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06Dec2016 Market Close: Wall Street Closed Higher, Commodities Remain Weak, The Bull Marches On

Written by Gary

U.S. stocks ended higher on Tuesday as telecom stalwarts AT&T and Verizon gained and bank shares added to their torrid post-election rally, helping the Dow set another record closing high. The U.S. trade deficit recorded its biggest increase in more than 1-1/2 years.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Dow sets record high close; banks, telecoms gain

NEW YORK (Reuters) - U.S. stocks ended higher on Tuesday as telecom stalwarts AT&T and Verizon gained and bank shares added to their torrid post-election rally, helping the Dow set another record closing high.

U.S. trade gap widens as exports of soybeans, other products drop

WASHINGTON (Reuters) - The U.S. trade deficit recorded its biggest increase in more than 1-1/2 years in October as exports of soybeans and other products fell, suggesting trade would be a drag on growth in the fourth quarter.

Japan's SoftBank to invest $50 billion in United States

WASHINGTON (Reuters) - Japanese telecoms and internet firm SoftBank Group Corp plans to invest $50 billion in the United States in businesses and create 50,000 new jobs, U.S. President-elect Donald Trump said on Tuesday.

Microsoft gains EU approval for $26 billion buy of LinkedIn

BRUSSELS (Reuters) - Microsoft won EU antitrust approval on Tuesday for its $26 billion bid for professional social network LinkedIn , its largest ever acquisition, after agreeing to a series of modest concessions.

U.S. judge throws out emissions fraud lawsuit against Mercedes

(Reuters) - A U.S. judge in New Jersey on Tuesday threw out a lawsuit alleging that automaker Mercedes misled consumers about emissions standards in "BlueTec Clean Diesel" vehicles.

Alaska Air wins U.S. antitrust approval for Virgin deal with conditions

WASHINGTON (Reuters) - Alaska Air Group Inc has won U.S. antitrust approval for its $2.6 billion acquisition of Virgin America Inc on condition that it scale back its code-sharing with American Airlines Group Inc , the Justice Department said on Tuesday.

Caesars unit's bank lenders threaten to end bankruptcy deal

CHICAGO (Reuters) - The bank lenders of Caesars Entertainment Corp's operating unit said they might walk away from a plan to bring the casino unit out of its $18 billion bankruptcy, potentially sending a high-stakes reorganization plan into disarray.

Blackstone's Schwarzman sees historic regulatory overhaul from Trump

(Reuters) - Blackstone Group LP Chairman and CEO Steve Schwarzman said on Tuesday he expected to see a "very substantial reversal of regulations of all types," for the financial sector, following Donald Trump's U.S. presidential election victory.

U.S. Supreme Court backs Samsung in smartphone fight with Apple

(Reuters) - The U.S. Supreme Court on Tuesday sided with Samsung in its big-money smartphone patent fight with Apple, throwing out an appeals court ruling that the South Korean company had to pay a $399 million penalty to its American rival for copying key iPhone designs.

Trader Exclaims "Markets Are In An Alternate Universe"

Events were breaking yesterday, but as Bloomberg's Richard Breslow mocks, not nearly as quickly as the narrative that tried valiantly to explain the price action.

After the fact. We all know what happened. The Italian referendum sent the euro and risk into the sewer in the hours following the result.

Everything stabilized smartly when European markets opened and liquidity was there to be had. Then the Christmas mindset took over and markets decided the calendar was, for now, temptingly free of known black swan events and it was off to the races.

From a trader's point of view, it was much simpler. They did all the obvious trades they thought they were supposed to do. Added at chart points that screamed lighten up. And then got their eyes ripped out. Why should December break the trading patterns that have played out so many times over the course of the year?

So far we're on familiar ground. But what struck me was the speed with which the ECB story spun out. Not insignificant ahead of an impending governing council meeting. And one President Draghi will be unlikely to skate through with "mañana".

We began with Italy and maybe the whole of Europe is in deep trouble. So horrid, at a time when monetary policy is losing its effectiveness. Followed by, buy-the-dip with both ...

China Admits "Economic Downturn Just Beginning", Slashes Salary Guidelines

In what may be the most direct admission that China's economy is about to grind to a deflationary halt, today China's Global Times, a newspaper which is seen as a propaganda companion to the official People's Daily, revealed data showing this year's proposed salary guidelines according to which there is a broad wage growth declines in virtually every single province on the mainland, which according to the Chinese publication "confirms the country is experiencing an economic slowdown."

Salary guidelines are issued by local governments as a reference to help firms decide how much they should increase their employees' salaries. They are based on labor market conditions and economic growth, among other factors.

