2.5% range. Again, that could change, but it looks a lot like the last 8 years. The sluggish growth rate has been good enough to keep unemployment at 4.7%. And now the Federal Reserve will be looking to raise rates in a slow growth environment, while they may already be behind the curve of the labor market.

And despite the talk about “animal spirits,” corporate America is not investing heavily, at least so far, in new plants and equipment. At the same time, demand in many industries is growing only modestly, while a few sectors like retail chains are having to make painful adaptations to a rapidly evolving consumer landscape.

Government debt and budget deficits are both set to spiral higher in the coming three decades if current patterns hold, per new projections released today by the Congressional Budget Office. The total current debt held by the public of $14.3 trillion is 77 percent of GDP.

The current total debt level of $18.8 trillion is about 101 percent of GDP (the CBO computes debt to GDP based on public debt). The debt-to-GDP ratio would rise to 89 percent in 2027, per current projections. In its new long-term budget outlook, the CBO said debt would reach 150% of gross domestic product in 2047. The report warns, “The prospect of such large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges.”

In addition to debts, the CBO also said the budget deficit will more than triple from the projected 2.9 percent of GDP in 2017 to 9.8 percent in 2047. The deficit at the end of fiscal 2016 stood at $587 billion.

The report said, “Large and growing federal debt over the coming decades would hurt the economy and constrain future budget policy,” in other words, bad news for growth prospects. Rising interest rates could pose a big problem for the increasing debt burden. The Fed has kept rates low since the financial crisis struck in 2008 but is on track to gradually hike rates over the coming year.

Tomorrow, the we’ll get more information on the personal consumption expenditures inflation data (that’s the Fed’s preferred gauge of inflation); the PCE is expected to come in at 2 percent year-over-year (that’s the Fed’s target for inflation).

The market expectations for Fed rate hikes have bounced around, but many Fed watchers now see two more rate hikes for 2017, as the Fed has forecast. If people start looking at inflation being already over target, there maybe a reconsideration of expectations for the Fed.

It has been a busy week for Fed jawboning and today, Cleveland Fed President Loretta Mester forecast GDP growth above 2% in 2017, and sees a “sustained return” to 2% inflation “over the next year or so.” Mester also expects the Fed to raise interest rates again this year, but didn’t say how many times might be likely.

Dallas Fed President Rob Kaplan says the biggest risk facing the economy is… Washington. Kaplan said he was worried about policy, such as on trade or healthcare, that would cause consumers to pull back. For instance, seniors may curtail spending if they see they may have to pay more for their health care.

Kaplan said he was also worried actions to roll back trade openness might cause U.S. jobs to be lost to Asia, especially if companies must supply chains and logistics that have helped them become productive. Kaplan defended the existing U.S. trade relationship with Mexico, saying it has improved U.S. competitiveness and added jobs.

Kaplan said Congress could also do positive things like cutting red tape and boosting spending on infrastructure. Corporate tax reform, if done right, might boost investment. The Dallas Fed president, who is a voting member of the Fed’s policy committee this year, said three interest rate hikes in 2017 is his “base case.”

William Dudley, the president of the New York Fed delivered a speech in Florida today, said the federal funds rate is in a “still unusually low” range of 0.75%-1%, and “In such circumstances, it seems appropriate to scale back monetary policy accommodation gradually.” Dudley said, “I don’t think we’re removing the punch bowl yet. We’re just adding a bit more fruit juice.”

The oil market might be looking at a supply crunch as producers cut spending on major projects to focus on short-term low-cost shale output in the US. After jumping 20 percent in the weeks following the decision by OPEC and 11 allies to curtail output to end a three-year surplus, prices have slipped as US shale producers fill the gap.

With current and future prices depressed, spending decisions on major projects have been delayed.  Oil companies are reviving investment after a two-year rout, easing but not eliminating the risk of a future supply crunch. Investment will likely increase this year after back-to-back declines of about 25 percent slashed global investment to $433 billion in 2016, per the IEA.

US producers are leading the spending revival, and will contribute most of the growth in supplies outside OPEC through to 2022. Still, a lot depends on price stability; stable prices at current levels or slightly higher might find more willing investors.

