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19Dec2017 Market Close: Wall Street Closes Fractionally Lower, DOW Down 37 Points, WTI Crude Trends Fractionally Higher As The US Dollar Index Slips

Written by Gary

US equities market drifted lower today (SPY -0.4%) as the U.S. House of Representatives approved a long-awaited bill to overhaul the tax system.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

House approves biggest tax overhaul in 30 years; Senate next

WASHINGTON (Reuters) - The Republican-controlled U.S. House of Representatives approved sweeping, debt-financed tax legislation on Tuesday, sending the bill to the Senate, where lawmakers were due to take up the package later in the evening.

Wall Street eases as House approves tax legislation overhaul

NEW YORK (Reuters) - Wall Street stocks drifted lower on Tuesday as the U.S. House of Representatives approved a long-awaited bill to overhaul the tax system.

UPS reserves 125 Tesla semi-trucks, largest public pre-order yet

DETROIT (Reuters) - United Parcel Service Inc said on Tuesday it is buying 125 Tesla Inc all-electric semi-trucks, the largest known order for the big rig so far, as the package delivery company expands its fleet of alternative-fuel vehicles.

United Technologies resolves U.S. counterfeit parts probe for $1 million

(Reuters) - United Technologies Corp will pay $1.06 million to resolve claims that a company it indirectly owned falsely certified the authenticity of counterfeit parts incorporated into U.S. Army helicopter engines, the U.S. Justice Department said on Tuesday.

U.S. tax cut to deliver corporate earnings gift

NEW YORK (Reuters) - A planned massive Republican tax overhaul has led Wall Street strategists to revise their 2018 corporate earnings forecasts sharply higher, but the jury is out on how long the accelerating effect on profits will last.

Niki hangs on to slots for now as potential bidders line up

VIENNA (Reuters) - Air Berlin's unit Niki can keep its valuable runway slots while Austria's Transport Ministry examines its insolvency filing, the airspace regulator said amid growing interest in the carrier from potential bidders.

Facebook makes German marketing push as hate speech law bites

BERLIN (Reuters) - Facebook is making a big marketing drive in Germany just as the country starts to implement tough regulations designed to clamp down on online hate speech.

Defiant O'Leary says union recognition sets stage for Ryanair expansion

DUBLIN (Reuters) - Ryanair Chief Executive Michael O'Leary broke months of media silence on Tuesday to defend his decision to recognize unions for the first time in 32 years, saying it would allow his airline to expand and help to keep staff costs down.

SEC halts trading in crypto firm after eye-popping rise

(Reuters) - U.S. securities regulators on Tuesday temporarily suspended trading in the shares of Crypto Company, a small firm that saw its stock rise more than 2,700 percent this month after signing a deal to buy a cryptocurrency data platform.

Small Caps Slammed And Bonds Bloodbath As Tax-Hopers "Sell The News"

Sometimes better not to play at all...

Bonds & Stocks both slammed lower today - the worst combined day since 11/9/16...

Trannies ended the day higher but the rest of the major US equity indices "sold the news"...Small Caps worst...

Futures show the excitement better over the last two days (not the dip in Nasdaq to unch from Friday before bouncing)...

High Tax companies did manage to outperform for the second day in a row but it was not exactluy breathtaking...

FANG Stocks sank into the red for the week...

Doug Kass' 15 Surprises For 2018: FANG Crackdown, Gold All-Time-Highs, Stocks Slump

Authored Doug Kass of Seabreeze Partners Management,

"The missing step in the standard Keynesian theory [is] the explicit consideration of capitalist finance within a cyclical and speculative context . . . finance sets the pace for the economy. As recovery approaches full employment . . . soothsayers will proclaim that the business cycle has been banished [and] debts can be taken on . . . But in truth neither the boom, nor the debt deflation... and certainly not a recovery can go on forever. Each state nurtures forces that lead to its own destruction. "

--Hyman Minsky, John Maynard Keynes

Contrary to the expectations of many (including myself), the uncertainty following the surprising Trump presidential election victory, which produced a number of possible outcomes (some of them adverse), was enthusiastically embraced by investors in 2017.

After a year of historically low volatility and ever-rising stock prices, the bullish consensus was "in" and the contrary was "out" in 2017.

But after the Trump election win in late 2016, a market on steroids was not a conclusion or forecast by any main stream Wall Street forecaster. There was no sell side strategist on Wall Street who expected equities would rise anywhere near the 20%-plus gains in the major indices recorded thus far in 2017, nor do I know any who predicted that the senior average would make 70 individual highs during the year.

