Financial Review

Black Cyber-ish

….Black November. New home sales at 10-year high. Congress looks to confirm Powell. Big vote this week on tax legislation. Who is in charge of CFPB? Meredith buys Time. Maryland assault weapons ban stands. Bitcoin gets bubbly.

DOW + 22 = 23,580
SPX – 1 = 2601
NAS – 10 = 6878
RUT – 5 = 1513
10 Y – .01 = 2.33%
OIL – 1.08 = 57.87
GOLD + 6.10 = 1295.00

 

Happy Cyber Monday. Online shoppers in the U.S. are expected to spend about $6.6 billion today, up from $5.6 billion one year ago. Thanksgiving and Black Friday, when shoppers spent $7.9 billion and bought more on their mobile devices than last year, had also generated record online sales. That brightened the overall outlook for traditional retailers that have expanded beyond brick-and-mortar outlets into e-commerce. The availability of deals and promotions throughout November hurt shopper traffic at stores. If you don’t find a really great deal today, be patient – look for deeper discounts to be offered later in December.

 

Online sales at Wal-mart grew 50 percent year-over-year in the most recent quarter. It now accounts for 3.6 percent of total U.S. online sales in the 12 months to October 2017, up from a 2.8 percent share a year ago. Even with this progress, Wal-Mart has a long way to go. Amazon’s share of the U.S. e-commerce market stands at 43.5 percent. About half of U.S. households are estimated to have Amazon Prime subscriptions.

 

GlobalData’s preliminary tracking figures have already predicted total Black Friday sales to have risen the most since 2011. The National Retail Federation (NRF), the industry’s trade group, is calling for an increase as much as 4 percent, with those results set to be released Tuesday afternoon.

 

After several years of growth, Small Business Saturday saw a dip in both foot traffic and overall dollars spent. The American Express-sponsored shopping holiday saw 108 million shoppers spend $12.9 billion on Nov. 25 at independently owned businesses. That is down from $15 billion in 2016.

 

Increasingly, the idea of one single day of shopping has been replaced by a month of holiday shopping. It’s no longer Black Friday. It’s now Black November. As retailers increasingly spread sales and discounts throughout the month, November has become a shopping extravaganza. Online sales from November 1 through 22 totaled almost $30.4 billion this year, accounting for nearly 18% year-over-year growth, according to Adobe Analytics. In fact, every day in November so far has seen over $1 billion in online sales, creating a new paradigm for shoppers and retailers. Black Friday sales events are starting earlier and earlier in November every year as retailers try to get the jump on one another.

 

The Census Bureau reports sales of new single-family houses in October 2017 were at a seasonally adjusted annual rate of 685,000 – that’s a 10-year high. This is 6.2 percent above the revised September rate of 645,000 and is 18.7 percent above the October 2016 estimate. Inventories are tight: it would take 4.9 months to sell all existing inventory – that’s down from 5.2 months’ supply of homes in September. The median sales price of new houses sold in October 2017 was $312,800. The average sales price was $400,200. New-home sales, tabulated when contracts get signed, account for about 10 percent of the market.

 

Congress is back in session for the next 3 weeks, with a busy schedule. Tomorrow, we’ll hear the Senate confirmation hearing for Jerome Powell, Trump’s nominee to head the Federal Reserve. We’ll get to hear Powell’s ideas on monetary policy, banking regulation and his general approach to run one of the most important institutions in the world. Confirmation hearings are often unpredictable. While Powell could face some scrutiny, particularly from Republicans who don’t care for the central bank to begin with, and Democrats who want a tighter rein on Wall Street, Powell’s confirmation is all but assured.

 

Wednesday morning, current Fed Chair Janet Yellen delivers her final Humphrey Hawkins testimony on the economy, before the Joint Economic Committee.

 

Today, Dallas Fed President Robert Kaplan delivered an especially hawkish speech. Kaplan said he is “cognizant of financial imbalances” present in the current economy and suggested that the unemployment rate may be starting to extend too far beyond its natural level. Specifically, Kaplan noted: stock market capitalization is about 135% of GDP, the highest since 1999-2000 just before the technology bubble burst; Commercial real estate prices and the valuation of debt both appearing “notably extended”; Historically low stock market volatility, which Kaplan described as “extraordinarily unusual”; Margin debt at record-high levels and Kaplan warned, “In the event of a sell-off, high levels of margin debt can encourage additional selling, which could, in turn, lead to a more rapid tightening of financial conditions”; and US government debt at about 75 per cent of GDP – a level Kaplan calls “unlikely to be sustainable”.

