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23Oct2017 Market Close: Wall Street Stalls And Falls As Industrials Lag, The Dow Is Up About 4 Percent For The Month, WTI Crude Holding Steady In The High 51 Handle

Written by Gary

US stock market indexes were moderately in the red (SPY -0.4%), with the S&P 500 retreating from its latest record on Friday. However, October is shaping up to be one of the best months of the year.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall St. stalls as industrials lag

NEW YORK (Reuters) - U.S. stocks were little changed, with the S&P 500 retreating slightly from a record on Monday, as a drop in General Electric weighed on industrial shares.

Halliburton warns of slower growth as U.S. rig count drops

(Reuters) - Oilfield services giant Halliburton Co on Monday warned of slower growth at its oil well drilling and evaluation business, reflecting a steady drop in rig counts in the United States.

Iphone X demand will be substantial, but not exceptional: survey

(Reuters) - Days before Apple Inc's much-awaited iPhone X opens for preorders, a survey by brokerage Bernstein showed that demand for the device will be substantial, but not exceptional, with about a quarter of the respondents planning to buy the phone.

Apple sees its mobile devices as platform for artificial intelligence

TAIPEI (Reuters) - Apple Inc sees its mobile devices as a major platform for artificial intelligence in the future, Chief Operating Officer Jeff Williams said on Monday.

U.S. jury finds ex-HSBC executive guilty of fraud in $3.5 billion currency trade

NEW YORK (Reuters) - A U.S. jury on Monday found a former HSBC Holdings Plc executive guilty of defrauding Cairn Energy Plc in a $3.5 billion currency trade in 2011.

Cisco buys BroadSoft for $1.71 bln in software push

(Reuters) - Cisco Systems Inc will buy software company BroadSoft Inc for $1.71 billion, it said on Monday, in a deal that boosts Cisco's collaboration tools and helps the company diversify its offerings away from switching and routing.

Fiat Chrysler sues shippers over alleged price fixing

WASHINGTON (Reuters) - Fiat Chrysler Automobiles NV has lodged a complaint with a U.S. regulator seeking "reparations" from a group of shipping companies from Asia, Europe and South America that admitted to fixing prices for shipping vehicles, according to documents made public on Monday.

U.S. regulators approve fix for 38,000 VW 3.0-liter diesel SUVs

WASHINGTON (Reuters) - U.S. and California regulators have approved a fix for about 38,000 Volkswagen AG 3.0-liter vehicles with potential excess emissions, a decision that could save the automaker more than $1 billion, according to a letter made public on Monday.

EU raids Daimler and VW in widening cartel inquiry

HAMBURG/BERLIN (Reuters) - European Union and German antitrust officials searched the offices of Daimler and Volkswagen on Monday, widening an inquiry into alleged collusion.

Why The Next Stock Market Crash Will Be Faster And Bigger Than Ever Before

Authored by Simon Black via SovereignMan.com,

US stock markets hit another all-time high on Friday.

The S&P 500 is nearing 2,600 and the Dow is over 23,300.

In fact, US stocks have only been more expensive two times since 1881.

According to Yale economist Robert Shiller's Cyclically Adjusted Price to Earnings (CAPE) ratio - which is the market price divided by ten years' average earnings - the S&P 500 is above 31. The last two times the market reached such a high valuation were just before the Great Depression in 1929 and the tech bubble in 1999-2000.

Some of the blame for high valuation goes to the so-called "FANG" stocks (Facebook, Amazon, Netflix and Google), whose average P/E is now around 130.

But there's something different about today's bull market...

Simply put, everything is going up at once.

Leading up to the tech bubble bursting, investors would dump defensive stocks (thereby pushing down their valuations) to buy high-flying tech stocks like Intel and Cisco - the result was a valuation dispersion.

The S&P cap-weighted index (which was influenced by the high valuations of the S&P's most expensive tech stocks) traded at 30.6 times earnings. The equal-weighted S&P index (which, as the name implies, weights each constituent stock equally, regardless of size) traded at 20.7 times.

Today, de ...

CLOs - "Safe" CDOs - Are Booming Again

Last week we explained how junk bond managers were buying increasing amounts of equities to "juice" their portfolios and propel their funds higher in the performance rankings.

