Financial Review

Record Territory

Heading into the holidays, we will have some limitations on the news feed, but we’ll try to make up  for it with a few extra author interviews and other podcasts we hope you will find useful.

Financial Review by Sinclair Noe for 12-09-2016

 

The MSCI World index is on track for a gain of 2.7 percent for the week. European shares hit their highest level for 11 months, and were set for their best week since February. Asia-Pacific stocks gained about 2 percent for the week. On Wall Street the Dow Industrial Average, Dow Transports,  S&P 500, Nasdaq Composite, and Russell 2000 all closed at record highs yesterday.

 

Wall Street’s jump this week has taken the S&P 500 to an eye-watering 27.9 times CAPE, or cyclically adjusted price earnings, that is inflation adjusted earnings averaged over the past 10 years. This is about the same level that the market hit just before the crash of 1929, and is far higher than was seen in 2007, for example, or during the ill-fated boom of the late 1960s. The last time we saw the stock market this expensive on this measure was early in 2002.


The U.S. House
 has cleared bills to keep the government running through April, but a Senate fight over benefits for retired coal miners and a permanent extension of “Buy America” mandates still threaten a government shutdown this weekend. The stopgap spending measure, which would allow the incoming Trump administration to weigh in on 2017 spending, must be approved soon to keep the government open beyond Friday’s midnight deadline.

 

Politicians in South Korea have voted to impeach President Park Geun-hye over a corruption scandal involving a confidante. If she’s permanently removed from office by the constitutional court (a procedure that could take up to 180 days), snap elections will be called within two months.

 

The European Central Bank has rejected a request by Italy’s Monte dei Paschi for more time to raise capital, a decision that piles pressure on the Rome government to bail out the lender. Italy’s third-largest bank, and the world’s oldest, had asked for a three-week extension until January 20 to try to wrap up a privately funded, $5.3 billion rescue plan. The ECB’s supervisory board turned down the request at a meeting this morning on the grounds that a delay would be of little use and that it was time for Rome to step in.

 

On Saturday, oil ministers from OPEC countries will meet non-OPEC producers in Vienna to seek help in curbing a global glut. Russia has said it would cut 300,000 barrels per day, meaning other non-OPEC producers combined would need to pledge the same amount to lower output by the 600,000 barrels per day OPEC wants.

 

Donald Trump will remain as an executive producer on NBC’s “Celebrity Apprentice,” even while serving as president of the United States. That agreement means the president will have an interest in a show aired by a media company that also reports on his presidency — a major conflict of interest for the network.

 

President-elect Donald Trump named fast-food executive Andy Puzder to head the U.S. Department of Labor, drawing criticism from labor advocates worried about his opposition to a higher minimum wage and government regulation of the workplace. Puzder, chief executive of CKE Restaurants, which operates the Carl’s Jr. and Hardee’s fast-food chains, has frequently argued in the media that higher minimum wages would hurt workers by forcing restaurants to close.

 

Coca-Cola says Chief Operating Officer James Quincey will succeed Muhtar Kent as chief executive, effective May 1, 2017. Kent will continue as chairman of the board.

Six former executives of Insys Therapeutics have been arrested on charges they orchestrated a racketeering scheme. The indictment alleged that they led a nationwide conspiracy to bribe medical practitioners to unnecessarily prescribe a fentanyl-based pain medication and defraud health insurers.

 

Lionsgate has won shareholder approval to acquire cable network Starz for $4.4 billion, ratifying one of the biggest studio deals this decade. The cash-and-stock deal has already received the greenlight from government regulators.

 

Irish banana company Fyffes has agreed to a takeover offer from Japanese conglomerate Sumitomo. Shares in the banana company surged after the announcement. Rival banana firm Chiquita had previously been interested in buying Fyffes, but the deal was never completed.  I included this story just because I never knew there were Irish banana companies, but there you have it.

 

In a likely controversial step, the Department of Transportation is considering eventually allowing in-flight calls from airline passengers – with two important caveats: airlines will have the option of whether to provide the service, and passengers must be informed well in advance if the flight allows calls. The FCC currently prohibits passengers from talking on cellphones during flights (due to disruption of certain radio frequencies) but not Wi-Fi calls.

 

Samsung is going to supply semiconductor chips to Tesla. A report from South Korea’s Electronic Times says Samsung will make the chips for the self-driving features in Tesla vehicles.

 

Forecasters are sending chills down some spines with a prediction that much of the northern half of the United States could see frigid weather next week similar to life-threatening lows the polar vortex brought to parts of the country in 2014. Anticipation of a freezing blast began to build this week when weather maps and forecast models showed similarities between next week’s system and one that developed in January 2014. The coldest weather next week is expected in the Midwest and Northeastern starting around Tuesday. Temperatures from the Northern and Central plains to wide swathes of the Midwest are likely to drop by between 5 and 20 degrees Fahrenheit compared to temperatures this week

 

 

 

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