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21Nov2017 Market Update: Wall Street Climbs To New Historic Highs, DOW Over 180 Points, SP 500 Passes 2,600 For The First Time, B Of A Sees End Of Bull Market Coming In 2018

Written by Gary

US equities market's major indexes hit record levels this morning (SPY +0.7%), from technology stocks and healthcare shares getting a boost from Medtronic's results.


Here is the current market situation from CNN Money

North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 2.01% while Mexico's IPC is up 0.67% and U.S.'s S&P 500 is up 0.65%.

What Is Moving the Markets

Here are the headlines moving the markets.

Tech stocks lift Wall Street to record high

(Reuters) - Wall Street indexes hit record levels on Tuesday, with technology stocks rising for a second straight day and healthcare shares getting a boost from Medtronic's results.

Republican-appointed judge to hear AT&T lawsuit, Time Warner shares rise

(Reuters) - A Republican-appointed judge with extensive antitrust experience was selected on Tuesday to preside over the U.S. government's lawsuit to block AT&T Inc's acquisition of Time Warner Inc, sending Time Warner shares higher as investors bet the judge would be more likely to allow the deal to proceed.

Apple removes several apps, including Skype, in China

(Reuters) - Apple Inc said on Tuesday it has removed several apps including Skype, Microsoft Corp's internet phone call and messaging service, from its app store in China after the country's government pointed to violations of local laws.

Exclusive: U.S. agency to vote to repeal 'net neutrality' rules - FCC chief

WASHINGTON (Reuters) - The chairman of the Federal Communications Commission on Tuesday unveiled plans to repeal a landmark 2015 order that barred internet service providers from blocking or slowing down consumer access to web content, and said the regulator will prevent states and cities from adopting similar protections.

NAFTA nations lock horns on U.S. auto demands as fifth round ends

MEXICO CITY (Reuters) - Negotiators from the United States, Mexico and Canada square off on Tuesday for the last time in a fifth round of talks to rework the North American Free Trade Agreement, with stalemate brewing on a contentious proposal to ramp up regional content for autos.

Tencent's stellar share rally sees it surpass Facebook in market value

HONG KONG (Reuters) - Tencent Holdings Ltd has racked up some impressive gains this week - becoming the first Chinese firm to be worth more than $500 billion and surpassing Facebook to be the world's fifth-most valuable company.

Ireland promises progress in Apple tax recovery in coming weeks

DUBLIN (Reuters) - Ireland expects to make progress in recovering up to 13 billion euros ($15 billion) in disputed taxes from Apple Inc in the coming weeks, its prime minister said on Tuesday, following EU criticism that Dublin was moving too slowly.

Facebook to meet Russian regulators to discuss compliance: TASS

MOSCOW (Reuters) - Facebook plan to meet Russian regulators in late December or early January to discuss compliance, TASS news agency cited the head of Russian communications watchdog Roskomnadzor as saying on Tuesday.

FCC to reconsider U.S. television station ownership cap: source

(Reuters) - The head of the Federal Communications Commission will ask the U.S. agency to cast an initial vote in December to reconsider rules preventing a company from owning stations serving more than 39 percent of households with a television, a person briefed on the matter said on Tuesday.

US Airstrike In Somalia Kills More Than 100 al-Shabab Militants

More than 100 al-Shabaab militants were killed Tuesday in the latest US airstrike in Somalia the Pentagon announced, the latest in a series of strikes against the al Qaeda affiliated group and ISIS fighters in the war-torn country meant to support the local government. The strike occurred 125 miles northwest of the capital of Mogadishu, and was the 29th such strike since the start of 2017, and 7th since November 9.

The Pentagon released the following statement commemorating the latest airstrike:

U.S. Conducts Airstrike in Support of the Federal Government of Somalia

In coordination with the Federal Government of Somalia, U.S. forces conducted an airstrike in Somalia against an al-Shabaab camp on Tuesday, Nov. 21 at approximately 10:30 a.m. local Somalia time, killing more than 100 militants. The operation occurred 125 miles northwest of the capital, Mogadishu.

Al-Shabaab has pledged allegiance to al-Qaeda and is dedicated to providing safe haven for terrorist attacks throughout the world. Al-Shabaab has publicly committed to planning and conducting attacks against the U.S. and our partners in the region.

U.S. forces will continue to use all authorized and appropriate measures to protect Americans and to disable terrorist threats. This includes partnering with AMISOM and Somali National Security Forces (SNSF); targeting terrorists, their training camps and safe havens throughout Somalia, the region and around the world.

Our political and security goals in Somalia are the same: a reconstituted Somali state at peace internally and able to address all threats within its territory.

