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18Oct2017 Market Close: Dow Trades Above 23,000-mark As IBM's Stock Jumps, The SP 500 Is Now Overvalued On 18 Of 20 Metrics

Written by Gary

The Dow Jones industrial average rose again above the 23,000 level today (SPY +0.1%), driven by a jump in IBM after the computing giant hinted at a return to revenue growth.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Dow trades above 23,000-mark as IBM's stock jumps

NEW YORK (Reuters) - The Dow Jones industrial average rose again above the 23,000 level on Wednesday, driven by a jump in IBM after the computing giant hinted at a return to revenue growth.

U.S. housing starts hit one-year low; building permits tumble

WASHINGTON (Reuters) - U.S. homebuilding fell to a one-year low in September as Hurricanes Harvey and Irma disrupted the construction of single-family homes in the South, suggesting housing probably remained a drag on economic growth in the third quarter.

U.S. bankers hold onto hopes that Trump will boost profits

NEW YORK (Reuters) - Top U.S. bankers are still hoping that President Trump's administration will make policy changes to boost profits, but made clear in public comments in recent days that they are not seeing any signs of progress so far.

Ford to recall about 1.3 million trucks in North America for door latch fix

WASHINGTON (Reuters) - Ford Motor Co said on Wednesday it would recall about 1.3 million 2015-17 Ford F-150 and 2017 Ford Super Duty trucks in North America to add water shields to side door latches at a cost of $267 million.

UPS CEO says updated NAFTA better for economy than no trade treaty

DETROIT (Reuters) - The top executive of United Parcel Service Inc said on Wednesday he is optimistic the U.S., Canadian and Mexican governments can successfully renegotiate NAFTA, and said not having a free trade agreement in place would not be good for the three countries' economies.

Viacom, Charter deal to include eight networks in basic package: source

(Reuters) - Viacom Inc and Charter Communications Inc have agreed to a distribution deal that puts eight of Viacom's most popular networks in Charter's cheapest U.S. cable bundle, a source told Reuters on Wednesday.

Native American tribe holding patents sues Amazon and Microsoft

(Reuters) - A Native American tribe sued Amazon.com Inc and Microsoft Corp in federal court in Virginia on Wednesday for infringing supercomputer patents it is holding for a technology firm.

McDonald's South Korea office raided in burger probe: reports

SEOUL (Reuters) - South Korean investigators raided the Seoul office of McDonald's Corp on Wednesday following a series of complaints that children fell ill after eating hamburger patties alleged to have been undercooked, Yonhap News Agency and other media said.

Nasdaq, Singapore Exchange sign pact for collaborative listings

(Reuters) - Singapore Exchange Ltd and Nasdaq Inc announced a pact on Wednesday that will allow firms to tap the capital markets possibly simultaneously under the two exchange operators' namesake exchanges.

Something Wicked This Way Comes: McDonalds - A Bear In A Bull Costume

Authored by 720Global's Michael Lebowitz via RealInvestmentAdvice.com,

As Halloween nears, kids are choosing costumes to transform themselves into witches, baseball players and anything else they can imagine. In the spirit of Halloween, we thought it might be an appropriate time to describe the most popular costume on Wall Street, one which many companies have been donning and fooling investors with terrific success.

Having gained over 65% in the last two years, the stock of McDonald's Corporation (MCD) recently caught our attention. Given the sharp price increase for what is thought of as a low growth company, we assumed their new line of healthier menu items, mobile app ordering, and restaurant modernization must be having a positive effect on sales. Upon a deeper analysis of MCD's financial data, we were quite stunned to learn that has not been the case. Utility-like in its economic growth, MCD is relying on stock buybacks and the popularity of passive investment styles to provide temporary costume as a high-flying growth company.

Stock Buybacks

We have written six articles on stock buybacks to date. While each discussed different themes including valuations, executive motivations, and corporate governance, they all arrived at the same conclusion; buybacks may boost the stock price in the short run but in the majority of cases they harm shareholder value in the long run. Data on MCD provides support for our conclusion.

Since 2012, MCD's revenue has declined by nearly 12% while its earnings per share (EPS) rose 17%. This discrepancy might lead one to conclude that MCD's management has greatly improved operating e ...

