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19Jan2018 Market Update: Wall Street Up And Trending Sideways, DOW Down 50 Points, Nasdaq Trading Near Historic Highs, Goldman: Government Shutdown Lasting "Up To A Few Weeks"

Written by Gary

The US equities main benchmarks are fractionally higher (SPY +0.2%) as the SP 500 and the Nasdaq trended higher by gains in consumer stocks.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The S&P 500 is up 0.17% while the Bovespa gains 0.13%. The IPC is off 0.08%.

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.

'Fear of missing out' runs wild as record amount of money flows into stocks the last four weeks

Trump administration rolls back more Obama abortion protections

What Is Moving the Markets

Here are the headlines moving the markets.

Gains in consumer stocks prop up S&P, Nasdaq

(Reuters) - The S&P 500 and the Nasdaq were prodded higher by gains in consumer stocks, while investors played down fears of a looming U.S. government shutdown.

SEC says bitcoin funds raise 'investor protection issues'

(Reuters) - The U.S. securities regulator on Thursday raised alarm about the safety of bitcoin-themed investments, telling the fund industry they want answers to their concerns before endorsing more than a dozen proposed products based on cryptocurrencies.

Exclusive: Trump's coal job push stumbles in most states - data

WASHINGTON (Reuters) - President Donald Trump's effort to put coal miners back to work stumbled in most coal producing states last year, even as overall employment in the downtrodden sector grew modestly, according to preliminary government data obtained by Reuters.

Japan, U.S. to discuss trade 'framework', U.S. envoy says: NHK

TOKYO (Reuters) - Japan and the United States next week will start to discuss a framework of negotiations with the aim of concluding a trade pact and fixing bilateral trade imbalances, Japanese public broadcaster NHK quoted the U.S. ambassador to Japan as saying.

NAFTA talks seen ending happily, despite growls from Trump

BENGALURU/SAO PAULO (Reuters) - The North American Free Trade Agreement will probably be renegotiated successfully with only marginal changes, said a large majority of economists in a Reuters poll, despite the Trump administration's saber-rattling.

En route to Davos, Macron makes Versailles the place to be

PARIS (Reuters) - French President Emmanuel Macron will host dozens of the world's most powerful business executives at the gilded Palace of Versailles to pitch France Inc before the global elite's annual gathering at Davos.

Wall Street traders brace for meager paychecks as bonus season approaches

NEW YORK (Reuters) - Some traders at the largest Wall Street banks are about to get big, fat zeroes for bonuses while they watch markets thrive.

Road to ruin? Carillion collapse puts spotlight on UK outsourcing model

LONDON/BALMEDIE, Scotland (Reuters) - In Balmedie, a village on the northeast coast of Scotland, an unfinished 12 km stretch of dual carriageway is a stark illustration of why British construction company Carillion went bust this week.

In sign of times, luxury watchmaker Audemars embraces second-hand

GENEVA (Reuters) - Swiss luxury watchmaker Audemars Piguet said it would launch a second-hand business this year, becoming the first big brand to announce plans to tap into a fast-growing market for pre-owned premium watches.

Goldman Now Sees 60% Odds Of A Government Shutdown Lasting "Up To A Few Weeks"

When we discussed Goldman's preview yesterday of what to expect should the government shutdown tonight at midnight, we highlighted that according to Goldman, "the odds of a lapse in spending authority after Friday, January 19, stand at around 35%."

One day later, and with the Senate set to vote on a stopgap bill which appears unlikely to pass, Goldman has nearly doubled its shutdown odds, and as of this morning, the bank's chief economist Jan Hatzius said that there is now "a 60% of a government shutdown, in our view, lasting anywhere from a few days to a few weeks." There is one alternative to a government shutdown that may last into February:

The alternative, which is almost as likely, appears to a short-term extension lasting several days. Each week of government shutdown would reduce Q1 GDP by 0.2pp (qoq ann.), but this would be reversed in the subsequent quarter. We expect any negative impact on financial markets from a shutdown to be very modest.

In this context, here are the latest observation points from Goldman's political economist, Alec Phillips:

1. The outlook for the extension of federal spending authority has become murkier and the chances of a shutdown have increased. There appear to us to be three possible outcomes at this point:



4-week extension: Yesterday (Jan. 18) the House-passed a 4-week extension, to February 16. The first procedural vote on this bill passed in the Senate, but at this point there appears to be firm Democratic opposition to voting for the bill itself.

