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19Oct2017 Market Close: Wall Street Pauses After Record Highs, Tech A Drag On Markets, US Crude And Dollar Remain Weak, Expect Rally To Continue Next Week

Written by Gary

US stocks were flat today (SPY +0.03%), pausing after their recent run of record highs, as technology shares dragged and some earnings disappointed.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street pauses after record highs; tech a drag

NEW YORK (Reuters) - U.S. stocks were flat on Thursday, pausing after their recent run of record highs, as technology shares dragged and some earnings disappointed.

Verizon quarterly revenue tops estimates as subscribers rise

NEW YORK (Reuters) - Verizon Communications Inc's quarterly revenue topped Wall Street analyst estimates on Thursday and the company added more phone subscribers than expected, sending shares of the No. 1 U.S. wireless carrier up in mid-morning trading.

Japan carmakers vouch for safety of Kobe Steel's aluminum parts

TOKYO (Reuters) - Four Japanese automakers on Thursday said they found no safety issues with aluminum parts supplied by Kobe Steel Ltd , allaying some concerns that falsified quality data on products from the steelmaker had compromised their vehicles.

U.S. jobless claims hit 44-1/2-year low; mid-Atlantic factories humming

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits dropped to its lowest level in more than 44-1/2 years last week, pointing to a rebound in job growth after a hurricane-related decline in employment in September.

Thirty years ago this week, Wall Street slid into the abyss

NEW YORK (Reuters) - Thirty years ago, before heading to work at the New York Stock Exchange, Peter Kenny left his home in lower Manhattan and made a detour to the nearby Our Lady of Victory church to pray to St. Jude, the Roman Catholic patron saint of desperate and lost causes.

Could the 1987 stock market crash happen again?

NEW YORK (Reuters) - On the 30th anniversary of the 1987 stock market crash, U.S. stocks are at a record high and investors are concerned that steep valuations may mean a correction is overdue, despite healthy corporate earnings and economic growth.

Facebook to launch news subscription feature, some big names opt out

(Reuters) - Facebook Inc said on Thursday it has signed up 10 news publishers including the Washington Post and The Economist to take part in a trial that gives its mobile app users access to a limited number of articles a month and then the option to subscribe via the publishers' own websites.

Microsoft expands rural U.S. campaign with Green Bay Packers tie-up

SAN FRANCISCO (Reuters) - Microsoft Corp has teamed up with the National Football League's Green Bay Packers in a $10 million partnership intended to spur tech innovation in Wisconsin, the software company said on Thursday.

U.S. auto reliability dented by new technology; electric cars fare better: report

DETROIT (Reuters) - New technology to stream music into dashboards or boost fuel efficiency is making cars less reliable, although electric cars such as the Tesla Model 3 and the Chevrolet Bolt should fare better than many conventional models, Consumer Reports magazine said on Thursday.

Spot The Odd One Out: 'War On Drugs' Edition

USA, USA, USA!!!

The rise of mass incarceration in the U.S. in 10 seconds (Animated version of Fig.1.1 from Incarceration Nation: https://t.co/KC5J9EeU8l) pic.twitter.com/4qnJoCDZk5

— Peter K. Enns (@pete_enns) October 19, 2017

As we noted previously, the over-criminalization of America is a relatively recent trend. As Holly Harris notes:

It wasn't always like this. In 1972, for every 100,000 U.S. residents, 161 were incarcerated. By 2015, that rate had more than quadrupled, with nearly 670 out of every 100,000 Americans behind bars.

The over-criminalization of America is rooted in federal laws and regulations, and state and local governments have followed suite. here is Harris's account:

The burgeoning U.S. prison population reflects a federal criminal code that has spiraled out of control. No one—not even the government itself—has ever been able to specify with any certainty the precise number of federal crimes defined by the 54 sections contained in the 27,000 or so pages of the U.S. Code. In the 1980s, lawyers at the Department of Justice attempted to tabulate the figure "for the express purpose of exposing the idiocy" of ...

GE Options Are Pricing In Massive Dividend Cuts

GE shares are languishing at more than four year lows (as the broader market soars to record highs) and GE credit risk stands at 8 month highs (almost dopuble the post-crisis lows hit in June). As Goldman analyst Joe Ritchie warns, a significant earnings per share/free cash flow reset looms and the prospect of a dividend cut is dragging the stocks lower.