The biggest surprise in 2018 may be that extrapolation of the market uptrend doesn't work after many years of working, and that we will witness the emergence of multiple non-consensus developments, including a dramatic drop in the price of bitcoin (to un ...

What The Yield Curve Says About The Timing Of The Next Recession

While most financial professionals would enjoy nothing more than to trade bitcoin all day long - after all it only goes up in the long run (for now), while bringing insane volatility with it - the reality for most is that they are confined to such boring, established legacy instruments as Treasurys, which rarely have intraday fireworks similar to those in bitcoin. There are rare exceptions of course, and as we showed earlier today, someone made roughly $60 million betting on the sharp yield curve steepening we have observed in the past 2 days following a record pile up of long net specs in the 30Y future.

There is an additional benefit of trading boring , old TSYs: one gets to indirectly at least, determine the time until the next recession, because the flatter the yield curve, the closer the recession, no matter the mitigating bullshit so-called experts will spout to keep confidence high.

So where do we stand right now? According to a recent analysis by Goldman, which expects no less than 8 rates hikes amounting to 200bps in Fed Funds futures by the end of 2019, the bank expects "rising US policy rates and term premium to gradually drive 10y rates higher, with the long end also rising more than market pricing. We also expect further US term structure flattening." Just not too much; in fact in keeping with the whole Goldilocks theme, "just the right amount of flattening", to wit:

For much of 2017, the term structure flattened because long-end rates fell, not because short-end rates rose. Indeed, by early September, US 10y rates had fallen 36bps, while US 2y rates had risen only 9bps on the year. But since then, US 2y rates have risen more than 55bps, while US 10y rates have increased only 29bps. In 2018, we expect 2y rates to be the driving force in flattening, as was the case in previous late cycles; CFTC positionin ...

Constitutional Law Attorney Says Mueller's Seizure Of Transition Emails "Likely Violated The Law"

Over the weekend, reports surfaced that Special Counsel Robert Mueller may have inappropriately taken possession of "many tens of thousands" of emails from the Trump transition team, obtained through the General Services Administration - the government agency responsible for hosting the transition email system which used a "ptt.gov" address, without getting the necessary search warrants and/or subpoenas.

The trove of documents, which, according to Axios, included sensitive emails to and from Trump son-in-law and top advisor Jared Kushner, comprise 12 email accounts - one of which reportedly contains around 7,000 emails.

The transition emails are said to include sensitive exchanges on matters that include potential appointments, gossip about the views of particular senators involved in the confirmation process, speculation about vulnerabilities of Trump nominees, strategizing about press statements, and policy planning on everything from war to taxes.

Not surprisingly, Trump transition team lawyer Kory Langhofer said the Special Counsel obtained the documents through "unlawful conduct" by career staff at the General Services Administration...whom one can only imagine had their own personal axe to grind.

In a letter obtained by Fox News and sent to House and Senate committees on Saturday, the transition team's attorney alleges "unlawful conduct" by the career staff at the General Services Administration in handing over transition documents to the special counsel's office.< ...

The Flawed Bull Case for Bitcoin

Even after taking full account of its technological advantages, the argument for bitcoin to keep rallying still falls apart.

The Climate for Coal Just Got Even Chillier

BHP, the world's largest mining company, has announced that it may withdraw from the World Coal Association, citing disagreements about climate change. Better profits in coal in the past 18 months shouldn't distract investors from the increasingly clear writing on the wall for the black stuff.

Get Your Groceries Online, Find Your Profits Elsewhere

Investors can expect more deals between supermarket groups and the tech industry as online orders grow.

CryptoWatch: Bitcoin once again the 'world's most crowded trade', fund managers say

Fund managers in December see bitcoin as the world's most crowded trade, the second time this year it's won the dubious distinction in Bank of America's monthly survey.

SEC suspends trade in Crypto Co.'s stock amid pump-and-dump concerns

SEC suspends trading of Cypto Co. shares amid concerns over "accuracy" of information and insider sales.

The Number One: This year's 'most engaging' story isn't about Trump, sexual harassment or bitcoin

Trump, Trump and more Trump. And when it's not Trump, this year's been all about sexual harassment and the bitcoin phenomenon. There's not much a whole lot of space leftover across the digital news landscape for anything else.

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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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