Short-term extension: An extension of a few days to as long as two weeks has been discussed as a possibility, and appears to be the most likely way to avoid a shut ...

White House Holds Emergency Press Conference As Shutdown Talks Stall

Update: There is still no vote scheduled for the Senate, but that didn't stop John Cornyn, the Republican No. 2 in the upper chamber, from telling reporters that he expects a vote to be held "after lunch."

Meanwhile, Mark Meadows, leader of the House Freedom Caucus, said he understands a proposal for a five-day short-term fix has been rejected by the House.

According to the latest headline from the New York Times, Trump has invited Democratic leader Chuck Schumer to the White House t try and hammer out a last-minute deal.

Despite all of this, markets haven't shown much of a reaction...

* * *

Update: Hardly a surprise, Mulvaney and Short arrived more than a half hour late, then proceeded to blast Democrats as obstructionists for trying to force a shutdown.

They even have a name for it: "The Schumer Shutdown".

"This is an attempt by democrats led by Schumer - that's why we're calling it the Schumer shutdown - to embarrass the president," Mulvaney said.

"They don't oppose anything in there. They support chip they don't want the cadillac tax to go into place they've always supported clean CRs. And again, it worked in the House - there were several Democrats who voted for it," Mulvaney.

DACA doesn't expire until March 5 - and therefore, doesn't need to be dealt with until mid-February, Mulvaney said.

Unlike the last shutdown in 2013, federal parks will be open, Mulvaney said. But all federal employees will be working for nothing (that is, until their back pay is approved by Congress). The military, TSA, Fannie Mae and Freddie Mac will also go to work, but they will not be paid.

As of now, it looks like the federal government expects the shutdown to happen - though Mulvaney said their version of the shutdown would be more "moderate" than the previous shutdown, which ...

Snowden: Trump Must Veto Reauthorized NSA Spying Powers In Light Of FISA Memo

Donald Trump must veto reauthorized NSA spying powers which passed both the House and the Senate yesterday without a single reform, in light of an explosive four-page memo said to detail sweeping FISA Abuses by the FBI, DOJ and the Obama Administration during and after the 2016 presidential election, says former NSA contractor and whistleblower Edward Snowden.

asd

The memo was circulated to the entire House of Representatives, prompting GOP lawmakers to call for its immediate release to the public.

Snowden, who exposed the NSA's expansive mass surveillance program, contends that the expansive FISA Amendments Reauthorization Act never would have passed if the memo had been distributed before the vote. The Senate broke a filibuster led by Rand Paul (R-KY) and Ron Wyden (D-OR) on Tuesday evening, voting 65-34, while the House voted last week 256-164 in favor of the bill with almost no changes.

Officials confirm there's a secret report showing abuses of spy law Congress voted to reauthorize this week. If this memo had been known prior to the vote, FISA reauth would have failed. These abuses must be made public, and

"It's A Buying Panic": Stocks See Largest Ever 4 Week Inflows In History

Two days ago we reported that stock market optimism among both professional and retail investors had hit the highest level since the crash of 1987...

asd

... with a recent E-Trade survey disclosing the 8 out of 10 retail investors were certain that stocks would rise in Q1.

And, according to the latest EPFR fund flow data as compiled by Bank of America, they have been putting their money where their euphoria is.

According to BofA CIO Michael Hartnett, the 4-week inflows into equities was not only "thundering", it was the largest ever. This is the result of a massive $23.9bn weekly inflow into equities which brings the 4-week inflow to stocks to the biggest ever, $58bn as shown in Chart 1 below...

asd

... and there was even some good news for active managers: the 4-week inflows to active equity funds @ 4-year high, which ...

Whistling Past the Shutdown

The economy would have no problem weathering a temporary government shutdown. That doesn't mean investors should be complacent about one.

It's Time for China's Property Developers to Quit Gambling

The likes of China Evergrande have performed well as China's property market boomed. But their high leverage could haunt them now as prices cool.

Is Lithium the Next Canary in the Markets Mine?

Suppliers of key battery component lithium are selling off after reports that heavyweight Chilean miner SQM will boost output.

Ford shares sink to lowest level in nearly four months

Ford's weak profit expectations continued to dog the company's stock, which fell to its lowest since late September and looked set to end Friday down nearly 10% for the week.

There's been a U-turn in family size and fertility over the last decade

American women have reached a milestone for the first time since 2006.

Women denied abortions are significantly more likely to experience poverty

The study drew from the experiences of nearly 1,000 women who sought abortions between 2008 and 2010.

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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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