Gasoline prices could see a significant springtime jump of 20 to 45 cents per gallon, pushing retail pump prices to their highest level since June 2015, per energy analysis at Oil Price Information Service. The factors behind the increase: anticipated higher crude prices, higher demand from US drivers and a higher level of gasoline exports.

Macro factors support higher gasoline prices, include: high employment, consumer purchases of SUVs instead of more fuel-efficient cars and strong consumer confidence, which jumped to a 16-year high this month. Global oil supplies appear to be rebalancing and demand for crude could soon outstrip supply, despite the huge amount of US oil in storage.

That should help prices, but so should demand for gasoline, which usually rises by about 100,000 barrels a day in April, though it fell last year. The forecast calls for gas prices to rise to around $2.50 to $2.75 a gallon, with a few states looking at $3 gas. According to AAA, the national average for unleaded gasoline as of today, is $2.30 per gallon.

Financial Review

Makes You Want to Holler

Sinclair Noe — March 16, 2017

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

Subscribe: iTunes | Android | RSS

DOW – 15 = 20,934
SPX – 3 = 2381
NAS + 0.71 = 5900
RUT + 3 = 1386
10 Y + .01 = 2.52%
OIL – .07 = 48.79
GOLD + 6.10 = 1226.80

President Trump will ask the Congress for cuts to many federal programs, and more money to bulk up defense spending. Trump’s budget outline is a blueprint covering just “discretionary” spending for the 2018 fiscal year starting on October 1.

It boosts spending for defense, homeland security and veterans’ affairs; the Defense Department budget would increase by $54 billion, which will raise defense spending to $639 billion for fiscal year 2018.

The Environmental Protection Agency faces cuts of 31% and the Department of Agriculture would see funding cuts more than 20; State Department 28%; Health and Human Services would be cut 16%; Education faces cuts of 14%.

Trump’s budget proposes eliminating discretionary funding altogether for at least 19 agencies and 61 other programs. Plans for new NASA missions, climate change research, aid for low-income families, funding for commercial flights to rural airports, public broadcasting, and Meals on Wheels would all be on the chopping block.

The spending cuts that Trump proposes come from those agencies that fund education programs, social services, environmental protection, health research, housing and food assistance, national parks, land management, and countless other endeavors. As it is, spending on non-defense discretionary programs is already historically low.

As a share of the economy it’s at its lowest level since 1998 and is well below where it was 50 years ago, per data from the Congressional Budget Office. The net effect is no change in the national deficit. The budget proposal is the first volley in what is expected to be an intense battle over spending in coming months in Congress.

President Trump’s second travel ban was blocked by a federal court in Hawaii hours before it was to go into effect. A federal judge in Maryland also ruled against the ban on the day it was supposed to take effect. The administration has promised to appeal the rulings.

The speaker of the House, Paul Ryan, the Senate Intelligence Committee chairman and the ranking Democrat on the committee all said that they’ve seen no evidence of President Donald Trump’s accusation that he was wiretapped last year by his predecessor.

Senate Intelligence Committee chair Richard Burr and ranking member Mark Warner issued a statement, saying “based on the information available to us, we see no indications that Trump Tower was the subject of surveillance by any element of the United States government either before or after Election Day 2016.”

House Speaker Paul Ryan said that “no such wiretap existed,” citing intelligence reports to House leaders. “We don’t have any evidence,” says the top Republican on the House Intelligence Committee. “No evidence,” says his Democratic counterpart.

The statement from the leaders of the Senate Intelligence Committee marks the clearest and strongest refutation of Trump’s allegations since the President first made them two weeks ago. The senators statement also addresses Trump’s more recent statement that he was not merely speaking about wiretapping specifically.

The leaders of the House Intelligence Committee have said they have yet to see any evidence of wiretapping, but have yet to flatly rule out all surveillance. House Intelligence Chairman Devin Nunes said Wednesday that it was possible that Trump aides were surveilled via “incidental” collection.

Dutch Prime Minister Mark Rutte defeated far-rightist Geert Wilders in the first of a series of European elections this year in which populist insurgent parties are hoping to rock the establishment. The center-right prime minister had trailed in opinion polls for much of the campaign but emerged the clear victor of Wednesday’s election, albeit with fewer seats than before.

