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24Jul2017 Market Close: Wall Street Closed Mixed, Nasdaq Up 23 Points, WTI Crude Settles Higher In The Mid 46 Handle Ahead Of The OPEC Meeting

Written by Gary

The tech heavy Nasdaq index rose to new historical highs today ahead of of a big week of technology earnings reports. The SP 500 and the DOW suffered ...

Todays S&P 500 Chart

... losses in healthcare heavyweight Johnson & Johnson took a toll (SPY -0.02%). The DOW ended down 67 points and the 500 closed flat -0.02%.

US home resales fell more than expected as a dearth of properties amid strong demand pushed prices to a record high, keeping many first-time buyers on the sidelines.

The Market in Perspective

Here are the headlines moving the markets.

J&J weighs on Dow, S&P; Nasdaq hits record

NEW YORK (Reuters) - The Nasdaq hit a record high on Monday ahead of a big week of technology earnings reports, while the S&P 500 and the Dow industrials lagged behind as losses in healthcare heavyweight Johnson & Johnson took a toll.

Organic ranchers eye Amazon distribution ahead of Whole Foods deal

(Reuters) - Amazon.com Inc plans to meet on Wednesday with a dozen U.S. ranchers, seeking to expand distribution of organic and grass-fed meats as it takes over Whole Foods Market Inc , according to the meeting's organizer.

U.S. home sales stumble as prices hit record high

WASHINGTON (Reuters) - U.S. home resales fell more than expected in June as a dearth of properties amid strong demand pushed prices to a record high, keeping first-time buyers on the sidelines.

Blue Apron shares surge on Wall Street's upbeat outlook

NEW YORK (Reuters) - Shares of Blue Apron Holdings Inc jumped as much as 20 percent on Monday, reversing some of their heavy losses from the past few weeks, after several brokerages initiated coverage of the meal-kit service with a bullish outlook.

Analysts cut Chipotle stock target, question menu price hikes

LOS ANGELES (Reuters) - Shares of Chipotle Mexican Grill Inc lost more ground on Monday, after analysts cut stock price targets and raised doubts about whether the burrito chain can raise menu prices to offset higher costs.

EU increases pressure on Facebook, Google and Twitter over user terms

BRUSSELS (Reuters) - European Union authorities have increased pressure on Facebook, Google and Twitter to amend their user terms to bring them in line with EU law after proposals submitted by the tech giants were considered insufficient.

Campaign group Avaaz calls on EU to block Bayer's Monsanto deal

BRUSSELS (Reuters) - Online campaigns group Avaaz has called on European Union antitrust regulators to block Bayer's purchase of Monsanto, saying it would hurt innovation and competition and push up prices.

Exclusive: Spotify, Warner hope to clinch royalty deal by September - sources

LONDON (Reuters) - Music streaming company Spotify is close to agreeing a new licensing pact with Warner Music Inc, the last big music royalty deal it needs before pushing ahead with a U.S. stock market listing, four sources familiar with the situation said.

Halliburton sees North America customers 'tapping the brakes'

(Reuters) - Halliburton Co reported impressive second quarter results on Monday but warned the growth in North American rig count was "showing signs of plateauing", sending shares down as much as 4.2 percent.

A Primer On The "Global Sharing Economy" In 20 Charts

This morning, BofA has released a humongous, nearly 200-page "primer" on the global sharing economy which in the eyes of Wall Street and Silicon Valley is the biggest disruptor behind virtually all 21st century business models. Since it is impossible to summarize the report, which will be largely ignored by most of BofA's clients who will instead focus on the hundreds of charts scattered throughout, we will simply summarize the basics as laid out by BofA, and then present some of the more interesting charts, with the remainder to be published in subsequent thematic posts.

This is how BofA recaps the basis of the "Sharing Economy"

The Sharing Economy is an umbrella term which describes a range of market activity transacted over online platforms. Its history is rooted in cooperatives, kibbutz, and jitneys; online classifieds and marketplaces; and peer-to-peer (P2P) platforms. The term encompasses everything from peer-to-peer, democratized-based sharing of access to goods and services to sales transactions via online marketplaces including business-to-business (B2B). We include on-demand (e.g. Uber), gig (e.g. TaskRabbit), access (e.g. Spotify), collaboration (e.g. WeWork), platforms (e.g. Amazon), rentals (e.g. Airbnb) and peer-to-peer (e.g. Lufax) business models under our Sharing Economy umbrella.

