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20Oct2017 Market Update: Wall Street Edges Up Moderately As Progress In Trump's Tax Plan Lifts Investors Hopes, WTI Crude And US Dollar Show Strength

Written by Gary

US markets resume bull rally making new historic highs from the opening bell reversing yesterday's down day (SPY +0.5%). Trump's tax plan lifts hopes in early afternoon risk trading.


Here is the current market situation from CNN Money

North and South American markets are higher today with shares in Mexico leading the region. The IPC is up 0.66% while Brazil's Bovespa is up 0.58% and U.S.'s S&P 500 is up 0.45%.

Traders Corner - Health of the Market

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street up as progress in Trump's tax plan lifts hopes

(Reuters) - U.S. stocks extended gains in early afternoon trading on Friday to scale new highs on hopes that President Donald Trump's tax-cut plan would make further headway after the Senate passed a budget resolution.

Merck to cut 1,800 U.S. sales jobs, add 960 in chronic care

(Reuters) - Drugmaker Merck & Co Inc , moving to a new sales team structure in the United States, plans to cut 1,800 sales positions, while adding 960 jobs to a new chronic care sales force, the company said on Friday.

Schlumberger, Baker Hughes warn of weak fourth quarter

(Reuters) - The world's top two oilfield services firms warned on Friday of a challenging fourth quarter for the industry, as investment slows due to soft oil prices and energy firms reducing activity on offshore rigs.

U.S. existing home sales unexpectedly rebound in September

WASHINGTON (Reuters) - U.S. home resales unexpectedly increased in September as the effects of Hurricanes Harvey and Irma began to dissipate, but a persistent dearth of properties for sale continued to weigh on overall activity.

Gillette weakens P&G report after Peltz row

(Reuters) - Procter & Gamble Co disappointed Wall Street with sales on Friday, hurt by continuing weakness in its Gillette business, a week after it claimed to have fought off hedge-fund manager Nelson Peltz's move to muscle onto the board.

Apple hit with trademark lawsuit over iPhone X 'animoji' feature

NEW YORK (Reuters) - A Japanese software company is suing Apple Inc in a U.S. court over the trademark for the term "animoji", alleging the U.S. technology company stole the name to use on a feature of its iPhone X.

Low pay, no bonus: U.S. retailers struggle with hiring

(Reuters) - U.S. retailers are finding it increasingly difficult to hire employees for stores and for middle and higher management as low pay and a feeling of uncertainty clouds the industry following a spate of bankruptcies and store closures.

BMW raided in cartel investigation as Daimler claims immunity

MUNICH/BRUSSELS (Reuters) - BMW's headquarters were raided by European Union officials investigating an alleged cartel among German carmakers, it said on Friday, as rival Daimler claimed whistleblower status in an effort to avoid fines.

Wells Fargo fires forex bankers, investigates unit: WSJ

(Reuters) - Wells Fargo & Co , the third-largest U.S. bank by assets, has fired four foreign-exchange bankers amid an investigation into that business by both the bank and regulators, the Wall Street Journal reported, citing people familiar with the matter and the bank.

"Rigged To Perfection" - Markets Charge But "The Nation As A Whole Is Getting F**ked Sideways"

Authored by James Howard Kunstler via Kunstler.com,

It amuses me that the nation is so caught up in the sexual mischief of a single Hollywood producer when the nation as a whole is getting fucked sideways and upside down by its own political caretakers.

Behind all the smoke, mirrors, Trump bluster, Schumer fog, and media mystification about the vaudeville act known as The Budget and The Tax Cut, both political parties are fighting for their lives and the Deep State knows that it is being thrown overboard to drown in red ink. There's really no way out of the financial conundrum that dogs the republic and something's got to give.

Many of us have been waiting for these tensions to express themselves by blowing up the artificially levitated stock markets. For about a year, absolutely nothing has thwarted their supernatural ascent, including the threat of World War Three, leading some observers to believe that they have been rigged to perfection.

Well, the algo-bots might be pretty fine-tuned, and the central bank inputs of fresh "liquidity" pretty much assured, but for all that, these markets are still human artifacts and Murphy's Law still lurks out there in the gloaming with its cohorts, the diminishing returns of technology (a.k.a. "Blowback"), and the demon of unintended consequences.

