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04Oct2017 Market Close: Wall Street Adds To Run Of Records, Services Data Upbeat, WTI Crude Continues To Slide Into The 49 Handle

Written by Gary

US stock markets set new records again today (SPY +0.1%), but it may be obscuring a factor that just may be a mirage caused by dollar weakness signs of strength in the economy.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall St. adds to run of records; services data upbeat

(Reuters) - U.S. stocks edged higher on Wednesday, extending their run of record highs, as data on the services sector added to signs of strength in the economy.

Currency impact on North American companies' second quarter results up vs first quarter: report

NEW YORK (Reuters) - The negative effect of currency fluctuations on North American companies' results in the second quarter rose slightly from the first quarter, but was down from a year ago, currency risk consulting firm FIREapps said on Wednesday.

Trump to keep Obama rule curbing corporate tax inversion deals

WASHINGTON (Reuters) - The Trump administration will keep for now an Obama-era rule that helped halt a wave of U.S. corporations moving abroad via tax-driven corporate inversion deals, it said on Wednesday, but added that it expected tax reform to obviate the rule.

EU takes Ireland to court for not claiming Apple tax windfall

BRUSSELS (Reuters) - The European Commission said on Wednesday it was taking Ireland to the European Court of Justice for its failure to recover up to 13 billion euros ($15.3 billion) of tax due from Apple Inc , a move labeled as "regrettable" by Dublin.

Shopify slides after Citron criticizes marketing business model

TORONTO (Reuters) - Shopify Inc shares fell over 11 percent on Wednesday after short-seller Citron Research said the stock of the Canadian provider of online retailing software was overvalued, according to traders and analysts.

SEC chair floats potential delay to fund data rules following hack

WASHINGTON (Reuters) - The chairman of the U.S. Securities and Exchange Commission (SEC) has floated a possible delay to new investment fund data gathering rules following a hack that has raised questions over the regulator's cyber security controls.

Exclusive: VW seeks to curb competition from Skoda - sources

BERLIN (Reuters) - Volkswagen managers and unions are seeking to curb competition from lower-cost stablemate Skoda, move some of its production to Germany and make the Czech brand pay more for shared technology, company sources told Reuters.

U.S. lawmakers seek to shut banks that harm consumers

WASHINGTON (Reuters) - U.S. House Democrats introduced legislation on Wednesday to direct banking regulators to review operations at the country's largest banks and consider shutting them down if they exhibit repeated wrongdoing to consumers.

Tesco whistleblower tells of mounting anxieties over accounts gap

LONDON (Reuters) - A senior accountant at Tesco described mounting pressures on managers as the food business under-performed against targets in 2014, telling a London court that his attempts to have the targets revised down had fallen on deaf ears.

Is Kevin Warsh The Ultimate Chicken-Hawk? (And Why Gold $1275 Will Hold)

Authored by Kevin Muir via The Macro Tourist,

The current front-runner for the next Fed Chair is Kevin Warsh. He seems to have all the prerequisites that Trump idolizes. He's connected. He's not an academic. He has conservative leanings.

But most important, he's rich. I mean really rich.

You see, Kevin married the granddaughter of the founder of the Estee Lauder company.

Jane Lauder owns 20 million shares of the company. Just for shits and giggles, I dialed the stock price of the company.

At the current stock price, that means the Warsh family is worth more than $2 billion!

On the trading desk, we used to joke about having f' off money (the amount where you can tell your bosses to go fly a kite with no worries about being fired because after all, you already have more than enough.) Well, Warsh is in a whole other league.

Why do I bring this up?

The prevalent thinking on Wall Street is that although Warsh has in the past been extremely hawkish, if he were to get the appointment, he would quickly shift towards the dove camp. Although I have no doubt he would try to ...

Watch Live: Janet Yellen Addresses Community Bankers In St.Louis

Update: Yellen didn't discuss her outlook for interest rates or the economy in her prepared remarks.

Bloomberg reports that Federal Reserve Chair Janet Yellen said the U.S. central bank has been working to ensure that regulations are tailored to the size, complexity and roles of the lenders it oversees.

"For community banks, which by and large avoided the risky business practices that contributed to the financial crisis, we have been focused on making sure that much-needed improvements to regulation and supervision since the crisis are appropriate and not unduly burdensome," Yellen said Wednesday.