It’s rare for a Dutch election to attract international attention, but the performance of Wilders is being seen as a bellwether for the ascent of populism around Europe, particularly with the National Front’s Marine Le Pen set to reach the run-off in the French presidential election late next month. Germans will vote later in the year.

The Bank of Japan is sticking with its ultra-loose monetary policy even as the Federal Reserve tightens. Japan’s economy is recovering with the help of a weaker yen but growth and inflation remain low. The Bank of Japan to keep its target for 10-year Japanese government bond yields at around zero, a policy it calls “yield-curve control.” It left the short-term interest rate on some yen deposits held by commercial banks at minus 0.1%.

The Bank of England held interest rates at the record low level of 0.25 percent and maintained asset purchases at £435 billion. The UK economy has shown strength since last June’s Brexit referendum and the government revised its forecasts for domestic growth in 2017 sharply higher. That might be wishful thinking.

The UK has not yet felt the full impact of Brexit, but that doesn’t mean they won’t. The big question is whether London’s financial institutions will lose access to the single market of the Euro Union after the UK leaves the EU.

The main argument is as follows: since London plays a key financial role in Europe, any disruption would endanger the financing of the EU economy and would ultimately pose a threat to financial stability in the bloc.

My guess is that argument plays better in London than Brussels. That’s not just speculation. The number of new available jobs listed in the UK’s financial center fell 17% in February year-on-year to 6,945.  Or simply, Brexit is Brexit.

Yesterday, the Federal Open Market Committee voted to raise the range of the federal funds rate to 0.75% and 1.00%, citing progress in labor market growth, business fixed investment and inflation. The Fed indicated they are still looking at 2 more rate hikes in 2017, which matches the guidance they provided in December.

In a press conference yesterday, Fed Chair Janet Yellen said, “The simple message is, the economy is doing well. We have confidence in the robustness of the economy and its resilience to shocks.”

The labor market has been a strong part of the economic recovery. In the last monthly jobs report, the unemployment rate dropped to 4.7%, but one weak spot was wages, which have flatlined. Once again, adjusted for inflation, there has likely been no growth whatsoever in real wages YoY.

For wages to increase, workers need job mobility, the ability to take a new job for more pay. Each month the Labor Department publishes the JOLT survey, or Job Openings and Labor Turnover; and in January, the number of Americans quitting their jobs rose to a seasonally-adjusted total of 3.22 million, the highest number since February 2001. The quits rate rose in January to 2.2%.

People quitting their jobs in droves is a sign of confidence among workers, as folks are unlikely to quit a job unless they are confident they can get another one. Openings totaled 5.63 million in January, above the prior month’s reading of 5.5 million.

The Labor Department said initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 241,000 for the week ended March 11. It was the 106th straight week that claims remained below 300,000, a threshold associated with a healthy labor market. That is the longest stretch since 1970, when the labor market was much smaller.

US home-building jumped in February as unseasonably warm weather helped boost the construction of single-family houses to near a 9-1/2-year high. Housing starts increased 3% to a seasonally adjusted annual rate of 1.29 million units last month.

Home-building was up 6.2 percent compared to February 2016. Single-family home-building, which accounts for the largest share of the residential housing market, surged 6.5%. Starts for the volatile multi-family housing segment fell 3.7%.

The Arizona Supreme Court has upheld the constitutionality of Arizona’s minimum wage increase to $10 an hour. Voters approved the increase in November, and the challenge was brought by the Arizona Chamber of Commerce and Industry and other business groups.

The state Supreme Court unanimously rejected the challenge. Proposition 206 raised the state’s minimum wage to $10 an hour in January 2017. Incremental increases continue until 2020, when it will increase to $12.

Four people have been indicted in a 2014 cyber-attack on Yahoo email accounts. The indictment charges two officers of the FSB, Russia’s Federal Security Service, and two hackers who allegedly worked together with them to crack 500 million Yahoo user accounts.

Cyber security specialists have long said the Kremlin employs criminal hackers for its geostrategic purposes. They say the arrangement offers deniability to Moscow and freedom from legal troubles for the hackers.

3M said it would buy Johnson Controls’ safety gear business, Scott Safety, in deal valued at $2 billion. Scott Safety makes respiratory and protective equipment and other safety products for firefighters, industrial workers, police squads and the US military.