FBI Reports 61% Surge In "Felonious" Cop Killings Year Over Year

Coinciding with an unprecedented surge in violence in cities like Chicago and Baltimore last year, the 2016 Law Enforcement Officers Killed And Assaulted (LEOKA) report released by the FBI earlier today has revealed a staggering increase in criminal attacks against police officers. Per the report, a total of 118 law enforcement officers were killed in the line of duty in 2016, of which 66 were felonious, a 61% increase versus 2015 and 144% increase compared to 2013.

A total of 118 law enforcement officers were killed in the line of duty in 2016, according to the FBI's annual Law Enforcement Officers Killed and Assaulted (LEOKA) report released today. Of those deaths, 52 were accidental and 66 were felonious.

Additionally, 57,180 officers were assaulted in the line of duty, with nearly 30 percent of those officers being injured in the incidents.

All of these numbers increased from figures reported in 2015, when 45 officers died accidentally and 41 were feloniously killed in the line of duty. There were 50,212 assaults against law enforcement listed in the 2015 LEOKA report.

Of the 66 officers who were killed in criminal incidents, the most common categories of circumstance surrounding officers' line-of-duty deaths were ambushes (17), followed by answering disturbance calls (13), and investigating suspicious people or circumstances (9 ...

The S&P 500 Is Now Overvalued On 18 Of 20 Metrics

With the market now stuck in the "Icarus Rally" melt-up predicted earlier in the year by BofA Michael Hartnett, in which EFTs, algos and desperate carbon-based hedge fund managers are all chasing performance, i.e. beta, in the last weeks of the year, at least until the inevitable "Humpty Dumpty great fall", some have been naive enough to ask just how overvalued are stocks as of this moment.

Yesterday we showed one answer, when according to Goldman Sachs, the average stock is in the 88th percentile of all historical valuations and 98% from if one uses median stocks to eliminate huge outliers such as Apple; the number would be even higher if one excluded cash flow-based valuation metrics, which are artificially boosted due to the collapse in capex and investment spending.

In any event, it is safe to say that stocks have never been more expensive.

Today, we present a different response, this time from Bank of America, which has just completed the periodic update of its valuation matrix base ...

57 Dead, Over 680 Infected As Madagascar Plague Outbreak Escalates

Authored by Mac Slavo via SHTFplan.com,

An outbreak of the plague in Madagascar is spreading at an unprecedented rate.

With the ease of spreading the plague, the likelihood that this disease will move to other more densely populated regions of the planet has become a huge concern for many.

So far, the plague has claimed 57 lives and infected more than 680 others. These figures are from October 12, however, and the disease is spreading rapidly. An estimated 329 of these cases and 25 of the deaths were in the capital city of Antananarivo. Of the 684 cases reported as of October 12, 474 were the pneumonic plague, 156 bubonic and 1 septicemic plague. A further 54 were unspecified, according to the World Health Organization. Of Madagascar's 114 districts, 35 have reported cases of plague, including at least 10 cities.

Plague is caused by infection with the bacterium Yersinia pes ...

IBM: Big Blue Coming Out of the Red

The company reported another decline in quarterly revenue on a year-over-year basis Tuesday. But revenue fell only 0.4% and ended up exceeding Wall Street's consensus forecast. That gave its shares a big boost.

China's Xi to World: Party First, Reform Second

The Chinese leader laid out a vision for a nation well on its way toward achieving "moderate prosperity"—one that is guided by the steady hand of the state.

Investors Need to Watch This Nasty Drug-Price Feud

Pharmacy-benefit managers are supposed to reduce drug prices but haven't, and their customers are pushing back.

October 2017 Beige Book: Reading Between The Lines - Rate Of Economic Expansion Unchanged

Written by Steven Hansen

The consolidated economic report from the 12 Federal Reserve Districts (Beige Book) stated "activity increased in September through early October, with the pace of growth split between modest and moderate". The previous report stated "expanded at a modest to moderate pace across all twelve Federal Reserve Districts in July and August".

The Moneyologist: My daughter earned millions at Google, but her boyfriend has student debt — should she get a prenup?

This father wonders whether his wealthy, smart daughter should remain unmarried.

In One Chart: Fewer shoppers are waiting for Black Friday to get a good holiday deal

Data from Accenture shows that some people are avoiding Black Friday in-store events, not only because of the crowds, but because deals are ubiquitous.

Earnings Outlook: EBay earnings: Poised for growth but facing an Amazon-sized hurdle

Ebay is expected to have a solid third-quarter showing, but Amazon looms large as a challenge to future growth

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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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