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02Nov2017 Market Close: Wall Street Closes Mixed, Dow Sets New Record High While Tax Plan Weighs On SP 500 And Nasdaq, US Crude Trends Higher

Written by Gary

The DOW climbed to a new record high while losses in Facebook kept other indexes in check as investors assessed the long-awaited tax cut plan. Fed Governor Jerome Powell to become head of the U.S. central bank.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Trump nominates Fed's Powell to lead U.S. central bank

WASHINGTON (Reuters) - President Donald Trump on Thursday tapped Fed Governor Jerome Powell to become head of the U.S. central bank, promoting a soft-spoken centrist to replace Janet Yellen when her term expires in February 2018.

Qualcomm sues Apple for breach of software license contract

(Reuters) - Qualcomm Inc has sued Apple Inc , alleging that it violated a software license contract to benefit rival chipmaker Intel Corp for making broadband modems, the latest salvo in the longstanding dispute between Qualcomm and Apple.

Dow rises while tax plan weighs on S&P, Nasdaq

(Reuters) - The Dow industrials climbed on Thursday while losses in Facebook kept the S&P 500 and the Nasdaq in check as investors assessed the long-awaited tax cut plan unveiled by U.S. President Donald Trump's fellow Republicans.

Exclusive: Airbus begins external search for new sales chief - sources

PARIS (Reuters) - Airbus has embarked on a fresh search for a sales chief to take over from soon-to-retire John Leahy as the aerospace group seeks a clean break from turmoil over investigations into the use of middlemen, said three people familiar with the plans.

U.S. and AT&T discuss conditions for approval of Time Warner deal

WASHINGTON (Reuters) - AT&T Inc and the U.S. Department of Justice are discussing conditions the No. 2 wireless carrier needs to meet in order for its acquisition of Time Warner Inc to win government antitrust approval, sources familiar with the situation told Reuters on Thursday.

Spending plans trigger Facebook stock retreat

(Reuters) - Facebook Inc shares slid on Thursday, as investors shrugged off strong quarterly results and worried about the cost of the company's decision to spend more on preventing misuse of the world's biggest social media network.

Goldman's Blankfein is only major financial firm CEO to join Trump on China trip

(Reuters) - Goldman Sachs Group Inc Chief Executive Lloyd Blankfein will visit China as part of a business delegation in November at the same time as U.S. President Donald Trump, a Goldman spokesman confirmed.

U.S. third quarter productivity fastest in three years; jobless claims fall

WASHINGTON (Reuters) - U.S. worker productivity increased at its fastest pace in three years in the third quarter but the trend remained moderate, suggesting that a recent acceleration in economic growth was unlikely to be sustained.

Bank of England takes slow lane after first rate hike since 2007

LONDON (Reuters) - The Bank of England raised interest rates for the first time in more than 10 years on Thursday but said it expected only "very gradual" further increases as Britain prepares to leave the European Union, sending sterling down sharply.

Coinbase Adds A Record 100,000 Bitcoin Traders In One Day

Back in the summer of 2015, one tracked the euphoria of the Chinese stock market bubble by the number, usually in the hundreds of thousands, of new brokerage accounts that were opened on any one given day.

And while that bubble has long since burst, the tradition of measuring new account openings has remained, and nowhere more so than in the biggest momentum instruement of the day, bitcoin.

Following a 7x increase in the price of bitcoin this year alone, which earlier today topped $7,000 for the first time ever (before sliding as much as $600) the broader public is now truly on board, and as one of the world's biggest US cryptocurrency exchanges reports in its daily usage update, there were 11.9 million Coinbase users as of November 1, shortly after the CME announced it would introduce bitcoin futures by the end of 2017.

This number is notable because according to data collected by Alistair Milne, an investor in the Atlanta Digital Currency fund...

Coinbase added 100,000 users in the past 24hrs
Data: https://t.co/R9B63J2d6Q#bitcoin

— Alistair Milne (@alistairmilne) November 2, 2017

... the number of users was 11.8 million yesterady, meaning that in one day Coinbase added a record 100,000 users, i.e., bitcoin traders.

Tesla's Having The Worst Day Ever As GOP Tax Plan Calls For Axing Electric Car Credit

Tesla may be officially having the worst day ever. One day after announcing its worst quarter in history, in which it burned a record $1.4 billion in cash (which is about $15.5 million every single day, btw)...

