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06Apr2017 Market Close: DOW Closes Up 15 Points, US Dollar Inches Up, Crude Prices Remain Higher And Investors Are Watching The Trump-Xi Meeting Closly

Written by Gary

Wall Street's major indexes rebounded from Wednesday's sharp decline (SPY +0.3%) as investors reconsidered their reaction to Federal Reserve meeting minutes. Global equity markets and the dollar edged higher today, helped by a tighter U.S. labor market. WTI crude prices remained in the high 51 handle.

Todays S&P 500 Chart

Stocks close off highs after Trump comments on North Korea, Syria; jobs, Xi meeting loom

The Market in Perspective

Here are the headlines moving the markets.

U.S. weekly jobless claims post largest drop in almost two years

WASHINGTON (Reuters) - New applications for U.S. unemployment benefits recorded their biggest drop in nearly two years last week, pointing to a further tightening in the labor market.

Wall Street bounces back from Wednesday's Fed-led decline

(Reuters) - Wall Street's three major indexes on Thursday rebounded from Wednesday's sharp decline as investors reconsidered their reaction to Federal Reserve meeting minutes.

Galvanized by Kraft, Unilever keeps shareholders sweet with cash

LONDON (Reuters) - Unilever promised shareholders a multi-billion euro rewards package on Thursday after February's $143 billion takeover offer from Kraft Heinz jolted it into a corporate makeover aimed at proving it can go it alone.

Sunoco to sell 1,110 U.S. stores to 7-Eleven operator for $3.3 billion

(Reuters) - Sunoco LP said on Thursday it would sell 1,110 convenience stores to Japan's Seven & i Holdings Co for $3.3 billion as the Texas-based company shifts its focus to its fuel supply business.

Lyft valued at $7.5 billion in new funding round: source

SAN FRANCISCO (Reuters) - Ride services company Lyft Inc has nearly completed a funding round of at least $500 million, valuing the company at $7.5 billion, according to a source close to the company.

Stocks, dollar edge higher ahead of Trump-Xi meeting

NEW YORK (Reuters) - Global equity markets and the dollar edged higher on Thursday, helped by fresh data showing a tighter U.S. labor market, as investors stayed cautious before the first meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping.

Troubled U.S. shopping-mall retailer stocks rally after L Brands' sales report

SAN FRANCISCO (Reuters) - Shares of beaten-down shopping-mall retailers bounced back on Thursday after March sales figures from L Brands, the owner of Victoria's Secret, were not as bad as feared.

Twitter dips after co-founder says selling some of his shares

SAN FRANCISCO (Reuters) - Shares of Twitter dropped about 1 percent on Thursday after co-founder Ev Williams said he is selling a minority of his shares in the social media company, which has been losing ground to Facebook and other fast-growing rivals.

Ex-VW chairman sells Porsche SE stake to brother: Frankfurter Allgemeine

BERLIN (Reuters) - Former Volkswagen chairman Ferdinand Piech sold the bulk of his stake in the company that controls Europe's biggest carmaker to his younger brother, Frankfurter Allgemeine Zeitung reported.

These Eight Retailers Will File For Bankruptcy Next, According To Fitch

The situation is rapidly deteriorating for America's "bricks and mortar" retailers. As discussed earlier this week, some 9 retail outlets have already filed for bankruptcy protection in 1Q 2017 alone according to Alix Partners. That volume of filings matches the total number of retail bankruptcies for all of 2016 and puts the industry on pace to exceed even the 'great recession' highs.

Retail

Confirming that even more retail defaults are imminent was the following chart from Morgan Stanley according to which in just the first quarter there were nearly 2,100 store closures, nearly double the number from Q1 of last year.

Appropriately, one day after our Monday report, Payless ShoeSource filed for bankruptcy. Payless filed Chapter 11 on April 4 to facilitate a balance sheet debt restructuring and operational overhaul. The company became highly leveraged in a 2012 buyout and debt became unsustainable as sales and cash flows decreased. The company plans to have liquidation sales for 400 out of 4,400 underperforming stores that are earmarked for permanent closure and intends to try to re-negotiate leases or close other stores and to emerge a ...

Tillerson Warns Russia "Coalition Steps Are Underway To Remove Assad"

VIX was being crushed and stocks were leaking higher just as planned, until Secretary of State Rex Tillerson hit the tape beating war drums and announcing a new US policy on Syria, just a week after he said the US had no interest in removing the Syrian president.