As we reported yesterday, the Defense Depart ...

BTFGGC!?

Because nothing says BTFD like a good government crisis...

The DAX is up almost 3% from the Sunday night post-coalition-fail lows...

But EURUSD is at those lows...

FCC Unveils Plan To Roll Back Net Neutrality Rules

The Trump administration has just set in motion a plan to repeal virtually all of the U.S. government's existing net neutrality rules — a move that could soon deliver a major deregulatory win to telecom/cable giants like AT&T, Charter, Comcast and Verizon. Ironically, the move comes just as another Trump administration department, the DOJ, seems intent upon delivering a massive blow to AT&T's efforts to acquire Time Warner.

According to a statement from FCC Chair Ajit Pai, the move is intended to return the internet to the "light-touch regulatory approach established by President Clinton and a Republican Congress."

"For almost twenty years, the Internet thrived under the light-touch regulatory approach established by President Clinton and a Republican Congress. This bipartisan framework led the private sector to invest $1.5 trillion building communications networks throughout the United States. And it gave us an Internet economy that became the envy of the world."

"But in 2015, the prior FCC bowed to pressure from President Obama. On a party-line vote, it imposed heavy-handed, utility-style regulations upon the Internet. That decision was a mistake. It's depressed investment in building and expanding broadband networks and deterred innovation."

"Today, I have shared with my colleagues a draft order that would abandon this failed approach and return to the longstanding consensus that served consumers well for decades. Under my proposal, the federal government will stop micromanaging the Internet. Instead, the FCC would simply require Internet service providers to be transparent about their practices so that consumers can buy the service plan that's best for them and entrepr ...

Now We Know Why The US 30yr Treasury Curve Has Been Flattening Like A Pancake - Pension Fund Buying And Tax Reform

TL/DR: Tax reform creates pension fund incentive to buy 30yr bonds NOW.

Currently, the top corp tax rate in the US is 35%. It looks most likely that rate will drop to 20% when tax reform passes. If you are a corp with an underfunded pension fund, you get a tax incentive to fund the pension THIS YEAR vs in the future when the corp tax rate drops to 20%. Why? Because contributions to the pension plan are tax deductible. You get a bigger tax deduction in 2017 then you will get in 2018 and onwards (assuming tax reform happens in something close to its current form...which it looks like it will).

Multiple primary dealers have reported pension buying in the 30yr sector over the past month, and coincidentally, 30yr bonds have rallied while the front end has sold off for the past month. Pension funds have a favorite bond to buy...STRIPS (30yr zero coupon bonds - higher yield than normal coupon bonds, better asset/liability match..more price sensitive to changes in yield...bigger bang for your buck in a bond rally..and is a flattener to the yield curve). Pension funds don't trade very much....they tend to buy and hold. So these flows will SIGNIFICANTLY flatten the 30yr curve...and that is exactly what we have been seeing.

1 Month of US Yield Curve Changes

US Treasury yield changes (basis points) since Oct 24, 2017

Mystery Solved.

Tencent Still Has a Bit to Learn From Facebook

Chinese tech giant Tencent has surpassed Facebook in market cap, but it needs to earn money like the U.S. social-media behemoth.

Commodity Bulls Ignoring a Few Large Elephants

Rising prices for growth-sensitive commodities have been one factor assuaging investors' fears about richly valued stocks. But investors have been ignoring warning signs in metal and energy markets too.

Wall Street Will See Washington in Court

AT&T's deal for Time Warner may be going to the courts where deal makers have a decent shot at challenging the Trump administration's suit against the media deal.

October 2017 CFNAI Super Index Moving Average Points To A Pickup In Growth

Written by Steven Hansen

The economy's rate of growth surged based on the Chicago Fed National Activity Index (CFNAI) 3 month moving (3MA) average - and economic growth is significantly above the historical trend rate of growth.

Metals Stocks: Gold regains some lost ground

Gold climbs Tuesday, setting prices up to recoup some of the hefty decline they suffered a day earlier as the U.S. dollar moves lower and investors look to minutes from the Federal Reserve's recent meeting for clues the central bank's decision on interest rates.

The Ratings Game: Why one analyst argues Morgan Stanley is a better investment than Goldman Sachs

One analyst thinks Goldman Sachs' turnaround plan is too optimistic and notes that Morgan Stanley is better positioned.

The Technical Indicator: Charting a November breakout attempt, S&P 500 rattles cage on the 2,600 mark

Technically speaking, the S&P 500's latest breakout attempt is underway, writes Michael Ashbaugh. The index has tagged a nominal record high, and continues to challenge resistance matching the 2,600 mark.

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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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