…..Three more indices hit records. Fed minutes confirm rate hike. New orders show strong economy. Overtime pay rule nixed. Car sales set to top record. IEA predicts gas demand peak. Amazon pilots strike. Lufthansana pilots strike. Google might pay taxes in Indonesia. Facebook has a censorship tool for China. Aloe vera gel isn’t.
Financial Review by Sinclair Noe for 11-23-2016.
DOW + 59 = 19,083
SPX + 1 = 2204
NAS – 5 = 5380
RUT + 7 = 1342
10 Y + .04 = 2.36%
OIL – .09 = 47.94
GOLD – 25.10 = 1188.00
Three of the four major U.S. stock market benchmarks closed at all-time highs again today; that follows 2 consecutive session where all 4 hit record highs. In the US, stock and bond markets will be closed tomorrow but open for a half-day of trading on Friday.
The Federal Reserve released minutes from the November 2nd FOMC policy meeting. Fed funds futures are already pricing in a 100% chance of a rate hike in December, and the minutes confirm. The minutes did not account for the postelection surge in Treasury yields and inflation expectations, which made a December rate hike all the more likely. The Federal Reserve thinks it will be appropriate to raise interest rates “relatively soon,” which is the same phrase we heard from Fed chair Janet Yellen. And the minutes expressed a fairly aggressive approach that will likely mean more rate hikes in 2017. That pushed bonds lower today and the dollar higher. The yield on the 10-year Treasury note spiked to 2.41% intraday and closed up 4 basis points to 2.36%, the highest level since July 2015. Treasuries pared losses after a $28 billion auction of seven-year notes drew higher-than-average demand. The dollar index pushed up to almost 102.
New orders for manufactured capital goods rebounded in October, driven by rising demand for machinery and a range of other equipment, pointing to a tentative pickup in business investment. The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.4 percent after declining 1.4 percent in September. These so-called core capital goods orders have now increased in four of the last five months. The Atlanta Federal Reserve is forecasting GDP rising at a 3.6 percent annual rate in the fourth quarter. The economy grew at a 2.9 percent pace in the July-September period.
The University of Michigan consumer confidence index rose to 93.8 from 87.2 in October. This report includes both pre- and post-election sentiment. Americans perceptions of current conditions and expectations for 6 months out, rose.
The Labor Department said initial claims for state unemployment benefits increased 18,000 to a seasonally adjusted 251,000 for the week ended November 19. Claims have now been below 300,000, a threshold associated with a healthy labor market, for 90 straight weeks. That is the longest run since 1970, when the labor market was much smaller.
A federal judge has blocked an Obama administration rule to extend mandatory overtime pay to more than 4 million salaried workers from taking effect. The rule, issued by the Labor Department, was to take effect December 1 and would have doubled to $47,500 the maximum salary a worker can earn and still be eligible for mandatory overtime pay. The new threshold would have been the first significant change in four decades.
Ben Carson has been offered the post of Secretary of Housing and Urban Development. The former Republican presidential candidate said he’ll consider the offer over Thanksgiving. South Carolina Governor Nikki Haley was picked to be US ambassador to the United Nations.
Industry consultants J.D. Power and LMC Automotive estimate November US auto sales will be up 5 percent from a year earlier, making it possible that 2016 will top last year’s record high of 18 million vehicles. The consultants estimated industry sales in the United States this month at 1.39 million vehicles, up from 1.32 million. Manufacturers began their holiday sales promotions this month, hoping to cut bulging inventories of unsold cars and trucks.
The International Energy Agency forecasts that global gasoline consumption has all but peaked as more efficient cars and the advent of electric vehicles will halt demand growth in the next 25 years. Royal Dutch Shell, the world’s second-biggest energy company by market value, shocked rivals this month when a senior executive said overall oil demand could peak in as little as five years. While the IEA calculates the number of passenger vehicles will double to 2 billion by 2040, they figure gasoline consumption will drop 0.2%. Not a big drop but not growth.