Global Times notes that compared to 2015 salary guidelines, wages in 2016 have grown at a slower rate in virtually all 19 provinces and regions that have so far published their annual guidelines for firms. Northeast China's Heilongjiang Province has not released salary guidelines for years as the region has been experiencing a recession and therefore wages are not generally increasing.

Seventeen provinces have seen a decrease in salary standards, including North China's Hebei Province, South China's Hainan Province, Northwest China's Xinjiang Uyghur Autonomous Region and East China's Jiangxi Province. The only increases were seen in Southwest China's Guizhou Province and Beijing Municipality.

"2016's guidelines have seen a slowing of salary growth after years of increases, which mean ...

Is Trump Calling Out Xi Jinping?

Submitted by Patrick Buchanan via Buchanan.org,

Like a bolt of lightning, that call of congratulations from Taiwan President Tsai Ing-wen to President-elect Donald Trump illuminated the Asian landscape.

We can see clearly now the profit and loss statement from more than three decades of accommodating and appeasing China, since Richard Nixon and Henry Kissinger made their historic journey in 1972.

What are the gains and losses?

Soon after Nixon announced the trip in July 1971, our World War II ally, the Republic of China on Taiwan, was expelled from the UN, its permanent seat on the Security Council given to the People's Republic of China's Chairman Mao, a rival of Stalin's in mass murder.

In 1979, Jimmy Carter recognized the regime in Beijing, cut ties to Taipei and terminated the Sino-American Mutual Defense Treaty of 1954. All over the world countries followed our lead, shut down Taiwan's embassies, and expelled her diplomats. Our former allies have since been treated as global pariahs.

During the 1990s and into the new century, Republicans, acting on behalf of the U.S. Chamber of Commerce and Business Roundtable, voted annually to grant Most Favored Nation trade status for China. They then voted to make it permanent and escort China into the WTO.

What did China get out of the new U.S. policy? Vast investment and $4 trillion in trade surpluses at America's expense over 25 years.

From the backward country mired in the madness of the Great Proletarian Cultural Revolution in 1972, China grew by double-digits yearly to become the foremost manufacturing nation on earth, and has used its immense earnings from trade to make itself a military power to rival the United States.

China now claims ...

Reasons To Doubt "The Year Of The Strong Dollar" Doctrine

The consensus around 2017 being the year of the dollar has clear vulnerabilities, according to Bloomberg's Mark Cudmore, who notes that there's a strong self-correcting impulse to dollar strength.

I've just returned from a week in New York that included meeting a number of FX traders from several different firms. And the one view that was repeated again and again, with conviction, was that next year will see the dollar roar.

Expected U.S. rate hikes are seen as key to this idea, based on the fact that inflation is really taking off. But an appreciating greenback will soon provide a disinflationary impulse, which will counteract some of the need for higher interest rates. An example: the strong currency is already eating into the value of the 44% of S&P 500 revenue that comes from outside the Americas.

There's a lot of faith in an expected Trump policy to incentivize the repatriation of corporate profits but there are many potential flaws in using this as a trading guide already. What will the actual policy be and when will it be implemented? Will lawmakers back it? And there's speculation that much of these cash piles are already in dollars, so the FX impact will be minimal.

For those who are buying the dollar because Trump will boost growth and investment over savings, it's important to note that this will only increase the U.S. current account deficit. That's ultimately going to be dollar negative, albeit on a longer-term horizon.

It was interesting to note that the dollar weakened yesterday after the strongest ISM print in more than a year. Maybe positioning is already quite stretched?

The Euro: Looking Through the Political Jitters

The euro has shaken off the Italian referendum result. Politics doesn't look like the swing factor yet for the single currency.

Wearable Tech Looking Worse for Wear

Slowing sales of wearable gadgets at Fitbit and Apple cast doubt on market's ultimate potential.

Smoother Brexit Hopes for Banks But No Special Deal

Officials are making soothing noises towards a key U.K. industry, but offer few details.

The Tell: Bill Gross warns investors of the 'negatives' of Trump policies

Investors need to pay attention to the "negatives" of President-elect Donald Trump's policies, bond guru Bill Gross said in a Tuesday missive to investors.

Market Extra: Boeing's stock dismisses Trump's threat after company, White House respond

Boeing's stock closes higher, erasing the earlier damage done by President-elect Donald Trump's threat to cancel the contract to build new Air Force One planes, as comments by the company and the White House questioned the numbers Trump quoted.

Mattress retailer Select Comfort's stock slides as analyst turns bearish

Stock downgraded on concerns discounting is pushing it below its current quarterly targets.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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