Yellen didn't discuss her outlook for interest rates or the economy in her prepared remarks.

The Fed has "an abiding commitment to consider how our decisions affect institutions and the customers they serve," she said in a text prepared for delivery at the St. Louis Fed's annual community banking conference.

* * *

As we detailed earlier, since Janet Yellen last spoke (shifting hawkish), the dollar and bond yields have surged (as have the odds of a Dec rate-hike).

Since Yellen last spoke...

It is unclear whether today's opening remarks at the fifth annual Community Banking in the 21st Century conference at the Federal Reserve Bank of St. Louis, will offer any new insights on monetary policy direction but given President Trump&# ...

Leverage On US LBOs Is The Highest Since The Financial Crisis

There was a brief period of sober rationality during the current central bank-facilitated, market reflation phase, when Private Equity shops decided they had no desire to chase artificially inflated valuations, especially since their currency - cash - did not benefit in the same was a strategic acquirors did, whose own stock had increased alongside that of the target company. After all, who can forget Apollo's Leon Black speaking at the 2013 Milken Conference when he said that "this is an almost biblical opportunity to reap gains and sell," adding that his private equity firm has been a net seller for the 15 months, and that they "are selling everything that is not nailed down."

In retrospect, he should have hung on. Of course, who could possibly known that nearly a decade into the greatest central-planning experiment in history, central banks would still be injecting trillions into the market to create the illusion of economic growth, stability and a wealth effect, hoping to kick the can in perpetuity.

So, several years later, and scared of missing the boat altogether after sitting out a big part of the bubble, PE firms - flush with cash - are rushing in. In some ways, the PE willingness to resume buying companies at virtually any price is understandable: with the financial system overflowing with cash, much of it has found its way into the PE industry, and according to a recent Prequin survey, as of 2016, private equity funds were sitting on nearly $800 billion in cash.

And

Federal Judge Upholds Trump's Arpaio Pardon

A federal district judge in Phoenix has accepted President Donald Trump's pardon of former Maricopa County Sheriff Joe Arpaio on Wednesday, confirming that the controversial tough-on-crime sheriff and early supporter of Trump's presidential bid will walk free with no legal record after being found guilty of contempt in July for refusing to honor a 2011 court order.

At the request of lawyers representing both Arpaio and the Department of Justice, Judge Susan Bolton dismissed the guilty verdict against Arpaio with prejudice, meaning it cannot face another legal challenge, according to AZ Central.

After Trump took the unprecedented step of pardoning Arpaio before the 84-year-old was sentenced, the former sheriff's lawyer confirmed that he will walk free immediately, and will not face jail time.

Joe Arpaio's lawyer states #Arpaio has a clean record and will not be facing jail time. pic.twitter.com/uO9WFs2Oxo

— Cronkite News (@cronkitenews) October 4, 2017

Bolton was widely expected to accept the pardon. Arpaio did not attend the hearing. The ruling comes five weeks after Trump pardoned Arpaio' ...

Auto Stocks Are on a Wild 'Robotaxi' Ride

Car stocks have been strong not because of hopes that sales growth can be maintained, but on optimism about the capacity of manufacturers to withstand—even benefit from—the disruptive forces of technology.

Curb Your Enthusiasm About the Jobs Report

The way the stock market reacts to Friday's jobs report may say more about the stock market than it does about jobs.

Even Tougher Choices Ahead for Teva After FDA Shocker

A surprise move from the Food and Drug Administration means that a recovery for Teva Pharmaceutical Industries just got much more difficult.

Key Words: Michelle Obama didn't mention Trump's name — because she didn't need to

In 1978, a pair clinical psychologists came up with a phrase to describe somebody who feels the need to keep reminding us of how great they are, while clearly struggling with feelings of inadequacy on the inside. Anybody come to mind?

Market Extra: Why stock market records may just be a mirage caused by dollar weakness

The U.S. stock market has hit dozens of all-time highs in 2017, but the run may be obscuring a factor that has Wall Street's rally looking less impressive from an outside perspective.

Howard Gold's No-Nonsense Investing: Trump's saber-rattling is the big reason you should own some gold

President Trump is gold bugs' best friend since Nixon, writes Howard Gold.

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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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