Oracle’s cloud business had a huge quarter. The business-software maker announced better-than-expected adjusted revenue and profit, helped by sales at its cloud business surging 62% to $1.19 billion

Adobe Systems stock jumped after the company delivered earnings and revenue that beat expectations.

Cold weather luxury apparel retailer Canada Goose’s stock rocketed 25 percent in its first day of trading. The stock trades under the ticker GOOS.

Amazon is ready to do to the local liquor store what it did to the local book store. It is rolling out free beer and wine 2-hour delivery and $7.99 1-hour delivery for Prime Now members, starting in Cincinnati and Columbus, Ohio.

Monday, April 14, 2014 - Blood Moon and More

Financial Review with Sinclair Noe

DOW + 146 = 16,173
SPX + 14 = 1830
NAS + 22 = 4022
10 YR YLD + .02 = 2.64%
OIL - .11 = 103.63
GOLD + 8.20 = 1327.60
SILV un = 20.07

Here’s what you can expect; the Earth will eclipse the moon tonight about 10:58PM pacific time, adjust according to your time zone. The eclipse will take some time, a few hours. The moon will shift color from orange to blood red to brown, again depending on you locale and the weather. It should be interesting.

The stock markets started the day in positive territory and as trading dragged on, the major indices moved lower on the very cusp of turning red, almost as if they were being eclipsed, and then positive again, right at 3:15 PM eastern time, everything just picked up. Now, you might think the markets are rigged. You might.

A group of traders has sued CME Group Inc, accusing the operator of the world's largest derivatives exchange of selling market data to high frequency traders, cheating other investors who lacked such access. The suit says the CME and its Chicago Board of Trade unit have been giving high-frequency traders early access to buy and sell orders.  They said this deprived other investors of the transparent, real-time data on futures and interest rate contracts that they thought they were getting, and were paying for.

Volume was down from Friday; that’s a nasty trend, lighter volume on up days, heavier volume on down days.

The economic calendar includes the March Consumer Price Index tomorrow; Wednesday brings an update on housing starts and building permits, plus the Federal Reserve will release its Beige Book; Friday, the markets are closed for Good Friday.

This morning the Commerce Department reported retail sales increased 1.1% last month; February’s sales numbers were revised higher to 0.7% from a previously reported 0.3%. An important subset of the report showed retail inventories, excluding automobiles, rose 0.2% in February. You will recall that businesses accumulated too much inventory in the fourth quarter of last year, and we have seen fewer orders as the businesses work through unsold goods and try to clear their shelves. That has left the inventory to sales ratio at its highest level since September 2009. Now, it looks like the buyers are back.

A separate report from the New York Fed showed people grew more confident in the labor market last month, with younger workers in particular seeing a greater chance of finding work should they lose their current job.

Earnings reporting season continues with Citigroup posting better than expected net income under of $3.9 billion, or $1.23 per share, from $3.8 billion, or $1.23 per share. Citi Holdings, which holds the bank's portfolio of troubled assets left over from the financial crisis, posted a loss of $292 million, down from $798 million a year earlier. For all of Citigroup, adjusted revenue dropped 2% to $20.1 billion. Citi still has problems with its Mexican unit, which is accused of making fraudulent loans. Also, Citi flunked the recent Fed stress tests for capital reserves. So, here we are nearly 6 years after the financial meltdown and Citi is still cleaning up its books, still exhibiting signs of structural damage, and unable to put money to productive purpose.

The Congressional Budget office says the deficit isn’t as bad as they thought. For the fiscal year 2014 ending September 30, CBO said, the deficit would fall to $492 billion from a $514 billion February estimate - and nearly a third lower than last year's $680 billion deficit. And CBO lowered its cumulative deficit forecast for fiscal years 2015 through 2024 by $286 billion, to a mere $7.6 trillion; the reason for the lower deficits, is that subsidies for health care costs will be less than previously guesstimated.

 

Deficits will reach a low point of $469 billion, or 2.6% of US gross domestic product, in fiscal 2015, then gradually start to rise, topping $1 trillion again in 2023 and 2024, a level that would be near 4% of GDP.

Last week the IMF and the World Bank held their Spring Meeting in Washington DC. Here’s a snippet from a panel discussion featuring Federal Reserve Bank of Chicago President Charles Evans and Citigroup chief economist Willem Buiter.