...a couple of GOP Representatives had to come along and propose a tax bill that would eliminate a key component on Tesla's business plan: taxpayer subsidies. As SF Gate notes, each electric vehicle purchased in the U.S. is currently eligible for a $7,500 tax credit...a credit that has long served to artificially prop up a business that would likely not exist but for the generosity of taxpayers.

Tesla Inc., General Motors Co. and other major carmakers pushing to boost U.S. electric car sales were dealt a blow by House Republicans who on Thursday proposed eliminating a $7,500 per vehicle tax credit that has helped stoke early demand for the still small segment of the U.S. auto market.

If adopted, the repeal would take effect after the 2017 tax year, according to a summary of the bill released Thursday by the House Ways and Means Committee as part of a sweeping overhaul of the U.S. tax code that would eliminate some deductions and cut the corporate tax rate to 20 percent. The Senate is crafting its own ver ...

Can Gradual Interest-Rate Tightening Prevent A Bust?

Authored by Frank Shostak via The Mises Institute,

Fed policy makers are of the view that if there is the need to tighten the interest rate stance the tightening should be gradual as to not destabilize the economy.

The gradual approach gives individuals plenty of time to adjust to the tighter monetary stance. This adjustment in turn will neutralize the possible harmful effect that such a tighter stance may have on the economy.

But is it possible by means of a gradual monetary policy to undo the damage inflicted to the economy by previous loose monetary policies? According to mainstream economic thinking, it would appear that this is the case.

In his various writings, the champion of the monetarist school of thinking, Milton Friedman, has argued that there is a variable lag between changes in money supply and its effect on real output and prices. Friedman holds that in the short run changes in money supply will be followed by changes in real output. In the long run, according to Friedman, changes in money will only have an effect on prices.

It follows then that changes in money with respect to real economic activity tend to be neutral in the long run and non-neutral in the short run. Thus according to Friedman,

In the short-run, which may be as much as five or ten years, monetary changes affect primarily output. Over decades, on the other hand, the rate of monetary growth affects primarily prices.

...

President Trump Announces Jerome 'Jay' Powell As Fed Chair

Having been leaked to most major news organizations last night, President Trump is fully expected to announce that Fed governor Jerome "Jay" Powell is Janet Yellen's replacement as the next bank-friendly Fed chair.

Live Feed (due to begin at 1500ET)...

Jerome Powell will be the first former investment banker to become Fed Chair (and first non-economics PhD in 40 years).

Powell, a Princeton graduate, was a lawyer in New York before he joined the investment bank Dillon Reed & Co. in 1984. He stayed there until he joined the Treasury Department in 1990. After he left Treasury, he became a partner in 1997 at The Carlyle Group (CG), the private equity and asset management giant. He left Carlyle in 2005.

He will also likely be the richest Fed head ever - Powell's assets are worth between $21 million and $61 million, according to financial disclosures which require officials to give a range in the value of their various holdings.

Since Powell has served as Federal Reserve governor for the past five years, starting May 2012, he has had ample opportunities to express his views about the policies he will oversee if the Senate confirms him as the central bank's next chairman.

For those who want a detailed breakdown ...

The Tax Plan's Pleasant Surprises for Investors

The Republican tax plan contains most of what prompted investors to bid the stock market up to a record in recent months with only a few twists, but the economic boost is less than it could have been.

World Record $5 Billion Skyscraper Sale a Tall Order

A consortium led by a Chinese Communist Party-backed oil company has bought a landmark building in the world's biggest commercial property deal.

Bank of England Raises Rates Amid the Brexit Gloom

The U.K. economy is lagging the world, and the Bank of England says that Brexit is having a "noticeable impact" on the economic outlook. That is a gloomy place to start from for a rate increase.

Market Extra: Bitcoin is the 'very definition of a bubble': Credit Suisse CEO

Credit Suisse Chief Executive Tidjane Thiam left little room for doubt about his feelings about bitcoin, branding it the "very definition of a bubble" in a news conference and joining the growing ranks of banking honchos to scorn the soaring cryptocurrency.

Trump Today: Trump Today: President says tax bill will boost jobs and Powell will sustain economy

On a big day, President Donald Trump celebrated a new tax bill and introduced his nominee to head the Federal Reserve as he called for changes to a visa program in reaction to the terrorist attack in New York City.

A look at Trump backer Robert Mercer, who stepped down from hedge fund

Robert Mercer, the billionaire co-chief executive of hedge-fund Renaissance Technologies LLC and an early backer of Donald Trump during his presidential campaign, is resigning from his role, according to a memo sent Thursday.

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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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