 

The big news on Capitol Hill continues to be the tax reform legislation, which might see a final Senate vote this week if they can muster the votes. With several senators not yet committed to supporting the $1.5 trillion tax plan, the week is expected to be punctuated by behind-the-scenes arm-twisting and deal-making as Republican leaders work to find enough votes to pass the bill along party lines. At least a half-dozen senators have raised concerns about the bill, including its potential to add to the federal deficit and a provision that would eliminate the Affordable Care Act requirement that most Americans have health insurance or pay a penalty. The talks could result in substantial changes to the bill before it reaches the Senate floor, or, more likely, in amendments that the full Senate would vote on. Any bill that passes the Senate is likely to differ in significant ways from the House-passed version, and Republican leaders in both chambers have said repeatedly that such differences will be worked out in a formal conference committee.

 

Recent national polls show the plan fails to garner the support of a majority of Americans; several polls show a majority actually opposing it. According to a new analysis from the Tax Policy Center, the Senate bill gives more than 60% of its benefits to the top 1% of taxpayers. Those in the top 0.1% of incomes are set to get 40% of all cuts.

The ongoing brouhaha over who is the rightful interim leader of the Consumer Financial Protection Bureau spilled over into Monday morning, as the two people separately tasked with leading the independent agency sent dueling emails asserting their authority. In the first email to staffers this morning Leandra English — whom the departing director, Richard Cordray, named the acting director on Friday — called herself “acting director” and expressed gratitude to her CFPB colleagues “for your service.” That was followed up by a memo from Mick Mulvaney, the director of the Office of Management and Budget who was tapped by Trump to serve as acting director of the agency shortly after Cordray announced English, his chief of staff, as his interim successor. Mulvaney’s memo told staffers to disregard the memo from acting director English. Then English filed a lawsuit in federal court seeking a temporary restraining order to prevent Mulvaney from fulfilling Trump’s appointment. Either English or Mulvaney will serve as acting director until the Senate can confirm a permanent nominee.

 

Media company Meredith Corp said on Sunday it will buy Time Inc, the publisher of People, Sports Illustrated and Fortune magazines, in a $1.84 billion all-cash deal backed by conservative billionaire brothers Charles and David Koch.

 

The state of Maryland passed a ban on “assault” weapons after the 2012 mass shooting at a Newtown, Conn., elementary school. A district judge had cast doubt on the constitutionality of the law. But the full U.S. Court of Appeals for the 4th Circuit in Richmond upheld the ban in a 10-to-4 vote. That court went further than other appellate courts that have reviewed similar laws, stating that “assault weapons and large-capacity magazines are not protected by the Second Amendment.” That court went further than other appellate courts that have reviewed similar laws, stating that “assault weapons and large-capacity magazines are not protected by the Second Amendment.” The majority opinion refers to the banned firearms as “weapons of war” that the court says are most useful in the military. Attorneys general in 21 states asked the Supreme Court to hear the Maryland case, and the National Rifle Association and other gun rights groups had joined the effort.  Today, the U.S. Supreme Court declined to hear the case, meaning the Maryland ban on assault weapons stands.

 

In the past year, bitcoins have generated transaction fees of nearly $219 million. And at $9,600 a piece, the total value of all bitcoins — their market cap — now tops $160 billion. That gives bitcoins the equivalent of a trailing P/E ratio of 708. Bitcoin now has a bigger market cap than General Electric, or Disney. Bitcoin has increased nearly tenfold in price so far this year. The digital currency has surged 50 percent in November alone. Bitcoin’s price has been helped in recent months by the announcement that the world’s biggest derivatives exchange operator CME Group would start offering bitcoin futures. The company said last week the futures would launch by the end of the year though no precise date had been set.

If you still don’t understand the underlying premise of bitcoin, you are not alone. There is no inherent value, just a transaction that happens based upon blockchain. Blockchain creates a quick, permanent and secure record of transactions, eliminating the need for a third party such as a bank. Banks and other large corporations are testing how blockchain can help improve everything from supply chain management to global payments. The blockchain technology is very real but bitcoins are pure speculation that has now grown into a bubble. Not a huge bubble but big enough to pain.

 

Previous post

Eddie Yoon

Next post

Tax Gimmicks 

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *