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12Jan2018 Market Update: Wall Street Trends Higher As Consumer And Bank Stocks Gain, Rents Boost US Core CPI, Retail Sales Rise Solidly, US Dollar Trends Down

Written by Gary

The US equities main benchmarks were higher today (SPY +0.5%) as strong December retail sales data drove gains in consumer stocks and bank results pushed up the financial sector.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The IPC is up 1.00% while the S&P 500 gains 0.47%. The Bovespa is off 0.25%.

Traders Corner - Health of the Market

Looking at the last three columns (below), the first one (Actual), is what was reported this morning. The second column (Forecast) is what analysts had forecast and the third column is the previous report. Full calendar HERE.

What Is Moving the Markets

Here are the headlines moving the markets.

Rents boost U.S. core CPI; retail sales rise solidly

WASHINGTON (Reuters) - Underlying U.S. consumer prices recorded their largest increase in 11 months in December on gains in the cost of rental accommodations and healthcare, bolstering expectations that inflation will accelerate this year.

Canada welcomes Trump suggestion of NAFTA deadline extension

LONDON, Ontario (Reuters) - Canada welcomes the suggestion by U.S. President Donald Trump that the deadline for concluding talks to modernize NAFTA could be extended beyond the end of March, Foreign Minister Chrystia Freeland told reporters on Friday.

Wall Street higher as consumer and bank stocks gain

(Reuters) - Wall Street's main indexes were higher on Friday as strong December retail sales data drove gains in consumer stocks and bank results pushed up the financial sector.

Mnuchin sees $1 trillion revenue growth from U.S. tax overhaul

WASHINGTON (Reuters) - U.S. Treasury Secretary Steven Mnuchin said on Friday he believed the Republican tax cuts will ultimately become revenue neutral over 10 years due to higher growth, but the Treasury will likely ask Congress for more money to implement the plan.

Chinese bitcoin miners eye sites in energy-rich Canada

MONTREAL/SHANGHAI (Reuters) - China's Bitmain Technologies is eyeing bitcoin mining sites in Quebec, a company spokesman told Reuters, as expectations of a potential Chinese crackdown on cryptocurrency mining make the energy-rich Canadian province an attractive alternative.

Explainer: Investors to scour outlooks for U.S. companies' tax cut plans

NEW YORK (Reuters) - Corporate results for 2017's final quarter will start pouring in next week and are expected to be laden with one-time charges as U.S. companies begin to cope with tax code changes, including a one-time tax on trillions of dollars in profits held overseas.

Year of policy tightening set for early Canadian test

DUBLIN (Reuters) - The Bank of Canada will get the first crack in the coming week at demonstrating whether, as many expect, monetary policy among the world's major economies is set to tighten more in 2018 than in any year since the crisis.

JPMorgan says tax changes will spur more profits after quarterly beat

(Reuters) - JPMorgan Chase & Co beat Wall Street's fourth-quarter earnings expectations on Friday and said tax law changes will help future profits by not only reducing the amount it pays the federal government but also by stimulating more business.

Wells Fargo adds $3.25 billion to consumer legal bill in fourth quarter

(Reuters) - Wells Fargo & Co set aside $3.25 billion in the fourth quarter to cover legal expenses related to probes into its mortgage and sales practices, but its 2018 cost outlook met analyst expectations as the bank tries to rebound from the scandal in its consumer banking business.

UN Human Rights Office Says 'Shitholes' Comment Could "Disrupt The Lives Of Many"

The backlash to a Washington Post report about a bizarre and incredibly controversial remark that President Donald Trump reportedly made during a meeting with a bipartisan group of Senators is exploding.

According to the report, which will undoubtedly dominate the news cycle for the rest of the week, if not longer, Trump exclaimed during a meeting with a group of Republican and Democratic senators "why are we having all these people from shithole countries come here?" after growing frustrated when they floated the idea of restoring protections for immigrants from Haiti and El Salvador that Trump is trying to kick out of the country.

Already, Trump has canceled a state visit to London - ostensibly because he didn't want to "cut the ribbon" at the new US embassy in the Southwestern portion of the city. And now, the United Nations Human Rights Office is saying Trump's incredibly callous description of countries in Africa, the Caribbean and South America could "potentially damage and disrupt the lives of many people."

Amazingly, the White House didn't even try to push back against the report, issuing an uncharacteristically flimsy non-denial denial. If anything, the statement served to reinforce the negative connotations of Trump's off-the-cuff comment.