Charles Evans said: “In the U.S. monetary policy is using the standard transmission mechanism. We’re trying to reduce financing costs. Auto rates are down and the auto sector is way back compared to where it was. Housing is better. Mortgage rates are down. And if you have the ability to refinance, or get a mortgage – it’s tougher these days because of the standards - then you can do that. So it’s the standard transmission mechanism. And we are indeed trying to get inflation up because we’re below target. What comes with that is wage increases, also up to where they ought to be. Wages are a symptom of inflation – using a lagging indicator – and they’re down around 2 to 2.25% right now. When they’re at a steady growth part of the cycle they ought to be about 3.5% - 1.5% productivity and 2% inflation target. So getting everything up – and getting inflation up to where it is supposed to be is an important part of all of this. So that benefits everybody.”

Citigroup chief economist Willem Buiter responded: “Monetary policy works with asset prices. By boosting equities, raising bond prices, weakening the currency and that’s exactly how it has happened. Not very effectively, because we have poor man’s monetary policy. Which is what unconventional monetary policy is. But it’s all we have. I would have preferred to see some additional measures on the fiscal side, which could have mitigated some of the income distributional consequences…”

Over the weekend we saw the investment game plan detailed on Sunday morning talk shows. Did you catch it? The climate is changing; we can still fix it; it will require massive investment. According to the most recent Intergovernmental Panel on Climate Change report, keeping global warming down to a level people can live with means cutting carbon emissions to "near zero" by the end of the century, even in an increasingly industrialized world. That may be doable, but it will take "substantial investments" in everything from planting more trees to replacing fossil fuels with low-carbon power sources like solar, wind and nuclear energy. The report clearly shows that the challenges to resolve the global common problem are huge, but also this report shows that there are some steps to resolve this issue.

And the longer we wait, the more expensive it becomes, and if we wait too long, the Earth and all of us who are too miserly to invest now, will cook.

Any hope will require more than tripling the share of electricity produced by renewable sources or nuclear power, along with refining the still-evolving technology of capturing carbon emissions and storing them underground. And it will take a coordinated global effort, likely including taxes on emissions. No direct price tag was attached to that scenario, but the IPCC authors indicate it would require "substantial investments," and more delays just drive up the expected cost. The impact could amount to shaving the projected average growth of the global economy by six-hundredths of a percentage point, from about 2% per year to 1.94%, over the coming century. The total global economy was about $72 trillion in 2012, according to World Bank figures.

Secretary of State John Kerry, who in February called the issue "the greatest challenge of our generation," said Sunday's report is an economic opportunity.

Kerry said in a written statement: "So many of the technologies that will help us fight climate change are far cheaper, more readily available, and better performing than they were when the last IPCC assessment was released less than a decade ago. These technologies can cut carbon pollution while growing economic opportunity at the same time. The global energy market represents a $6 trillion opportunity, with 6 billion users around the world."

Despite more than two decades of efforts to restrain carbon emissions, not only are emissions still going up, they're going up faster than ever. Though there's been an increased emphasis on generating power from renewable sources, the use of coal has gone up in the past 10 years.

The Washington Post and the Guardian captured coveted Pulitzer Prizes for public service for their revelations about the US government's massive surveillance programs. The newspapers' stories were based on thousands of secret documents obtained from Edward Snowden, the former National Security Agency contractor who is living in Russia after fleeing the United States. The Post also won a Pulitzer this year for explanatory reporting. The New York Times won two Pulitzers, both for photography. No award was handed out for feature writing. The Boston Globe won for breaking news for its coverage of the Boston Marathon bombing. Reuters won an award for its coverage on the persecution of a Muslim minority in Myanmar who in efforts to flee often fall into the hands of brutal human-trafficking networks. The prize for investigative reporting went to The Center for Public Integrity for reports on how some lawyers and doctors rigged a system to deny benefits to coal miners stricken with black lung disease. The prize for explanatory reporting went to the Washington Post for work on the prevalence of food stamps in post-recession America. The prize for local reporting went to the Tampa Bay Times for an investigation into squalid housing conditions for the city's homeless population. The prize for national reporting went to The Gazette in Colorado Springs, Colorado, for his examination of how wounded combat veterans are mistreated.

I know what you’re thinking; this is a shocking development. Who knew there were still newspapers?