Written by Gary
The three major US benchmark indexes rallied today (SPY +0.8%) after the US and China put their trade differences “on hold” to work on a wider agreement, while sentiment was also boosted by the nearly $28 billion worth of merger deals.
Todays S&P 500 Chart
Dow closes above 25,000 for the first time since March as US-China trade war is placed ‘on hold’
The Market in Perspective
Here are the headlines moving the markets. | |
Wall St. rises on trade war truce; industrials lead(Reuters) – U.S. stocks rallied on Monday after the United States and China put their trade differences “on hold” to work on a wider agreement, while sentiment was also boosted by the nearly $28 billion worth of merger deals. | |
Consumer Reports finds flaws in Tesla’s Model 3(Reuters) – U.S. consumer bible Consumer Reports stopped short of recommending Tesla Inc’s Model 3 sedan on Monday, criticising the car for its braking and taking the shine off a day of gains for shares in billionaire Elon Musk’s venture. | |
GE to merge transportation unit with Wabtec in $11.1 billion deal(Reuters) – General Electric Co announced a $11.1 billion deal on Monday to merge its transportation business with U.S. rail equipment manufacturer Wabtec Corp , with GE and its shareholders owning just over half of the combined business. | |
LaSalle Hotel accepts Blackstone’s $3.7 billion cash offer(Reuters) – LaSalle Hotel Properties decided to sell itself to private equity firm Blackstone Group LP for $3.7 billion in cash, rejecting a cash-and-stock offer from rival Pebblebrook Hotel Trust . | |
Rising oil prices help ground U.S. airline stocks; could make them cheapNEW YORK (Reuters) – Shares of U.S. airlines have been depressed by rising oil prices this year, but their descent to relatively cheap levels could position them for takeoff. | |
Trade war fears ebb as U.S., China agree to continue talksBEIJING/WASHINGTON (Reuters) – Washington and Beijing both claimed victory on Monday as the world’s two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost U.S. exports to China. | |
U.S. and Canadian regulators open probes into cryptocurrency scamsWASHINGTON (Reuters) – U.S. and Canadian state securities regulators announced Monday they have launched dozens of investigations into cryptocurrency scams. | |
Britain unlikely to investigate Comcast bid for Sky, says ministerLONDON (Reuters) – Britain said it was unlikely to refer Comcast’s bid for Sky for a lengthy investigation after an initial review found that the $30 billion offer did not raise public concerns about media ownership. | |
Carl Icahn files lawsuit against AmTrust, controlling family(Reuters) – Activist investor Carl Icahn filed a lawsuit on Monday against AmTrust Financial Services Inc and the family that controls the company, accusing them of trying to take the insurer private at the wrong time and at the wrong price. | |
Bonds & The Dollar Go Nowhere As Stocks Surge On Trade-War Ceasefire HopeMonday Humor… Emerging markets are crashing, Italian capital markets are imploding, European money-markets are getting anxious, US bonds and the dollar do absolutely nothing… but The Dow spikes 300 points…(thanks to Boeing et al) ….On the basis of Steve Mnuchin proclaiming a ceasefire in the trade war… Futures show the malarkey better with the insta-lift at the Sunday open, another momo ignition at the US open, a dump at the European … | |
Trump Bars Purchases Of Debt, Receivables Owed To Venezuela, PDVSAOne day after Nicolas Maduro won another six-year term as Venezuela’s president in a vote that western countries denounced as illegitimate and which the opposition boycotted, President Donald Trump escalated economic pressure on the Latin American nation with an executive order prohibiting purchases of debts owed to the government, including to the state-run oil company Petroleos de Venezuela, Bloomberg reported. While both entities are now officially bankrupt, having failed to make several coupon and maturity payments in the recent past and triggering CDS, hardly leading to a burst in investors confidence even among those desperate to allocate “other people’s money” into this particular hyperinflationary socialist paradise, the executive order – which covers all transactions on any debts owed to the Venezuelan government or state-owned enterprises including accounts receivable – will make funding of the Caracas regime even more complicated. Speaking to Bloomberg, Trump ad … | |
What Was The Real Purpose Of QE?Authored by Chris Hamilton via Econimica blog, The story goes that quantitative easing was instituted to “bridge” the financial and economic systems across a “rough patch”. Via QE, the Federal Reserve conjured new “money” into existence (if we did this, its called forgery…not QE) & exchanged this new “money” to the largest banks for US Treasury bonds and financial assets (Mortgage backed securities). Banks were left flush with cash, the Fed holding $4.5 trillion in Treasury’s and MBS. The suggested goal of this exercise was that QE would lower interest rates and this would settle the economic system and subsequently boost asset valuations. How’d it work out? As far as asset prices, generally they have soared 300% to 400% but the part about lowering interest rates…not so much. The chart below shows the Federal Reserve holdings of over 5yr to 10yr US Treasury debt versus the yield on the 10yr Treasury. The Fed increased its holdings of 5 to 10yr US debt from $100 billion in early 2009 to nearly $900 billion by early 2013…and then lowered it back to just $290 billion currently. And the correlation on the 10 year yields…essentially zero. | |
Al Gore Urges Maryland Graduates To Vote Trump Out Of OfficeFormer Vice President Al Gore has been mostly forgotten by the public since he won a Nobel Peace Prize in 2007 for a Microsoft Powerpoint presentation he made about the dangers of climate change. But Gore resurfaced at the Xfinity Center in College Park, Maryland this weekend to deliver a commencement address that included some well-placed criticism about President Trump. While he resisted referring to Trump by name until the final section of the speech – beginning roughly 19 minutes in – when he did, he implored students to do everything they could to vote President Donald Trump out of office – or cut his administration short by another means. He also urged the graduates in the audience to prove the stereotype that younger people are less engaged wrong, according to the Baltimore Sun.
A committee of students chose Gore to speak at the ceremony, where 7,500 of the school’s 40,000 students received their degrees. Gore added that the Trump administration was “an experiment” that should be “terminated early for ethical reasons.” He added that Americans needed to reclaim respect for reason a … | |
Is Tesla Abandoning the Mass Market?Tesla has given its first signals that it’s giving up on its ambition to become a mass-market car maker, when Chief Executive Elon Musk admitted that his promised $35,000 Model 3 vehicle would cause the company to “lose money and die” if built right away. | |
Fifth Third Signals Resurgence of Banker ConfidenceFifth Third Bancorp’s $4.7 billion deal to acquire a small Chicago lender is a sign that positive animal spirits have returned to the banking world. Investors should expect many more mergers and acquisitions. | |
Fifth Third Acquires MB FinancialFifth Third Bancorp and MB Financial announced that they have agreed to merge in a mostly stock deal, further expanding Fifth Third’s presence in Chicago. | |
The Ratings Game: Chip maker stocks rise on improved Micron outlook, hope of China trade war thawChip maker stocks traded higher Monday after Micron Technology Inc. raised its outlook for the quarter and broader markets rose on an apparent easing in trade war tensions with China. | |
Earnings Outlook: Target preview: Shoppers are showing up for the exclusive brandsTarget has focused on exclusive and private-label brands, which sets it apart from the competition in a packed retail space, according to analysts. | |
Bond Report: Treasury yields hold near 7-year high, with fading trade tensions offset by Italy selloffTreasurys struggled for direction on Monday after abating trade tensions offset heightening fears over a new Italian government. |
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