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05Jan2018 Market Close: Wall Street Again Sets New Historical Closing Highs, New Year Rally Continues, Even As US Job Growth Came In Weaker Than Expected

Written by Gary

The SP 500 and Nasdaq are on track to post their best weekly gain in more than a year (SPY +0.6%), as U.S. stocks extended their new year rally.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

S&P 500, Nasdaq on track for best week in more than a year

NEW YORK (Reuters) - The S&P 500 and Nasdaq were on track to post their best weekly gain in more than a year on Friday, as U.S. stocks extended their new year rally even after December U.S. job growth came in weaker than expected.

Intel downplays fears security patch will slow computers

(Reuters) - Intel Corp downplayed concerns that software updates to address security vulnerabilities in its computer chips will degrade performance of computers as businesses and consumers scrambled to figure out whether installing the patches would slow their machines.

U.S. job growth cools as labor market nears full employment; wages up

WASHINGTON (Reuters) - U.S. job growth slowed more than expected in December amid a decline in retail employment, but a pick-up in monthly wage gains pointed to labor market strength that could pave the way for the Federal Reserve to increase interest rates in March.

U.S. factory orders rise for fourth straight month

(Reuters) - New orders for U.S.-made goods increased in November for a fourth straight month, but business spending on equipment appeared to be cooling after robust growth in 2017.

Verizon removes Bloomberg TV, refusing to pay carriage fees

(Reuters) - Verizon Communications Inc has pulled Bloomberg L.P.'s news network, Bloomberg TV, from 4.6 million of its pay-TV customers after the financial news provider asked the carrier to pay it for its content for the first time ever.

Neiman Marcus names Ralph Lauren executive as CEO

(Reuters) - Neiman Marcus Group Ltd [NMRCUS.UL] on Friday named Geoffroy van Raemdonck, an executive at upscale clothing manufacturer Ralph Lauren Corp , to succeed Karen Katz as chief executive officer of the debt-burdened luxury retailer next month.

Morgan Stanley to take $1.25 billion hit in the fourth quarter from the tax bill

(Reuters) - Morgan Stanley said on Friday it would take a $1.25 billion hit in its fourth-quarter earnings due to a cut in corporate tax rate as part of the U.S. tax code overhaul.

Saudi Arabia converts Aramco into joint-stock company ahead of historic IPO

DUBAI (Reuters) - Saudi Arabia has changed the status of its national oil giant Aramco to a joint-stock company as of Jan. 1, in a key step for an initial public offering (IPO) planned for later this year.

Constellation third quarter sales miss, no hit from legalized pot

(Reuters) - Constellation Brands Inc missed Wall Street estimates for third quarter revenue on Friday and said wine and spirit sales for the full-year would be at the low end of a previous forecast, sending its shares down as much as 4 percent.

Risk Hits Record Low, Ripple Ravaged As Gold Has Longest Ever Win Streak

What a week...

Quick summary of this week's records:

Record highs for S&P, Dow, and Nasdaq.

Lowest VIX close ever.

First time VIX has ever traded at or below 9.00 for 3 straight days ever.

Nasdaq's best start to a year since 2004.

Near record streak for stocks to remain within 5% of all-time high ever.

Individual investors highest stock exposure since 2000.

Fastest yield curve flattening since 2007.

Longest streak of complacency for risk ever.

Longest winning streak for gold ever.

Longest winning streak for global commodities ever.

So stocks opened gap up on Tuesday and never looked back...Nasdaq was the week's big winner...

As notes, individual investors have the most stock exposure since 2000, and their short-term optimism is now rising. It has done an about-face during the past two months, going from pessimism to the 2nd-highest optimism since the 2009 low.

TINA Is Dead - Stocks Are No Longer 'Cheap' To Bonds

For years, equity market investors have been cajoled into stocks by their commission-rakers with four simple words - "there is no alternative" - often shortened to the acronym 'TINA'.

The argument went that since bonds had such low yields, you were a mug not to buy stocks with every penny of your retirement funds.

