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05Oct2017 Market Close: Wall Street Records New Record Highs And Closes Fueled By Gains In Technology Stocks Including Netflix , Microsoft And Amazon.com

Written by Gary

All three major US stock indexes rose to record high closes again (SPY +0.6%), on tax plan optimism. A eight-year bull market on Wall Street will simmer for the rest of 2017 before picking up again next year, said strategists.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street climbs to records on tax plan optimism

NEW YORK (Reuters) - All three major indexes rose to record high closes again on Thursday, with optimism over a tax overhaul increasing as Congress moved closer to agreement on a budget resolution and as data added to recent signs of economic strength.

Netflix ups U.S. fees for first time since 2015

(Reuters) - Netflix Inc's U.S. business announced the first rises in monthly fees in two years on Thursday, hiking costs for two of its three main subscription plans as it spends heavily on its own original content.

Panel finds U.S. washing machine makers hurt by LG, Samsung imports

WASHINGTON (Reuters) - The U.S. International Trade Commission found on Thursday that surging imports of large residential washing machines harmed domestic producers, a major step toward the imposition of broad duties or quotas on foreign-made Samsung- and LG-brand machines.

Alibaba denies Tsai in deal talks with NBA's Brooklyn Nets

(Reuters) - Chinese internet conglomerate Alibaba Group Holding Ltd denied on Thursday that its vice chairman, Joseph Tsai, is in advanced talks to buy a stake in the Brooklyn Nets of the National Basketball Association.

Wells Fargo executives, board must face lawsuit over fake accounts, federal judge says

(Reuters) - A federal judge said current and former Wells Fargo & Co officers and directors, including Chief Executive Officer Tim Sloan, must face nearly all of a lawsuit by shareholders seeking to hold them personally liable for sales abuses and the creations of millions of unauthorized accounts.

As Ford pushes into electric vehicles, U.S. union aims to save jobs

DETROIT (Reuters) - The United Auto Workers is talking with Ford Motor Co about ways to avoid layoffs as the No. 2 U.S. automaker builds more electric vehicles, a senior union official told Reuters on Thursday.

Storms impact U.S. job market; trade expected to bolster economy

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits fell more than expected last week, but the continued impact of Hurricanes Harvey and Irma on the data made it difficult to get a clear picture of the labor market.

Regulators probe Standard Chartered over 1.4 billion dollar transfer: source

LONDON (Reuters) - Financial watchdogs in Europe and Asia are investigating Standard Chartered Plc over the transfer of 1.4 billion dollars of private bank client assets from Guernsey to Singapore ahead of new tax transparency rules, according to a source familiar with the matter.

L'Oreal, cosmetics rivals to appeal Greek anti-trust fines

PARIS (Reuters) - L'Oreal said on Thursday it would appeal a 2.6 million euro ($3 million) fine imposed by Greece's competition authority, which ruled that the French cosmetics company and several of its rivals were fixing prices.

These U.S. Companies Have The Most Cash Parked Overseas

While many US companies, especially those in the Russell 2000, have seen their stocks surge in recent days on renewed hopes that Trump tax reform may pass in the coming months (Goldman assigned a 65% probability of Trump tax passing), the reality is that for a vast majority of US corporations a tax cut to 30% or even 25% will have little marginal impact: after all, while US companies may have some the highest statutory tax rate in the world...

... the effective tax rate of the median S&P 500 company is 12% below the statutory rate, or roughly 27%:

Yet one aspect of the upcoming tax law change - if it passes - that would certainly boost US corporate bottom lines, is if the IRS grants an offshore cash repatriation holiday (or even one penalized by a nominal tax). It is here that most companies will promptly take advantage of the new rules to repatriate cash, and use it not to hire more workers or spend on capex, but "invest" in dividends and buybacks.

As Bank of America writes in a recent report, a major boost to S&P 500 EPS would come from the repatriation of the $1.2tn in cash overseas, excluding cash held by Financials and Managed Care companies - which may require a significant portion of their overseas cash for their foreign operations.

The proposal reco ...

Trump Reverses On Puerto Rico Debt Forgiveness: "We Will Follow The Bankruptcy Process"

One day after Donald Trump unleashed turmoil in the municipal market, launching a selling avalanche in Puerto Rico GO bonds which crashed to all time lows, shortly after the president signaled an openness to wipe out Puerto Rico's debts during an interview with Fox News on Tuesday, the White House has thrown cold water on the prospect of Trump forgiving Puerto Rico debt.

Recall that on Tuesday night, Trump told Sean Hannity that Puerto Rico "owes a lot of money to your friends on Wall Street and we're going to have to wipe that out," adding that "You can say goodbye to that." The next morning Puerto Rico bonds plunged, with the 8s of 2035 tumbling 10 points from 44 to as low as 32, an all time low, before rebounding modestly.

