Dow lost 34, decliners just ahead of advancers & NAZ gave back 12. The MLP index fell 1 to the 274s & the REIT index was flattish in the 355s. Junk bond funds were lower & Treasuries crawled higher. Oil climbed over 60 again & gold advanced, taking it to 1305.
AMJ (Alerian MLP Index tracking fund)
Stocks fluctuated in thin trading on the final market day of 2017, while the $s slump continued as the € headed for its best annual performance in 14 years. The S&P 500 Index was little changed, leaving its gain this year just over 20%, the most since 2013, while the Dow edged to a fresh record. The Stoxx Europe 600 Index pushed higher, on the cusp of its 5th rise in the past 6 years. The Bloomberg Dollar Index fell for a 3rd day, heading for its worst year in more than a decade, while the € closed in on $1.20 for the first time since Sep. The Bloomberg Commodity Index extended a record-breaking string of gains, as WTI crude held above $60 a barrel & copper declined. With little news to drive trading ahead of the New Year holidays, investors returned to themes familiar for the year, a synchronous global expansion & go-slow approach toward monetary-stimulus withdrawal in major economies, which has been a winning recipe for equities & a loser for the greenback.
German inflation slowed in Dec, underscoring the challenge the ECB will face next year as it gradually removes its stimulus program. Consumer prices rose an annual 1.6%, the Federal Statistics Office said. While that's slower than Nov's 1.8% but above the 1.4% forecast. Inflation has remained tepid in Germany even as record-low unemployment bolsters private consumption & a recovery in global trade fuels exports & investment. The Bundesbank this month lifted its projections for growth in Europe's largest economy thru 2019 & said it expects momentum to remain strong over the coming year. It sees inflation accelerating to 1.9% in 2020. The German number comes a week before data for the euro area, where consumer-price gains are expected to slow to an annual rate of 1.4%. The ECB has already warned that inflation will slow temporarily in the coming months before accelerating again later in 2018. Earlier this month, Pres Mario Draghi stopped short of declaring that the inflation goal will be met in 2020, although he expects underlying price pressures to rise gradually over the medium term as the euro-area economy enjoys its best growth in a decade. The ECB will next month halve its monthly pace of asset purchases to €30B ($36B) & continue buying until at least Sep.
Goldman Sachs (GS), a Dow stock, expects to take a $5B hit to profits for Q4 & year because of the tax overhaul signed into law last week. The bank became one of the first to release details on how changes in the tax code will affect how money parked overseas is handled. 2/3 of the $5B are due to changes in repatriation taxes, when funds are returned from overseas. The remainder includes the "effects of the implementation of the territorial tax system and the remeasurement of U.S. deferred tax assets at lower enacted corporate tax rates." The new tax overhaul imposes a discounted one-time levy on money held overseas, 15.5% for earnings held in cash or other liquid assets & 8% for earnings held in harder-to-sell assets. It would be a big one-time hit for GS, which had been expected to post Q4 net income of $2.07B. US companies had found ways to legally park money overseas to avoid the higher US corp tax. It has been expected that changes in the law would prompt many companies to return money to the US, potentially at least $2.5T. After taking a hit on repatriated earns, GS, & other banks, will operate in a much more favorable tax environment. Finance & insurance companies would have paid an effective corp tax rate of 26.1% next year. Now, it will be 14.3%. GS has estimated that the tax law will boost big-bank EPS by 13% next year. Economists believe the overall effect on the economy will be muted, however, because of those cuts to the US corp tax rate. Historically, repatriated profits have not had a broad effect on the US economy anyway. The stock dropped 3.20.