Specifically, Tillerson said that steps are underway to remove Syrian President Bashar al-Assad, and that the U.S. is considering an "appropriate response" to the Syrian government's alleged use of chemical weapons.

"The process by which Assad would leave is something that requires an international community effort both to first defeat ISIS within Syria, to stabilize the Syrian country to avoid further civil war and then to work collectively with our partners around the world through a political process that would lead to Assad leaving," Tillerson said at the news conference in Palm Beach, Fla.

Tillerson on Assad: "Clearly with the acts that he has taken it would seem there would be no role for him to govern the Syrian people." pic.twitter.com/Nr5BcHJmz1

— ABC News (@ABC) April 6, 2017

Tillerson also called into question Assad's future in Syria, saying there would be "no role" for authoritarian ruler in Syria, and said that there is no doubt the Assad regime was reponsible for the Syria attack.

As a result, Tillerson said that "Assad's role in the future is uncertain clearly, and with the acts that he has taken it would seem that there would be no role for him to govern the Syrian people"

Acknowledging that a conflict with Syria would involve Russia, Tillerson said that "it's very important that the Russian government consider carefully t ...

The Biggest Stock Bubble In U.S. History

Via Investment Research Dynamics,

Please note, many will argue that the p/e ratio on the S&P 500 was higher in 1999 than it is now. However, there's a number of problems with the comparison.

First, when there is no "e," price does not matter. Many of the tech stocks in the SPX in 1999 did not have any earnings and never had a chance to produce earnings because many of them went out of business. However - and I've been saying this for quite some time and I'm finally seeing a few others make the same assertion - if you adjust the current earnings of the companies in SPX using the GAAP accounting standards in force in 1999, the current earnings in aggregate would likely be cut at least in half. And thus, the current p/e ratio expressed in 1999 earnings terms likely would be at least as high as the p/e ratio in 1999, if not higher. (Changes to GAAP have made it easier for companies to create non-cash earnings, reclassify and capitalize expenses, stretch out depreciation and pension funding costs, etc).

We talk about the tech bubble that fomented in the late 1990's that resulted in an 85% (roughly) decline on the NASDAQ. Currently the five highest valued stocks by market cap are tech stocks: AAPL, GOOG, MSFT, AMZN and FB. Combined, these five stocks make-up nearly 10% of the total value of the entire stock market.

Money from the public poured into ETFs at record pace in February. The majority of it into S&P 500 ETFs which then have to put that money proportionately by market value into each ...

Bannon Responds: "I Love A Gunfight"

Since it was revealed yesterday that Steve Bannon was removed from Trump's National Security Council, the mainstream media rumor mill has run wild with speculation over whether the transition was voluntary or a devastating blindside to a man once considered Trump's right-hand man.

Not surprisingly, Bannon's 'official' statement, which suggested that his removal was simply a natural progression after Michael Flynn's dismissal and the appointment of General McMaster, did little to calm the rampant speculation of a rising civil war within the Trump administration.

"I was put on to ensure that [Susan Rice's NSC] was de-operationalized. General McMaster has returned the NSC to its proper function."

Pence also downplayed the alleged drama last night on Fox News saying that Bannon would continue to play a key role in the Trump White House.

TONIGHT - @marthamaccallum interviews @VP Pence on #First100 - Tune in at 7p ET on Fox News Channel! pic.twitter.com/opQMZ17RBt

— Fox News (@FoxNews) April 5, 2017

Despite the G-rated statements from the White House, the MSM continues to promote a more sordid tale, with full attribution to anonymous sources of course, that puts Bannon on the outs in the Trump administration, leaving him on the verge of resigning his post.

And while we suggest consuming ...

Unilever's New Look Suggests More Deals to Come

The Anglo-Dutch consumer giant will probably rationalize its legal and shareholding structure in readiness for the next big deal wave in consumer goods

March Jobs Report Could be Under the Weather

Economists warn that Friday's jobs report will likely be skewed by winter storm Stella.

Why Ford's Electric Push in China Might Get Grounded

Ford Motor is making a big electric-car push in China as its home market has hit a plateau, but it faces even steeper challenges in the world's largest electric-vehicle market.

The American Dream appears to be more attainable in Mexico and China

Mexican millennials have higher homeownership rates than young Americans.

Are drivers in minority neighborhoods being unfairly charged for auto insurance?

A new investigation by ProPublica and Consumer Reports says zip codes influence rates.

The Wall Street Journal: Twitter co-founder Evan Williams to sell 30% of his stock

Twitter's co-founder is selling 30% of his shares over the next year.

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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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