And the WH does not deny POTUS "sh*thole" comments. pic.twitter.com/GRraWOt35d

— ...

3 Million Barrels Per Day Could Go Offline In 2018

Authored by Nick Cunningham via OilPrice.com,

Venezuela's oil production has been falling for years, but 2018 could mark a new, darker chapter for the South American nation.

https://www.zerohedge.com/sites/default/files/inline-images/20180111_30Y2.png

Late last year, Venezuela's government defaulted on millions of dollars' worth of debt, with larger and more significant payments maturing this year. The ability to service billions in debt payments this year is almost certainly out of the question, although the size of the default this year remains to be seen.

The cash crunch that Venezuela has suffered through has worsened substantially over time, and the country's oil sector has paid the price. Venezuela produced over 3.5 million barrels per day (mb/d) in the late 1990s, but output has been falling for much of the past two decades, although often at a gradual pace. The declines really started to accelerate in the past two years.

BofA: All Our Clients Want To Know When The Fed Will Do A Surprise Rate Hike

With global equity markets now sprinting higher in a furious meltup to daily record highs, one which will most likely not end until the bubble finally bursts, destroying any shred of credibility the Fed and fractional reserve banking have left (while leading to brisk sales of pitchforks) but not before generating countless headlines such as these...

The term of the week is 'melt-up' pic.twitter.com/6phpDc47uW

— Mark Constantine (@vexmark) January 12, 2018

... we said - following Bill Dudley's surprisingly hawkish speech yesterday - that the odds of a surprise rate hike under Jerome Powell are now especially high.

Dudley repeating that "financial conditions today are easier than when we started to remove monetary policy accommodation" means odds of surprise rate hike under Powell are high

— zerohedge (@zerohedge) January 11, 2018

This morning, Bank of America's Michael Hartnett, in his weekly Flow Show report, touches on this growing possibility, specifically of when, and what level in the S&P, will the Fed engage in a surprise rate hike. Here is BofA:

SPY me to the Boom: #1 FAQ is "what level of bond yields will cause equity markets to fall?"; better question is "what level in SPX causes Fed to start hiking 50bps ...

Key Trade Data Shows Rapidly-Worsening Deficit

Via BusinessCycle.com,

With ECRI's focus on economic cycles, including a large array of specialized leading indexes, we have a solid read on where we are in the business cycle. But our cyclical vantage point also allows us to distinguish between those economic developments that are cyclical, and those that are structural in nature. While we are strictly nonpartisan, political change is often spurred by economic forces, particularly longer-terms shifts, including those in foreign trade, which figured prominently in the 2016 presidential election.

Donald Trump rode to the White House in part on the promise of an economic revival at home, largely by reversing the massive deficits piling up between the U.S. and nearly all its trading partners, China chief among them.

A year later, there is an indication that this imbalance has increased against the U.S. and in favor of its trading partners.

https://www.zerohedge.com/sites/default/files/inline-images/20180112_trade.gif

Trends in the three key sectors of U.S. trade are revealing. The chart shows the U.S. trade surplus in services, along with the trade deficits in both petroleum and non-petroleum goods.

Since 2010 the U.S. trad ...

A Place Where Stocks Still Have Reason to Rally

The breadth of the global economic growth pickup is lifting even longstanding laggards. European stocks are a case in point—but the potential for catch-up remains appealing.

Why Nvidia Shares Can't Rise Forever

Chipmaker's business should keep growing strong, but its expensive stock may be in for a breather.

Why Gucci Owner Wants to Kick Off Its Pumas

Luxury group Kering is seizing the chance to offload Puma at a price that just about covers its purchase cost 11 years ago.

December 2017 CPI: Year-over-Year Inflation Rate Now 2.1%

Written by Steven Hansen

According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate was 2.1 % - moderating slightly. The year-over-year core inflation (excludes energy and food) rate rose marginally to 1.8 % from last month's 1.7 %, and is below the target set by the Federal Reserve.

Black college graduates default on their student debt more than white dropouts

A new analysis suggests that by 2023, 40% of borrowers who entered school in 2003-2004 will have defaulted.

Ask the Dow: Here's what all 30 companies that make up the Dow industrials think about blockchain

MarketWatch asked all 30 members of the Dow industrials what blockchain initiatives they have in place, or plan to have.

The Moneyist: This woman's fiancé wanted her to move in and help pay his mortgage — did she stay or did she go?

A letter writer updates the Moneyist on her romantic and financial dilemma.

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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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