Morning News: December 15, 2017
Posted by Eddy Elfenbein on December 15th, 2017 at 7:03 am

Net Neutrality Is Gone. Feel The Freedom Coursing Through Your Veins.

What the World’s Central Banks Are Saying About Bitcoin

JPMorgan Sees S&P 500 Hitting 3,000, Warns on Tech Stocks

How America’s Inequality Is Sending the Dow Soaring

Big Data and a Bullet Train Drive Ties Between India and Japan

China’s HNA Keeps Striking Foreign Deals as Banks Wince and Investors Flee

Labor Board Reverses Ruling That Helped Workers Fight Chains

No Sequel to ‘Massacre at the Shopping Mall’ This Year

Disney Makes $52.4 Billion Deal for 21st Century Fox in Big Bet on Streaming

Murdoch Solves Empire Succession by Getting Rid of the Empire

Airbus Board Triggers Shake-Up to End Succession Row

1 Red Flag on Tesla’s Balance Sheet, Made Even Worse By the Red Flag on Its Cash Flow Statement

Ben Carlson: Best Idea Wins

Josh Brown: A Twist

Jeff Carter: The Common Mistake

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Retail Sales Rose 0.8% Last Month
Posted by Eddy Elfenbein on December 14th, 2017 at 3:24 pm

As the holiday shopping season ramps up, we got a look at the retail sales report for November. Last month, retail sales rose by 0.8%. The number for October was bumped up from growth of 0.2% to growth of 0.5%.

If we look at “core” retail sales, which doesn’t include cars, gas, building materials or food services, then retail sales rose by 0.8%. This suggests the consumer is in a good mood.

We also got the initial claims report, which dropped to 225,000. That’s very close to a multi-decade low. Eight weeks ago, we got down to 223,000. That was the lowest since March 31, 1973.

Express Scripts Gives Upbeat Forecast
Posted by Eddy Elfenbein on December 14th, 2017 at 11:23 am

Shares of Express Scripts (ESRX) are doing well this morning after the company gave an optimistic forecast for 2018:

Express Scripts said it expected adjusted full-year 2018 earnings of $7.67 to $7.87 per share, above analysts’ average expectation of $7.65, according to Thomson Reuters I/B/E/S.

The company said it estimated that eviCore would have adjusted earnings before income, tax, depreciation and amortization of $265 million to $285 million in 2018.

Express Scripts’ shares were up 1.8 percent at $69.83 in pre-market trading.

The company said the forecast also included the sale of its United Biosource unit to Avista Capital Partners, which was announced last month.

Express Scripts also increased its full-year 2017 adjusted earnings per share outlook to $7 to $7.08, from its earlier estimate of $6.97 to $7.05.

Express has earned $4.94 per share through the first three quarters, so the new range implies Q4 earnings of $2.06 to $2.14 per share. Wall Street had been expecting $2.06 per share.

Morning News: December 14, 2017
Posted by Eddy Elfenbein on December 14th, 2017 at 7:04 am

Oil Trades Below $57 After IEA Says OPEC May Not See Happy 2018

Russia Wins in Arctic After U.S. Fails to Kill Giant Gas Project

China Still Fears the Fed

Europe’s Central Bank, Lagging Its Counterparts, Faces Eventful 2018

Why the Fed Raised Rates (For a Fifth Time)

Yellen Isn’t Buying Trump’s Tax Cut Talk of an Economic Miracle

Federal Communications Commission Set to Reverse Net Neutrality Rules

Bitcoin Trading Thrives Wherever Regulators Crack Down Most

Ripple Price Surges 84% In A Day To New Record High. Is XRP The Next Crypto Rocket ‘To The Moon’?

Target to Buy Shipt for $550 Million in Challenge to Amazon

Disney’s Fox Acquisition Means the End of Hulu As We Know It

2017 Was Bad for Facebook. 2018 Will Be Worse.

Howard Lindzon: A 2018 Prediction – More Fintech

Cullen Roche: IDGAF>FOMO

Roger Nusbaum: A 64% Decline? Really?

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The Latest Fed Projections
Posted by Eddy Elfenbein on December 13th, 2017 at 2:18 pm

Here are the latest economic projections from the Fed. The median forecast calls for three more rate hikes next year. After that, it’s two more in 2019 plus one or two in 2020.

This means that the real Fed funds rate will finally get up to 0% by the second rate hike next year (June, maybe). It will take four rate hikes for the Fed funds rate to match the current 10-year yield.

The Fed Hikes Again
Posted by Eddy Elfenbein on December 13th, 2017 at 2:12 pm

The Fed raised rates. There were two dissents. Here’s the statement:

Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Averaging through hurricane-related fluctuations, job gains have been solid, and the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. On a 12-month basis, both overall inflation and inflation for items other than food and energy have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Hurricane-related disruptions and rebuilding have affected economic activity, employment, and inflation in recent months but have not materially altered the outlook for the national economy. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12‑month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1-1/4 to 1‑1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Voting for the FOMC monetary policy action were Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Patrick Harker; Robert S. Kaplan; Jerome H. Powell; and Randal K. Quarles. Voting against the action were Charles L. Evans and Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate.

