DAILY MARKET REPORTS
- Global stock benchmarks have surged to multiyear or record highs this year, boosted by a rally in shares of technology companies.
- The S&P 500 is now trading at 18.3 times forward earnings, up from about 16.9 at the end of 2016.
- Goldman Sachs estimates the new tax legislation could reduce its fourth quarter earnings by about $5 billion.
- Bond prices rose. The yield on the 10-year Treasury fell to 2.42 percent from 2.43 percent late Thursday.
- The dollar fell to 112.54 yen from 112.87 yen on Thursday. The euro strengthened to $1.994 from $1.1952.
US FINANCIAL MARKET
Goldman to take a $5 billion fourth-quarter earnings hit due to repatriation tax
- The company said about two-thirds of the reduction would be due to the repatriation tax, which allows companies to bring cash and assets held overseas to the U.S.
- Companies will have to pay a one-time tax ranging from 8% on illiquid assets to 15.5% on cash and cash equivalents.
Apple apologizes after outcry over slowed iPhones
- Facing lawsuits and consumer outrage after it said it slowed older iPhones with flagging batteries, Apple is slashing prices for battery replacements.
- Apple will change its software to show users whether their phone battery is good.
- “We know that some of you feel Apple has let you down,” Apple said in its posting. “We apologize.”
Trump targets Amazon in call for postal service to hike prices
- Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” he tweeted Friday morning. “Should be charging MUCH MORE!”
- The USPS posted a $5.6 billion loss in its 2016 fiscal year, driven by retiree health benefit expenses of more than $5 billion.
- Earlier this month, the federal agency that oversees the USPS gave the service permission to speed up its pricing increases over the next five years.
- Postmaster General Megan Brennan has said she’d prefer to eliminates price caps altogether.
SoftBank succeeds in tender offer for Uber shares
- A consortium led by SoftBank Group Corp will buy a large number of shares of Uber Technologies Inc in a deal that values the ride-services firm at $48 billion.
- The price is a roughly 30 percent discount to Uber’s most recent valuation of $68 billion.
- SoftBank and the rest of the consortium, which includes Dragoneer Investment Group, will own approximately 17.5% of Uber.
- SoftBank itself will keep a 15% stake, while the rest of the consortium will own approximately 3 percent.
World Stocks Poised to Beat the S&P 500 This Year
- U.S. stocks posted exceptional gains in 2017. For the first time since 2012, international equities did even better.
- The MSCI AC World ex-USA Index, which tracks non-U.S. companies across developed and emerging markets, was poised to end 2017 with gains of 24%, compared with a 20% advance for the S&P 500.
Stocks cheer $9 trillion year, downer for the dollar
- Markets were ending 2017 in a party mood on Friday after a year in which a concerted pick-up in global growth boosted corporate profits and commodity prices, while benign inflation kept central banks from snatching away the monetary punch bowl.
- MSCI’s world equity index, which tracks 47 countries has been on an upward trajectory for pretty much all of 2017, putting it 22% and almost $9 trillion higher for the year.
- Emerging markets have led the charge with gains of 34%.
Gold breaks above $1,300/oz on way to best year since 2010
- The dollar’s drop to three-month lows versus a basket of currencies on Friday lifted gold to its highest since mid October at $1,303.90 an ounce.
- The dollar, in which gold is priced, is sliding towards its worst year since 2003, damaged by tensions over North Korea, the Russian scandal surrounding U.S. President Donald Trump’s election campaign, and persistently low U.S. inflation.
Everything Went Right for Markets in 2017—Can That Continue?
- The S&P 500 is on track to post its best yearly gain since 2013.
- Strong corporate earnings growth, record-low volatility and synchronized global economic expansion helped stocks broadly beat analysts’ expectations.
- Underpinning the index’s 20% climb in 2017 has been corporate earnings growth.
- At the end of the first quarter, analysts polled by FactSet were expecting companies in the S&P 500 to post 9.1% earnings growth in that period. Instead, companies grew their earnings by 14%, FactSet data show.
- Corporate tax cuts could boost earnings growth and stock prices.
- Yet, some analysts say they are worried the potential benefits from the tax bill are already priced into company shares, limiting upside in 2018.
US ECONOMY & POLITIC
U.S. oil prices hit highest since mid-2015 on surprise output drop
- In international markets, Brent crude oil futures also rose, supported by ongoing supply cuts by top producers OPEC and Russia as well as strong demand from China.
- Since the start of the year, Brent and WTI have risen by 17 and 12 percent, respectively, although the price rises from mid-2017 are much stronger, at nearly 50 percent.
- WTI prices were further boosted by a fall in U.S. commercial crude storage levels, which dropped by 4.6 million barrels in the week to Dec. 22 to 431.9 million barrels, according to the EIA.
- Inventories are now down by almost 20 percent from their historic highs last March, and well below this time last year or in 2015.
EUROPE & WORLD
Airbus confirms $50 billion jet order, one of the biggest aviation deals in history
- Airbus has confirmed a mammoth order of 430 jets worth a total $49.5 billion.
- Veteran airline investor Bill Franke of Indigo Partners inked the deal, comprising of 274 A320neos and 156 A321neos.
- The European plane maker has also announced a $5.42 billion deal to sell 50 A320neos to China Aircraft Leasing.
TODAY in HISTORY
- Texas became the 28th state in the United States. (1845)
- The Constitution of Ireland, changing the Irish Free State into Eire, went into effect. (1937)
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