Everybody’s Doing It
…..Record high for the Dow. Job openings up. Consumer credit climbs. Waymo self-driving cars coming to Phoenix. Snap loses. Twitter doubles up. Saudi purge. Paradise Papers names names of the wealthy tax cheaters.
Financial Review by Sinclair Noe for 11-07-2017
DOW + 8 = 23,557
SPX – 0.49 = 2590
NAS – 18 = 6767
RUT – 18 = 1479
10 Y – .01 = 2.31%
OIL – .41 = 56.94
GOLD – 6.70 = 1275.80
The Dow Industrial average floundered in negative territory for much of the trading day, and then managed to pull out a modest gain – enough for another record high close. Go figure.
Tax reform is the number one thing on everybody’s minds right now. The Senate has indicated they’re going to announce their own bill Thursday, and that bill is extensively based off of the House bill, but there’s likely to be some important differences.
The number of job openings in the U.S. rose slightly in September to 6.09 million, keeping them near a record high. Job openings have topped 6 million for four months in a row for the first time ever. The Labor Department’s JOLT survey, or Job Openings and Labor Turnover, shows 5.27 million people were hired in September, down from 5.42 million. And 5.24 million people lost their jobs, also down from the prior month. The so-called quits rate among private-sector employees was unchanged at 2.4%. The quit rate edged up to 2.2% from 2.1% if government workers are included. The higher quit rate indicates more people are confident about landing a new job and therefore willing to quit their old job.
Total consumer credit increased $20.8 billion in September to a record seasonally adjusted $3.79 trillion, posting an annual growth rate of 6.6%. This is up from a $13.1 billion gain in August. All categories of borrowing showed strength in September. Nonrevolving credit, which covers loans for education and cars, rose at an annual rate of 6.3% in September, up from 3.3% rate in August. Revolving credit, which is mostly made up of credit-card loans, increased at an annual rate of 7.7% in September.
Self-driving cars have graced public roads for almost a decade—but always with a person behind the wheel. Waymo, the autonomous car unit from Google parent Alphabet, will soon start chauffeuring people in minivans without “safety drivers,” a milestone for the internet giant’s bid to lead the crowded pack trying to commercialize driverless technology. And they have picked Phoenix as their test market. We don’t yet know the specific date for the beginning of the pilot program, but a Waymo service will arrive soon, allowing people/volunteers/guinea pigs to hail the cars with a mobile app, similar to services like Uber and Lyft. Waymo has partnered with Lyft but hasn’t shared details on that deal. Waymo’s driverless cars will roll out in selected areas of Chandler, Arizona and then expand throughout the metro Phoenix area.
Third quarter earnings have been coming in better than expected, but a miss can result in sharp punishment. Today’s example – Snap. The company, which runs the Snapchat mobile-messaging app, said third-quarter revenue was $207 million, falling short of the $235 million analysts predicted, as the price per ad declined 60 percent. Daily users averaged 178 million, missing estimates. Shares dropped 22% in after-hours trade.
Twitter says users can now send tweets with as many as 280 characters, double the current limit, the latest attempt by the social media company to revive anemic user growth. The company started testing the longer tweet limit with a small group of users in September. Twitter found that people with the expanded character limit spent less time editing their tweets. Those people also got more followers, spent more time on the platform and interacted more with other users on the service. Some Twitterati think brevity is the soul of the service and worry the longer form will ruin what’s special about it. However, many of Twitter’s 330 million monthly active users were already getting around the limit by linking to longer pieces, taking screenshots of full stories, and sending streams of tweets … called tweetstorms to complete thoughts.