While this struck us as a relatively recent development, the tried-and-trusted method of trading more risk for more yield is going gangbusters in the CLO (Collateralized Loan Obligations) market in 2017...

In "Hunt for Yield Fuels Another Boom in Another Complex, Risky Security", the WSJ notes:

"The CLO boom is the latest sign of the ferocious hunt for yield permeating markets. Stellar performance over the past year has made CLOs increasingly hard to ignore for investors like insurance companies and pension funds. CLOs carve up a portfolio of bank loans to highly indebted companies into slices of securities with different levels of risk.

The securities at the bottom of the CLO stack offer the highest potential source of returns, but they are also the first to absorb losses if there are defaults in the underlying loan por ...

Good Companies Don't Always Make Good Stocks

Authored by Vitaliy Katsenelson via RealInvestmentAdvice.com,

I was recently going through a new client's portfolio and found it full of the likes of Coca-Cola, Kimberly-Clark and Campbell Soup - what I call (pseudo) bond substitutes. Each one is a stable and mature company. Your mother-in-law would be proud if you worked for any one of them. They have had a fabulous past; they've grown revenues and earnings for decades. They were in their glory days when most baby boomers were coming of age. But the days of growth are in the rearview mirror for these companies - their markets are mature, and the market share of competitors is high. They can innovate all day long, but consumers will not be drinking more fizzy liquids, wearing more diapers or eating more canned soup.

If you were to look at these companies' financial statements, you'd be seriously under-impressed. They paint a stereotypical picture of corporate old age. Their revenues haven't grown in years and in many cases have declined. Some of them were able to squeeze slightly higher earnings from stagnating revenue through cost-cutting, but that strategy has its limits — you can only squeeze so much water out of rocks (unless someone like 3G Capital takes the company, sells its fleet of corporate jets and starts mercilessly slashing expenses like the private equity firm did at Budweiser and Heinz). These businesses will be around ten years from now, but their profitability probably won't be very different from its current level (not much higher, but probably not much lower either).

However, if you study the stock charts of these companies, you won't see any signs of arthritis; not at all - you'll have the impression that you're looking at veritable spring chickens, as these stocks have gon ...

New York AG Launches Civil Rights Probe Into Weinstein Company

Thomas Barrick's Colony Capital might want to hold off on its planned purchase of "some or all" of the Weinstein Company's major assets, because the company might need those to settle a civil probe that's been opened by New York Attorney General Eric Schneiderman.

According to the New York Times and the New York Post, Schneiderman's Civil Rights Bureau on Monday sent a subpoena to the Weinstein Company - which recently accepted an emergency loan from Colony - seeking a laundry list of documents — personnel files, criteria for hiring, promoting and firing, formal and informal complaints of sexual harassment or age or gender discrimination, and records of how those complaints were handled, said a source familiar with the investigation.

Schneiderman also wants paperwork and communications related to eight settlements that Weinstein reached with accusers that were first reported by the New York Times. The investigation will also examine whether the company should be held financially responsible for any of Weinstein's misconduct.

Eric Schneiderman

The question of who at the company knew what about Weinstein's aggressive behavior has been widely explored since the scandal broke earlier this month. Reporting by the New Yorker suggests that most of the firm's employees knew both Harvey and Bob Weinstein to be difficult, aggressive and abu ...

Feeding Babies in China Is a Booming Business Again

The world's largest infant-formula market is surprisingly volatile. Investors shouldn't expect the good news for Western consumer groups to last.

Allergan: That $15 Billion Sure Went Fast

Last year Allergan PLC did one of the best deals in drug industry history. The drug company has been busily squandering the benefits ever since.

Natural Gas Prices May Surprise This Winter

After nine years of booming production of natural gas, this winter could be one of the rare instances supply and demand conspire to drive up prices.

Trump Today: Trump Today: President says he's 'very, very close' to naming pick for Fed chief

President Donald Trump promised Monday that 401(k) accounts won't see a change under a tax-reform plan, said he was "very, very close" to picking a new leader for the Federal Reserve and met with the prime minister of Singapore.

Top Celgene cancer drugs now 20% more expensive after latest price hikes

These are "the highest we have seen for these drugs," one Wall Street analyst said.

Key Words: NBA player tweets 'I Dont wanna be here' and his team obliges

Eric Bledsoe reportedly told the team's GM he was referring to a hair salon.

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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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