To be sure, the reason for the market freak out is that bondholders were on edge that just like Obama in the GM restructuring fiasco, Trump would overturn the traditional bankruptcy process, and favor one group of stakeholders over another. In this case Trump was convinced that Wall Street is the primary holder of PR bonds, although he may have changed his mind upon learning that well over half of Puerto Rico GO bonds is in retail investor and pension fund hands.

And, as a result, when asked about Puerto Rico's more than $70 billion in debt, White House press secretary Sarah Huckabee Sanders said that the best thing for the island will be for it to use the normal process set up to deal wi ...

This Time Isn't Different & The Lack Of Value

Authored by Vitality Katsenelson via RealInvestmentAdvice.com,

We are having a hard time finding high-quality companies at attractive valuations.

For us, this is not an academic frustration. We are constantly looking for new stocks by running stock screens, endlessly reading (blogs, research, magazines, newspapers), looking at holdings of investors we respect, talking to our large network of professional investors, attending conferences, scouring through ideas published on value investor networks, and finally, looking with frustration at our large (and growing) watch list of companies we'd like to buy at a significant margin of safety. The median stock on our watch list has to decline by about 35-40% to be an attractive buy.

But maybe we're too subjective. Instead of just asking you to take our word for it, in this letter we'll show you a few charts that not only demonstrate our point but also show the magnitude of the stock market's overvaluation and, more importantly, put it into historical context.

Each chart examines stock market valuation from a slightly differently perspective, but each arrives at the same conclusion: the average stock is overvalued somewhere between tremendously and enormously. If you don't know whether "enormously" is greater than "tremendously" or vice versa, don't worry, we don't know either. But this is our point exactly: When an asset class is significantly overvalued and continues to get overvalued, quantifying its overvaluation brings little value.

Let's demonstrate this point by looking at a few charts.

The first chart shows price-to-earnings of the S&P 500 in relation to its historical average. The average stock today is trading at 73% ...

Senior House Democrat: "Nancy Pelosi Should Step Aside"

Minority Leader Nancy Pelosi may have survived November's contentious leadership vote - securing an eighth term as the Democrats' leader in the House despite an abysmal election-day performance and a formidable challenge by Ohio Congressman Tim Ryan, a 43-year-old Congressman from Youngstown, Ohio - but tensions between the San Francisco congresswoman and rank-and-file lawmakers, many of whom believe (correctly) that her toxic public personal outweighs her effectiveness as a fundraiser, never subsided.

Now, one senior House Democrat is calling for Pelosi and her two most-senior lieutenants - Steny Hoyer and Jim Clyburn - to step aside and make way for a new generation of lawmakers to lead the party in the post-Obama era.

The comments by Rep. Linda T. Sánchez (Calif.), who, as vice chair of the House Democratic Caucus is the fifth-highest ranking Democrat in the House, mark the first time a member of the party's leadership has openly called for Pelosi to step down, as the Washington Post reports.

Pelosi's half-hearted attempt to appease her critics by doling out leadership positions to junior lawmakers have done little to assuage the rank and file's anger.

On Thursday, the party's simmering dissatisfaction with Pelosi burst into full view when Sanchez shared her thoughts about the party's leadership in a TV interview.

Netflix Needs a Bigger Box Office

The second season of the streaming service's "Stranger Things" launches later this month—conveniently about a week after many of the company's U.S. subscribers will be notified that their prices are going up.

Europe Hardens Bad Loan Stance Just as Italy's Oldest Bank Returns

European regulators are turning up the heat on bad loans and Italy's banks will feel it most.

Why Google's Gadgets Are Worth the Reach

Expanding product lineup helps the web giant get services into more hands.

August 2017 Leading Index Review: Growth Trends Slow

Written by Steven Hansen

This post is a review of all major leading indicators follows - and their trends are generally indicating slower growth.

Trump Today: Trump Today: President ramps up war on 'fake news' by suggesting investigation

President Donald Trump stepped up his attack on what he calls "fake news" by suggesting Congress investigate networks, discussed immigration and Iran with Sen. Tom Cotton of Arkansas, and was preparing to meet with senior leaders of the U.S. military.

Bond Report: Treasury yields climb as tax cuts return to agenda

Treasury yields show little change on Thursday as traders await several Fed speakers throughout the day, which could provide direction as investors are tugged between geopolitical concerns and speculation over future leadership at the Fed.

5 ways to avoid charity scams exploiting Hurricane Maria

The FBI released a warning about emails and calls requesting donations.

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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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