But as of this week, that argument is no more. TINA is dead...

For the first time since 2008, 2Y US Treasury bond yields are greater than the dividend yield of the S&P 500...

Of course, just as the TINA analogy triggered stocks fund managers to pitch their assets, so this latest swing in yields has brought back the bond managers with the same extremes...

"It's the right strategy if you're looking for income," said Andrew Brenner, head of international fixed income at Natalliance Securities in New York.

"You should be moving all your assets and risk into shorter fixed-income because you're getting paid for it."

Perhaps the 'all-in' approach should be tempered a little.

As Bloomberg reports, Leuthold Weeden Capital Management's Jim Paulsen said,

"Right now, people are frozen at the stick with this one-way market. It's hard to make a decision because every day you wait, equities go up again...

What would change that is if there's an event that alters the risk profile of the credit or ...

One Bank Asks If The PBOC Is Secretly Goosing Markets

Something odd is going on in China. On one hand, the PBOC has been soaking up excess liquidity from the market like a drunken sailor, and after not conducting reverse repos for 10 consecutive days, it has reduced the excess liquidity level by 510bn yuan in the latest week as existing open market operations matured, and roughly half that in the week prior.


On the surface, this would suggest a sharp tightening in monetary conditions, and yet precisely the opposite is taking place: over the past week, instead of rising short-term rates - the traditional indicator of tighter conditions in China - yields on Chinese short-dated instruments have tumbled. Putting the move in context, 1Y yields have plunged nearly 20bps in the first week of 2018, the biggest weekly slide since June 2015.


In parallel, on Thursday the 7-Day repurchase rate slid to the lowest since April.

While some have provided theoretical explanations, nobody really knows what is going on. In fact, some such as Citi have put on the tinfoil hat and speculate that the PBOC is covertly adding tons of liquidity on the short-end of the curve, to wit:

It looks like the PBoC has been adding quite a lot of liquidity in the shorter end of the curve in recent days -with a variety of interbank rates softer, and the 1y CGB yield notably lower by ...

New Report Exposes Inconsistencies In Obama Oil & Gas Testing Approvals

Authored by Zainab Calcuttawala via,

A new investigation by the Government Accountability Office (GAO) says the Obama administration took an inconsistent amount of time to approve applications for seismic testing for offshore oil and gas drilling, a report by The Hill says.

Depending on the regional office, some applications were approved within a day and others would take almost a year to go through the process.

The National Marine Fisheries Service (NMFS) and the Fish and Wildlife Service (FWS) did not record application turnaround times consistently either.

"Until NMFS and FWS develop guidance that clarifies how and when staff should record the date the agency determines the 'adequacy and completeness' of an application, the agencies and applicants will continue to have uncertainty around review time frames for incidental take authorizations," GAO said.

"Moreover, NMFS and FWS officials we interviewed said that they do not analyze their review time frames, a practice that is inconsistent with federal standards for internal control."

Seismic analysis, which allows oil and gas companies to determine potential reserves in the underwater a ...

The Dow Has What Investors Want

The Dow Jones Industrial Average has done very well lately, with a total return of 27% since the end of 2016, versus 24% for the S&P 500. And that has less to do with the quirk of how the Dow is constructed than what is in it.

Drug Industry Is Ripe for a Wave of Deals

Big pharma and biotech aren't benefiting as much from higher drug prices. That raises the possibility of large deals.

Now Italy Is Growing, Can It Lighten Its Huge Debt Load?

Italy, Europe's most indebted large economy, is at the crossroads again. Growth has picked up finally, and the country's bank cleanup is in progress. But the national election due in early March puts the country's debt back in focus.

Why NOT to buy $570 million Powerball or $450 million Mega Millions tickets

These reasons to avoid lottery fever have nothing to do with the impossible odds.

Iceland is hot, the U.S. is not — and other travel trends for 2018

Some destinations are being 'loved to death.'

Americans are eating more red meat — why that's good news

Meat prices vary wildly, but they're still the most expensive item on the dinner table.

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