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20Dec2017 Pre-Market Commentary: Wall Street Moves Into Red Flat-status, Oil Is Hitting New Highs And Inflation Is Starting To Percolate, Stocks Could See Another Year Of Double-digit Gains, Says Credit Suisse

Written by Gary

All three benchmarks slipped into the red at closing today (SPY -0.03%), as investors eye progress on a tax overhaul now in a long-anticipated vote.


Here is the current market situation from CNN Money

European markets finished broadly lower today with shares in Germany leading the region. The DAX is down 1.11% while France's CAC 40 is off 0.56% and London's FTSE 100 is lower by 0.25%.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street takes a breath as tax bill clears Congress

NEW YORK (Reuters) - Wall Street's main indexes were little changed on Wednesday, taking a breather after a month-long rally as both houses of Congress approved a tax overhaul in a long-anticipated vote.

Uber dealt blow after EU court classifies it as transport service

LUXEMBOURG (Reuters) - Uber Technologies Inc [UBER.UL] should be classified as a transport service and regulated like other taxi operators, the European Union's top court said in a landmark ruling on Wednesday that could impact other online businesses in Europe.

Three months that shook Ryanair: How cancellations sparked a pilot revolt

DUBLIN (Reuters) - Within hours of the news on Sept. 15 that thousands of Ryanair flights had been canceled in Europe, pilots' WhatsApp groups exploded with pent-up frustration.

Chipotle restaurant under investigation after illness scare: Report

(Reuters) - Shares of Chipotle Mexican Grill Inc fell as much as 3.3 percent after a report that public health officials are investigating a possible illness outbreak in one of the company's restaurant in Los Angeles.

AT&T says to pay bonuses, invest $1 billion once tax reform signed

NEW YORK (Reuters) - AT&T Inc said on Wednesday it will pay $1,000 bonuses to more than 200,000 employees and invest an additional $1 billion in the United States in 2018 once a tax reform bill approved by Congress is signed into law.

Exxon Mobil to ease restrictions on shareholder talks with directors

HOUSTON (Reuters) - Exxon Mobil Corp said on Wednesday its board had ended a prohibition on outside directors meeting with shareholders, halting a long-standing policy that rankled big investors and led some to vote against key directors.

U.S. aims to keep steep duties on Bombardier jets after Boeing complaint

WASHINGTON (Reuters) - The U.S. Commerce Department on Wednesday finalized steep anti-subsidy duties on Bombardier Inc's CSeries jets, setting up the next round of a fierce international trade dispute between the United States and Canada.

UAW head does not see more charges in U.S. training center probe

DETROIT (Reuters) - The United Auto Workers is cooperating with a Justice Department probe into alleged misspending by union officials at training centers funded by U.S. automakers, the union's president said on Friday, saying that he did not expect any more charges stemming from the probe.

Atlanta airport power outage cost Delta Air Lines up to $50 million

NEW YORK (Reuters) - The 11-hour system outage at Atlanta's Hartsfield-Jackson, the world's busiest airport, cost Delta Air Lines up to $50 million, a Delta spokesman confirmed on Wednesday, and the carrier said it plans to seek compensation for its losses.

The Big Problem With The GOP Tax Cut, Charted

While the jury will be out for years whether the Trump tax cuts will boost the economy (they already had an outsized impact on markets, pushing the Dow by nearly 5,000 points higher since Trump's election), there are several key problems that remain outstanding. The first one, as the following JPMorgan chart shows, is that all prior Republican tax cuts in US history took place when debt/GDP ratios were less than 40%. Now, the number is double that, and is expected to hit 100% in a few years, which means that absent some miracle, the only economic outcome will be much higher levels of debt. And with rates now rising, one can forget about economic miracles.

Looking at the chart above prompted JPM's Michael Cembalest to ask, rightfully, "what happened to all the fiscal conservatives in the GOP?" What indeed.

There is another problem with the tax cut: while typically at this late point in the business cycle, the US budget deficit is improving, this time around it is already growing again, having troughed two years ago. This, as JPM says, is unusual.

Macroeconomic considerations aside, the Tax Cuts and Jobs Act is, for all intents and purposes, very big. In fact, as a % of nominal GDP, it is one of the larget tax cuts since 1969, with the exception of 1981.

Its 2007 Redux - What Is Your Excuse This Time: Here are some! - by Michael Carino

Here we go again, again.