Ricthie says he would "ideally want to get more positive" with the stock hitting 52-week lows and sentiment at its most bearish since initiating coverage four years ago, however, a fresh look at fundamentals "leaves us incrementally bearish."

Expects new CEO John Flannery to make changes necessary to position the company better for longer-term prosperity.

GE's stock dividend yield has never been so high to its corporate bond yield...

And as Susquehanna's derivative strategist Chris Jacobson notes, GE options are pricing in a dramatic cut in dividends in the next few years.

In fact, GE options are implying ~71c of cumulative dividends between now and January 2019, compared with the ~$1.20 that would be expected without any action

As Chris Whalen recently noted, traders continue to puzzle over the latest management changes ...

Bernie To Americans: "Sure, You'll All Pay More Taxes... But You'll Get More Free Stuff"

Vermont Sen. Bernie Sanders, the runner-up for the Democratic Party's nomination for president in 2016, told an audience on CNN Wednesday night that Americans would be happy to pay more in federal income taxes if he could just explain to them it would mean they'll get more "free" government benefits, including health care, child care and college.

As DailyCaller.com's Derek Hunter details, in a televised debate against Texas Sen. Ted Cruz, Sanders told the audience the American people would support his economic vision if only he were able to explain it to them.

Sanders says raising taxes can help lower health care premiums, the cost of childcare and college tuition https://t.co/sWxgHO5Din

— CNN (@CNN) October 19, 2017

"If we can explain to people, 'Yeah, you're going to be paying more in taxes. It's going to be a progressive tax system,'" Sanders told the crowd,

"'The wealthy are going to pay their fair share, not the middle class, not the working class, but everybody will pay some more. But you're gonna get free health care, and ...

Trump Met With Janet Yellen; Meeting Lasted 30 Minutes

The anticipated meeting between president Trump and Janet Yellen has concluded, and according to Fox News, it lasted no more than 30 minutes, running from 2:00PM to 2:30PM, or barely enough for Trump to stop patting himself on the back about the yuuge Dow Jones rally under his presidency.

#BreakingNews WH official tells me Janet Yellen's meeting with @realDonaldTrump has just come to an end. More to come.

— Brian Schwartz (@schwartzbFBN) October 19, 2017

#BreakingNews WH official tells me the meeting with Yellen and Trump started at 2:00 pm and went to about 2:30.

— Brian Schwartz (@schwartzbFBN) October 19, 2017

And to think it was a just over a year ago that Trump was bashing Yellen for creating a stock bubble with the help of low rates, shortly after urging his fans to sell their stocks.

As a reminder, last September, Trump said that "keeping the rates artificially low so the economy doesn't go down so that Obama can say that he did a good job. They're keeping the rates artificially low so that Obama can go out and play g ...

Box Stacks Up its Cloud Gains

Young tech companies like to move fast and break things, but humbled upstart Box has discovered the value of taking things slow and steady.

Unilever Cost-Cutting Turns Out to Be Twisty Path to Profits

The Anglo-Dutch consumer giant has been hit by upstart competitors like ice-cream brand Halo Top, as brand-building is a less predictable business than it used to be.

For a Profitable Tech Stock That's Still Cheap, Look to Taiwan

TSMC stands to benefit from the hottest tech trends, from new smartphones to cryptocurrencies.

September 2017 Leading Economic Index Declined

Written by Steven Hansen

The Conference Board Leading Economic Index (LEI) for the U.S declined this month - and the authors say "Despite September's decline, the trend in the US LEI remains consistent with continuing solid growth in the US economy for the second half of the year".

Market Extra: 30 years after Black Monday, could stock market crash again?

It has been three decades since the most disastrous single day in U.S. stock market history, and investors can be forgiven for wondering if Wall Street learned its lesson.

Market Extra: Black Monday anniversary: How the 2017 stock market compares with 1987

It is the 30th anniversary of Black Monday, and while worries about market structure abound, investors shouldn't compare the 2017 rally to the 1987 surge that preceded the most cataclysmic single day in Wall Street history.

Trump Today: Trump Today: President questions if FBI paid for dossier alleging Russia ties

President Donald Trump questioned on Thursday if the Federal Bureau of Investigation was behind an intelligence dossier that alleged ties between Russia and his presidential campaign, gave the federal aid effort for Puerto Rico a '10,' and met with Federal Reserve Chairwoman Janet Yellen as he draws closer to announcing his choice for the central bank's next leader.

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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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