While Amazon’s newly established in-house transportation network is facing a rocky start to its all-important holiday season. About 250 pilots employed by ABX Air, a subsidiary of Air Transport Services Group, went on strike Tuesday morning to protest what they say are staffing shortages. ABX operates 35 flights a day for Amazon and 45 flights a day for DHL Worldwide Express. This could cause major disruptions and delays for some Amazon customers during the busy holiday season, according to the union.
Lufthansa pilots went on strike. The German carrier was forced to cancel nearly 900 of its 3,000 scheduled flights from German airports on Wednesday—including 51 long-haul flights and at least seven U.S.-bound flights one day ahead of Thanksgiving. Talks with the pilot’s union over pay increases failed. The strike will continue until Friday.
A credit card breach lasting almost a year has hit Madison Square Garden, Radio City Music Hall and other venues owned by the MSG company. Cards whose data may have been captured were swiped in person at food and beverage locations from Nov. 9, 2015, through Oct. 24, 2016. Hackers may have received payment card numbers, cardholder names, expiration dates and internal verification codes.
Google is expected to reach a potentially hefty tax settlement with the Indonesian government in the next few weeks, Reuters reports, in a move that could pave the way for more countries to aggressively pursue back taxes from internet firms. Under the proposed settlement, Google will pay back taxes and fines, and the search giant will have to agree to a new calculation of profits made in the country. Separately, Indonesia’s communications minister said Google’s Project Loon is still awaiting clearance. The tech giant hopes to deploy balloons to deliver internet across remote areas of the country.
Following a seven-year ban in China, Facebook has quietly developed a censorship tool that could persuade authorities to allow the world’s largest social media network to re-enter the world’s second largest economy. The software is said to allow certain third parties the capacity to control visibility and monitor stories and suppress posts from appearing in people’s news feeds in specific geographies.
Eli Lilly shares sank to a two-year low today following news that the drug maker’s treatment for dementia in patients with Alzheimer’s failed its late-stage trial. Eli Lilly said it will no longer seek regulatory approval for the drug and that the failed trial will result in a fourth quarter charge of $0.09 a share.
HP, the printer and PC maker, provided a disappointing earnings outlook for the current quarter due to lower demand for printers. However, strong demand for notebook PCs helped earnings match estimates for the fiscal fourth quarter on better than expected revenue. HP’s sales jumped 2% to $12.5 billion, marking its first quarter of sales growth since splitting from its parent company a year ago.
Hewlett Packard Enterprise, which is the cloud computing and data centers business of the former HewlettPackard, reported earnings that were a penny above analysts’ estimates last quarter. However, revenue missed expectations, and both profit and sales fell from a year ago.
GameStop delivered earnings that beat estimates. However, revenue came in slightly below forecasts for the third quarter due to a bigger-than-expected drop in same-store sales. The company also said it expects disappointing same-store sales for its holiday quarter, as more players download games on consoles instead of buying them.
Deere shares traded at a new all-time high after the maker of farm equipment forked over a big beat on earnings. Revenue also topped estimates for its fiscal fourth quarter. The company also said it expects sales will continue to fall, but less than expected as the farm recession eases.
If you’ve ever had a bad sunburn or skin rash you may have tried to relieve the pain with aloe vera, or maybe not. The aloe vera gel many Americans buy contains no evidence of aloe vera at all. Samples of store-brand aloe vera gel purchased at national retailers Walmart, Target and CVS showed no indication of the plant in various lab tests. The products all listed aloe vera as either the No. 1 ingredient or No. 2 after water. Maltodextrin, a light-colored powder that looks like aloe powder and is used as a food additive, was a common filler or substitute in aloe gels. Maltodextrin is cheaper; aloe powder can cost as much as $240 a kilogram, while the same amount of maltodextrin can cost a few dollars. Several lawsuits have already been filed. There’s no watchdog assuring that aloe products are what they say they are. The U.S. Food and Drug Administration doesn’t approve cosmetics before they’re sold and has never levied a fine for selling fake aloe. If you want to be sure you get the good stuff, best bet is to grow your own; it is a low maintenance succulent, and you can just snip off a bit when needed.