Inflation Is Still Tame
Posted by Eddy Elfenbein on December 13th, 2017 at 1:21 pm

The Fed’s policy decision is coming out later today. Just in time, we got the inflation report for November this morning. Not surprisingly, inflation is still very low.

Headline inflation rose by 0.39% last month. Some of that was caused by energy prices. The “core rate,” which excludes food and energy, rose just 0.12%.

In the last 12 months, headline inflation is running at 2.20% while the core rate is at 1.71%. In fact, the year-over-year core rate has barely moved over the last six months.

Morning News: December 13, 2017
Posted by Eddy Elfenbein on December 13th, 2017 at 6:59 am

Rising Coal Exports Give Short-Term Aid to an Ailing Industry

South Korea Seeks Measures to Curb Bitcoin Frenzy

What Is Litecoin, and Why Is It Beating Bitcoin This Year?

Bitcoin Arbitrage and Tax Math

U.S. SEC Stops ‘Munching’ Munchee’s ICO After Reg Concerns Raised

Fed 2018 Dots in Focus for Yellen Swan Song: Decision Day Guide

Trudeau Snubs Boeing, Unveils Plan to Buy Used Australian Jets

How 2017 Became a Turning Point for Tech Giants

Disney’s Deal for 21st Century Fox Is Said to Be Close

Google Is Opening A New AI Research Centre in China

Tesla Semi: Total Addressable Market And Incremental Value

Toshiba and Western Digital Make Peace, Clearing Major Hurdle for Chip Deal

Jeff Miller: Goldman Speaks! Should You Listen?

Michael Batnick: Lessons From the General

Ben Carlson: 2017 Has Been a Remarkable Run For Stocks

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Morning News: December 12, 2017
Posted by Eddy Elfenbein on December 12th, 2017 at 6:57 am

Carney to Put Pen to Paper as U.K. Inflation Climbs Above 3%

Sri Lanka Hands Major Port to China to Ease Its Debt

Trump’s Criticism of W.T.O. Hurts America First

Tax Plan’s Biggest Cuts Could Be in Living Standards

FCC, FTC Announce Partnership to Police Internet After Net Neutrality Repeal

Want to Issue a Red-Hot ICO? Rule No. 1 Is Do Very Little Work

Bitcoin Frenzy Poses No Threat to Bullion, Goldman Sachs Says

There’s a Medical ‘Land Grab’ Underway as Hospitals Try to Get Larger

American Express As A Dividend Income Investment

Comcast Drops Bid for Fox Assets, Leaving Disney in Pole Position

Westfield, Owner of World Trade Center Mall, to Be Sold for $15.7 Billion

Cullen Roche: Elasticity of Money is a Feature, not a Bug

Josh Brown: Investors Will Never Get the Answer to “Why Now?”

Howard Lindzon: 2017 – The Year of the Comeback

Jeff Carter: The Free Market In Bitcoin

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The New Yorker Profiles Jim Simons
Posted by Eddy Elfenbein on December 11th, 2017 at 8:48 pm

The New Yorker profiles math-hedge-quant-gabillionare Jim Simons. He’s very, very, very smart.

Simons, a noted mathematician, is also the founder of Renaissance Technologies, one of the world’s largest hedge funds. His income last year was $1.6 billion, the highest in the hedge-fund industry. You might assume that he had to show up every day at Renaissance in order to make that kind of money, but Simons, who is seventy-nine, retired eight years ago from the firm, which he started in the late seventies. His Brobdingnagian compensation is a result of a substantial stake in the company. He told me that, although he has little to do with Renaissance’s day-to-day activities, he occasionally offers ideas. He said, “I gave them one three months ago”—a suggestion for simplifying the historical data behind one of the firm’s trading algorithms. Beyond saying that it didn’t work, he wouldn’t discuss the details—Renaissance’s methods are proprietary and secret—but he did share with me the key to his investing success: he “never overrode the model.” Once he settled on what should happen, he held tight until it did.

The Flatiron Institute can be seen as replicating the structure that Simons established at Renaissance, where he hired researchers to analyze large amounts of data about stocks and other financial instruments, in order to detect previously unseen patterns in their fluctuations. These discoveries gave Simons a conclusive edge. At the Flatiron, a nonprofit enterprise, the goal is to apply Renaissance’s analytical strategies to projects dedicated to expanding knowledge and helping humanity. The institute has three active divisions—computational biology, computational astronomy, and computational quantum physics—and has plans to add a fourth.

Simons works out of a top-floor corner office across the street from the institute, in a building occupied by its administrative parent, the Simons Foundation. We sat down to talk there, in front of a huge painting of a lynx that has killed a hare—a metaphor, I assumed, for his approach to the markets. I was mistaken, Simons said: he liked it, and his wife, Marilyn, did not, so he had removed it from their mansion in East Setauket, on Long Island. (Marilyn, who has a Ph.D. in economics, runs the business side of the foundation, and the institute, from two floors below.) An Archimedes screw that he enjoyed fiddling with sat on a table next to a half-filled ashtray. Simons smokes constantly, even in enclosed conference rooms. He pointed out that, whatever the potential fine for doing so is, he can pay it.