Tuesday, August 8, 2017

Markets crawl higher to new records

Dow gained 25 to yet another record, advancers 4-3 & NAZ added 5.  The MLP index dropped 3+ to the 286s & the REIT index dropped 1+ to 351.  Junk bond funds were flattish & Treasuries drifted lower.  Oil lost pennies in the 49s & gold was sold.

AMJ (Alerian MLP Index tracking fund)

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US consumer credit-card debt just passed an ominous milestone, beating a record set just before the global financial system almost collapsed in 2008.  Outstanding card loans reached $1.02T in Jun, data from the Federal Reserve show, as lenders compete to sign up cardholders who may carry balances, a relatively lucrative business in a prolonged period of low interest rates.  The bet is that this time it won't end so badly.  In 2008, a drop in home prices spiraled into a global financial meltdown, & after the jobless rate surged toward 10%, banks wrote off more than $100B in credit-card loans over the next 2 years.  Investors have been skittish over the potential for defaults to rise ever since card balances eclipsed $1T in Feb.  Credit-card issuers said write-off rates ticked up in Q2 from the previous 3 months.
U.S. Credit-Card Debt Surpasses Record Set at Brink of Crisis
China's trade surplus widened for a 5th month in Jul as export growth remained solid & imports moderated, keeping the spotlight on a trade gap Pres Trump aims to narrow.  Exports rose 7.2% in $s as imports increased 11%, both falling short of projections.  The trade surplus widened to $46.7B.  Shipments to the US rose 8.9% versus 19.8% in Jun, narrowing the trade surplus with the world's biggest economy slightly to $25.2B.  Demand for Chinese products has remained resilient as growth in major trading partners continues to recover.  At home, stronger-than-expected output is supporting robust import demand.  Yet the world's largest exporter confronts more uncertainty as Trump continues sporadic tough talk on trade.  The White House may be considering a probe of alleged intellectual property violations, which could risk igniting trade tensions.

China's Trade Surplus Widens for Fifth Month as Imports Moderate

Only a small number of US tax, finance & business professionals expect Trump's 15% corp tax rate to become reality as part of tax reform, according to a Deloitte Tax survey.  The poll of more than 3K offered a glimpse of private-sector expectations about tax reform that are less optimistic than public statements from Trump administration officials & lawmakers.  Trump & Reps are pushing to get the corp income tax rate down from 35% to 15-20%, saying that doing so would drive economic growth & competitiveness in coming years.  Just under ½ of the participants viewed a lower corp rate as being the main economic driver of tax reform, but nearly 40% predicted the rate would end up at 25%, due to the political & budgetary challenges.  31% of those surveyed during a Jul  expected a corp tax rate of 20%.  Only 5.3% believed Trump's 15% rate would become law.  Reps have pledged to enact the most sweeping tax overhaul since the Reagan era before year-end.  An ambitious White House timeline calls for legislation to be unveiled in Sep & voted on in the House & Senate before the end of Nov.  Still, about 74% were doubtful or not at all confident that a comprehensive tax reform bill would be enacted in 2017.  Less than 19% were confident or somewhat confident that it would happen this year.  More than 63% believed compromise to be the necessary ingredient for Congress to succeed at tax reform, a quality that has proved elusive this year.  Trump's leadership, public support & a sense of economic crisis were seen as essential by less than 10% of participants respectively.  In terms of growth, about 16% identified tax code simplification as the feature most likely to boost the economy.

Few expect Trump's 15% corporate tax rate: Deloitte survey

Stocks began the day in the red, bt buyers are bidding shares higher.  No dramatic news so far & the survey above shows investors are accepting the dismal reality of getting tax reform passed.  While Trump is out of DC when repairs are made to the White House & Congress is on vacation, not a lot of news coming from DC

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