Many, including yours truly, have expected the distortions and perversions on the money side of life to express themselves in money itself: the dollar. So far, i ...

...And "Horrible, Unacceptable" GE Goes Green

Having tumbled 10% in the pre-open after massively missing earnings expectations and slashing guidance, panic-dip-buyers have stepped in and (thanks in large part to passive index buyers flooding into The Dow), General Electric is now green...

"Kitchen sink" is the new no-brainer... as CEO call sit "horrible and unacceptable"

Dow-buyers helping out (and it looks like some Dow vs GE pairs hit at the open)...

It seems Dow at 1000x the price of GE remains solid resistance...

Who could have seen that coming?

1 more hour of central bank buying before GE turns green

— zerohedge (@zerohedge) October 20, 2017

Institutions Are Selling To Retail Investors At An Unprecedented Pace

According to the latest EPFR fund flow data compiled by BofA's Michael Hartnett, the great "institutional to equity" stockholding rotation is accelerating, with another $8.8bn allocated to equities, more than all of it from retail investors, and another $5.8bn going into bonds, offset by a $0.4bn outflows from gold.

Ironically, the one place where active investors are still putting back at least a token fight against the robots is in bonds, where $3.6bn went into active bond funds this week vs "only" $2.2bn into passive bond ETFs. And, as Hartnett writes, active AUM is fighting back, if only in bondland, where there have been $1.04tn in active bond inflows past 10 yrs vs. $0.93tn into passives...

.... a very different trend from what has taken place in stocks in the past decade (Chart 2) where institutions are delighted to dump to "low-cost" passive alternatives.


Of course, this particular "great rotation" is no surprise: earlier this week we were surprised to report that on its conference call, Morgan Stanley reported that the cash levels in its clients (retail) accounts, is the lowest it has ever been:

... w ...

Can Trump Drive A Wedge Between Saudi-Russian Alliance?

Authored by Zainab Calcuttawala via OilPrice.com,

Together, Russia and Saudi Arabia produce a fourth of the world's oil. The laws of competitive international commodity trading have pit the two petrostates on opposite poles of the U.S.-Russia geopolitical rivalry. But a new era of American oil exports and ailing national budgets is pulling Moscow and Riyadh together in trying financial times.

President Barack Obama's administration maintained a cold distance from Saudi Arabia in its final years. As the United States and its European allies began a war against the Islamic State in 2014, Saudi Arabia focused its military might on Yemen—a country on the Arabian Peninsula facing the brutal consequences of an extended Arab Spring. Iranian arms and funding reached the pockets of the Shiite Houthi rebels, who hoped to build a new regime in Yemen, to the chagrin of Wahabbi Saudi Arabia.

President Donald Trump's White House has extended an olive branch towards Riyadh as the new State Department lays out its foreign policy agenda.

But this new diplomatic program runs contrary to the KSA's economic goals. American oil exports, reinstated back in December 2015, counter the effects of OPEC's landmark agreement to lower bloc-wide output by 1.2 million barrels per day in an effort to alleviate an international supply glut.

As a major oil exporter, Russia was invited to pa ...

Catastrophes Everywhere, but Big Insurers May Do Alright

Much uncertainty remains around the costs from recent storms and earthquakes that will fall on investors. But for the big traditional groups like Swiss Re and XL, the storm damage may not be that bad.

The Downside of Big Profits at Google and Facebook

Google, Facebook and Twitter face serious questions about their outsize influence. Strong earnings reports won't help that.

P&G Does Itself No Favors Post-Peltz

Life isn't getting easier for Procter & Gamble after its unconfirmed victory in the proxy fight with activist Nelson Peltz.

Market Extra: Bitcoin breaks above $6,000, nears $100 billion value for the first time in its history

The world's most prominent digital currency was on track to mark a fresh milestone on Friday, with bitcoin rallying and putting the cyber currency in position to hit a total market value of around $100 billion.

The Fed: What a Jerome Powell-Fed may look like

Traders are likely to breathe a sigh of relief if Jerome Powell, the Fed governor under consideration by President Donald Trump to become chairman of the central bank, gets nominated.

Stitch Fix IPO: 5 things to know about online clothing service

Stitch Fix, a clothing service that uses data, stylists, and clients feedback to handpick items, has filed to go public

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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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