If you would like to learn more about GS, click on this link:?
club.ino.com/trend/analysis/stock/GS?a_aid=CD3289&a_bid=6ae5b6f7
There is not a lot going on in light trading on the final day of trading this year. But the Dow gained a massive 5K to 24.8K in 2017, making for one of its best year's in history. That's up about 25%. All the popular averages are very close to their record highs which were set this month. This kind of advance will be difficult to match in 2018.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 60.02 | +0.18 | +0.3% |
| GC=F | Gold | 1,304.60 | +7.40 | +0.6% |
Stocks fluctuated in thin trading on the final market day of 2017, while the $s slump continued as the € headed for its best annual performance in 14 years. The S&P 500 Index was little changed, leaving its gain this year just over 20%, the most since 2013, while the Dow edged to a fresh record. The Stoxx Europe 600 Index pushed higher, on the cusp of its 5th rise in the past 6 years. The Bloomberg Dollar Index fell for a 3rd day, heading for its worst year in more than a decade, while the € closed in on $1.20 for the first time since Sep. The Bloomberg Commodity Index extended a record-breaking string of gains, as WTI crude held above $60 a barrel & copper declined. With little news to drive trading ahead of the New Year holidays, investors returned to themes familiar for the year, a synchronous global expansion & go-slow approach toward monetary-stimulus withdrawal in major economies, which has been a winning recipe for equities & a loser for the greenback.
U.S. Stocks Mixed, Euro Seeks Best Year Since '03: Markets Wrap
German inflation slowed in Dec, underscoring the challenge the ECB will face next year as it gradually removes its stimulus program. Consumer prices rose an annual 1.6%, the Federal Statistics Office said. While that's slower than Nov's 1.8% but above the 1.4% forecast. Inflation has remained tepid in Germany even as record-low unemployment bolsters private consumption & a recovery in global trade fuels exports & investment. The Bundesbank this month lifted its projections for growth in Europe's largest economy thru 2019 & said it expects momentum to remain strong over the coming year. It sees inflation accelerating to 1.9% in 2020. The German number comes a week before data for the euro area, where consumer-price gains are expected to slow to an annual rate of 1.4%. The ECB has already warned that inflation will slow temporarily in the coming months before accelerating again later in 2018. Earlier this month, Pres Mario Draghi stopped short of declaring that the inflation goal will be met in 2020, although he expects underlying price pressures to rise gradually over the medium term as the euro-area economy enjoys its best growth in a decade. The ECB will next month halve its monthly pace of asset purchases to €30B ($36B) & continue buying until at least Sep.
German Inflation Slows in December as ECB Moves to Curb Stimulus
Goldman Sachs (GS), a Dow stock, expects to take a $5B hit to profits for Q4 & year because of the tax overhaul signed into law last week. The bank became one of the first to release details on how changes in the tax code will affect how money parked overseas is handled. 2/3 of the $5B are due to changes in repatriation taxes, when funds are returned from overseas. The remainder includes the "effects of the implementation of the territorial tax system and the remeasurement of U.S. deferred tax assets at lower enacted corporate tax rates." The new tax overhaul imposes a discounted one-time levy on money held overseas, 15.5% for earnings held in cash or other liquid assets & 8% for earnings held in harder-to-sell assets. It would be a big one-time hit for GS, which had been expected to post Q4 net income of $2.07B. US companies had found ways to legally park money overseas to avoid the higher US corp tax. It has been expected that changes in the law would prompt many companies to return money to the US, potentially at least $2.5T. After taking a hit on repatriated earns, GS, & other banks, will operate in a much more favorable tax environment. Finance & insurance companies would have paid an effective corp tax rate of 26.1% next year. Now, it will be 14.3%. GS has estimated that the tax law will boost big-bank EPS by 13% next year. Economists believe the overall effect on the economy will be muted, however, because of those cuts to the US corp tax rate. Historically, repatriated profits have not had a broad effect on the US economy anyway. The stock dropped 3.20.
If you would like to learn more about GS, click on this link:?
club.ino.com/trend/analysis/stock/GS?a_aid=CD3289&a_bid=6ae5b6f7
Goldman Sachs expects $5 billion hit from tax overhaul in 4Q
There is not a lot going on in light trading on the final day of trading this year. But the Dow gained a massive 5K to 24.8K in 2017, making for one of its best year's in history. That's up about 25%. All the popular averages are very close to their record highs which were set this month. This kind of advance will be difficult to match in 2018.
Dow Jones Industrials
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