The unemployment rate is at a historic low. GDP is above 3% and with the recently enacted
historic tax cuts, poised to go much higher. Inflation is at the Federal Reserve's target. Housing starts and sales are booming and housing supply is at an all-time low. Equities
are hitting new highs. Oil is hitting new highs as well and inflation is starting to percolate. Global economies and markets are performing well. Credit spreads are at historically
tight levels. Spare levels of capacity are running tight and there are no indications of a downturn on the horizon. No I'm not talking about 2007. I'm talking about the here and now.

There were similar conditions in 2007 that led to the financial
crisis of 2008. The main catalyst to the
2008 financial crisis was easy monetary policy allowing risks to build while
letting the economy run too hot for too long.
Yes, easy money policy and the Fed reducing accommodation too slowly led
to the 2008 crisis. This resulted in the
current and most accommodative monetary policy in history over the past decade.

Historically, current economic conditions would result in
monetary policy and Treasury bond rates at least 3% to 5% higher. This disconnect of the current Federal
Reserve Federal Funds Rate, the size of their balance sheet and historic low
yields in the bond market verses the state of the US and global economy is the
biggest and only tangible risk to the short and mid-term outlook to the
economy. Yes, the biggest risk of a
recession is Federal Reserve policy itself.

After years of accumulating trillions of bonds and pegging
rates at 0%, the Fed understands they h ...

North Korea-Linked Hackers Stole Bitcoins From Seoul-Based Exchange

As we pointed out yesterday, bitcoin and other tokens across the crypto space sold off following reports that South-Korea based exchange YouBit had been hacked, forcing its owner into bankruptcy.

The exchange reported that hackers had stolen 17% of assets held in the exchange's digital wallet. However, Yapian, YouBit's owner, didn't specify the value of its losses. This was the second time Yapian's exchange had been hacked this year.

Now, with crypto prices still reeling from the hack and the reopening of US exchange GDAX after launching trading in bitcoin cash, the Wall Street Journal is reporting that South Korean intelligence believes North Korea-linked hackers perpetrated yesterday's heist.

SEOUL—Investigators in South Korea are looking into North Korea's possible involvement in a heist from a bitcoin exchange that collapsed here on Tuesday, according to people familiar with the situation, as the regime develops new ways to raise money as sanctions choke off its traditional revenue sources.

The investigation into the hack, led by South Korean law enforcement and a state cybersecurity agency, is still in its infancy and a review of the malware code could take weeks, the people said.

The Most Outlandish Gold Products You Can Buy

Submitted by BullionStar.com

BullionStar would like to thank all our friends and customers for supporting us during 2017, and to wish all of you a Merry Christmas and a Happy New Year! To wrap up the year, we have published this light-hearted article about outlandish products made from gold.

Throughout the world, many luxury good companies vie for attention in producing luxury products made from gold, plated with gold, or with substantial gold content. These products tend to be very opulent and usually very expensive because of the gold content and workmanship that goes into them. It seems that nothing is off-limits for receiving the gold treatment.

While a lot of these products may be considered slightly ridiculous, what they have in common is that they are well-designed, mostly customized, and on the whole very valuable. The limited edition nature of the products and the fact that in some cases they are made to order also adds to their rarity value and collectability. Below we profile some of the more outlandish products made from gold, all of which, apart from some one-off customized designs, are available for purchase for those with the inclination.

Gold Fidget Spinner

Micron Calms Fears of Memory Chip Downturn

If nothing else, Micron's latest earnings report should allow nervous chip investors to enjoy their holiday in peace.

The One Tax Change That Really Bites Businesses

The tax rules on deductibility of interest payments will change longstanding rules for corporate finance and hurt profits in some businesses.

A Massive Margin Loan That Went Really Wrong for Banks

Steinhoff International's share collapse shows the dangers for banks in the fast-growing stock-based lending business.

Why REITs may be worth a second look in 2018

There are a lot of reasons to invest in real estate, and there are real estate investment trusts for all kinds of property.

Amazon rules the public cloud, but Google, Microsoft, Alibaba are growing faster

As every tech company under the sun seeks to make a play for the cloud, only a handful of companies account for more than 80% of public cloud service revenue, though the competitive landscape is shifting.

This dominatrix makes men mine cryptocurrency for her — and she now has over $1 million

Through financial domination, men get pleasure from giving her money.

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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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