All major Persian Gulf stock markets slid today and oil prices are adding a risk premium on jitters about Saudi Arabia’s sweeping anti-graft purge. Authorities detained dozens of top Saudis including billionaire Prince Alwaleed bin Talal in a move widely seen as an attempt by Crown Prince Mohammed bin Salman to suppress political opposition. Trump endorsed the crackdown, saying some of those arrested have been “milking” Saudi Arabia for years. Saudi banks have frozen more than 1,200 accounts belonging to individuals and companies in the kingdom and the number keeps rising. Investors worry that his campaign against corruption – involving the arrests of the kingdom’s most internationally known businessmen – could see the ownership of businesses and assets become vulnerable to unpredictable policy shifts. Authorities sought to reassure the business community, with the Saudi central bank saying it was freezing suspects’ personal bank accounts at the request of the attorney general but not suspending operations of their companies. In Washington, the U.S. State Department said it was not informed in advance of the Saudi crackdown, but it had been reassured by Riyadh that any prosecutions of suspects would be undertaken in a fair and transparent manner. The show of investor nerves coincided with sharply heightened strains between Riyadh and Tehran, as Prince Mohammed denounced Iran over its role in Yemen. Iran has denied it was behind a recent Yemen-based missile launch that targeted Riyadh. The Saudi military intercepted the missile.
A new set of data taken from an offshore law firm again threatens to expose the hidden wealth of individuals and show how corporations, hedge funds and others may have skirted taxes. A year after the Panama Papers, the International Consortium of Investigative Journalists has published the Paradise Papers, a massive collection of confidential information on offshore accounts. The Paradise Papers documents include nearly 7 million loan agreements, financial statements, emails, trust deeds and other paperwork over nearly 50 years from inside Appleby, a prestigious offshore law firm with offices in Bermuda and beyond. The Paradise Papers reveal offshore interests and activities of more than 120 politicians and world leaders, plus information on more than 100 multinational corporations. Here are some of the findings:
Jim Simons, the billionaire founder of hedge fund Renaissance Technologies, has amassed more than $7.5 billion in a previously undisclosed, four-decade-old fund set up in Bermuda.
Warren Stephens, an Arkansas banker and Republican donor, used a Bermuda-based family trust to reduce his tax bill and conceal his interest in a payday lender under U.S. scrutiny.
More than a dozen members of President Donald Trump’s inner circle, including Secretary of State Rex Tillerson and top economic adviser Gary Cohn, held undisclosed offshore companies.
Robert Mercer, a Republican donor who just said he would step down as Renaissance Technology’s co-CEO, was revealed to be a director of more than eight of RenTech’s offshore subsidiaries, who used other offshore firms to shelter money his family funneled to political causes.
The Blackstone Group, co-founded by Trump economic adviser Stephen Schwarzman, used trusts and companies registered in tax havens to avoid paying taxes on two U.K. commercial properties.
Irish officials closed a tax loophole that had allowed Apple to avoid billions of dollars in taxes, Apple then enlisted international law firms to help it find a new tax home and settled in the English Channel island of Jersey. The documents helped solve a two-year mystery of where the world’s biggest company by market capitalization is booking a big share of its revenue.
Bank of Utah manages more than 1,390 aircraft trust accounts that obscure the identities of the jets’ (largely foreign) owners. Among the wealthy foreigners said to use the bank’s services: Russian oligarch Leonid Mikhelson, an ally of Russian leader Vladimir Putin whose gas company is under U.S. sanctions.
Commerce Secretary Wilbur Ross faces questions about his financial disclosures to Congress and the government after a report that he didn’t disclose business ties to the son-in-law of Russian President Vladimir Putin and an oligarch under U.S. sanctions. The Appleby documents included details of Ross’s stake in a shipping company, Navigator Holdings.
Commodities trader Glencore was one of the top clients of Appleby, which even had a “Glencore Room” at its Bermuda office that kept information on the trader’s 107 offshore companies.
Silicon Valley investor Yuri Milner, who was an early backer of Facebook Inc., partnered in two investments with the Russian state-controlled bank VTB Bank before it was sanctioned.
Queen Elizabeth II of the U.K. made a series of investments in a Cayman Islands fund through the British Royal Family’s private estate, the Duchy of Lancaster.
Everybody’s doing it.