Key concepts behind the Sharing Economy include unlocking the value of unused or underused assets ("idling capacity"), and a shift from "asset-heavy" to "asset-light" business models. Technology matches buyers/demand and sellers/supply to reduce market inefficiencies (source: Botsman 2011). We are also seeing a major shift away from the overarching idea of owning the means of capital/production. That model dominated economic thinking from the industrial revolution through the 20th century, but is now often viewed as old-fashioned, slow-moving and inflexible. In contrast, Sharing Economy leaders are ...

Can Financials Lead With A Flattening Yield Curve?

Authored by Bryce Coward via Knowledge Leaders Capital blog,

The financial sector has been getting a lot of attention recently with earnings announcements so we thought we'd weigh in on one aspect of financial stock relative performance that is making it difficult for financials to truly lead this market higher: the flattening yield curve.

As most of our readers are aware, one way financials in general and banks in particular make money is by capturing the spread between short-term funding costs and long-term lending returns.

A nice proxy for the margin that is earned is the 10-year minus 3-month US Treasury yield spread. When the spread is expanding (curve steepening) it implies bumper times for financials and vice versa when it is contracting (curve flattening). Well, after the brief steepening episode that occurred between the middle and end of 2016, the yield curve is back to the flattest it's been all cycle, and flattening still further. That has, so far in 2017, been an impediment to financial stock relative performance and has kept the group from breaking out of its range-bound trend (chart 1).

So the obvious question for financial stock bulls is what would it take to get a steeper yield curve?

At this stage in the cycle a steeper yield curve could be generate by the economy producing higher inflation or higher real growth. As charts 2 and 3 demonstrate, there is a tight relationship between both inflation and real GDP growth and the yield curve.

Watch Live: President Trump Delivers A Statement About Healthcare

Having warned "Republicans have a last chance to do the right thing on Repeal & Replace after years of talking & campaigning on it," in a tweet this morning, building pressure on the GOP after threatening overnight that "if Republicans don't Repeal and Replace the disastrous ObamaCare, the repercussions will be far greater than any of them understand!" President Trump will deliver a statement about healthcare, shortly after meeting with what he calls "victims of Obamacare."

The Senate will move forward with a vote this week on a Republican health-care bill, but, as MarketWatch.com reports, it's not yet known whether the legislation will seek to replace Obamacare or simply repeal it, according to the Senate's third-ranking Republican. The Associated Press reports Sen. John Thune of South Dakota said Senate Majority Leader Mitch McConnell of Kentucky will make a decision soon on which bill to bring up for a vote.

At this stage, it's unlikely that the senate will vote to begin debate, as the Trump administration has struggled to bridge the divide between moderates and conservatives, who have dramatically different expectations regarding the bill and its contents. In its latest draft, the Trump team included a revision that ...

The Death Of Equity Research Hasn't Been Greatly Exaggerated

Authored by James Valentine via Inegrity-Research.com,

From my vantage point, the career prospects for Equity Research analysts look dismal. The decade-long shift from active to passive management isn't new, but it appears to be reaching a tipping point as seen in the rash of announcements from high-profile buy-side and sell-side firms closing their doors, merging or outsourcing to bots.

I'm not sure if we should be more troubled by the fact that so little is being done within our industry to fix the problem or by the lack of acknowledgement there even is a problem. I don't claim to have all the answers, but I can see one major dilemma leading to our demise. Clients are asked to pay 1%-2% active management fees because "Research is in our DNA" and "Research defines us and distinguishes our firm" (direct quotes from sell-side and buy-side marketing content) and yet I find over 80% of analysts are relying almost entirely on company management for their financial forecasts (or relying on the sell-side, who too often rely primarily on company guidance).

How can we tell our clients we can consistently beat passive indexes if everyone is using company guidance to drive our collective thought process? There are thousands of buy-side firms that pay $1,000 to $10,000 to take a single meeting with company management during non-deal roadshows and yet most of these firms don't have a budget or a process to rigorously develop an independent view for the stocks being researched. Moreover, I find too many analysts "covering" well over 50 stocks, stretched too thin to consistently derive out-of-consensus insights.

The simple truth is if we're going to ask clients to pay us 1%-2% of A ...

Bringing In Wealth Beats Trading It for Julius Baer

Managing money for the rich looks like a better business than trading and investment banking: That is the upshot of half-year results for Swiss bank Julius Baer and the theme of last week's U.S. bank results.

5 of the best places to see the 'Great American Eclipse' on Aug. 21

Here's how to take full advantage of this once-in-a-lifetime solar phenomenon.

Trump administration stymies push for improved climate-risk disclosure among companies

Companies, including energy companies and insurers, favor greater disclosure of the risk of climate change and investors are on board too.

Cal-Maine says egg production has recovered from avian flu, but demand hasn't

Cal-Maine Foods reported earnings losses as egg demand fell, although production bounced back from the avian influenza outbreak in 2015

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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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