News Flash: Thursday 7/27/17

Markets:

DJI: Up 0.39%

S&P: Down 0.10%

Nasdaq: Down 0.63%

Consumer Confidence is up from last month, and we see that the major indices have been creeping upwards slightly this summer.  Many economists are forecasting market corrections, but no one is able to predict when.   The Dow is up, while the other two major indices are down.  Tech took a hit today, and the big driver of the downward move in the NASDAQ was the decline of the FAANG stocks.

Companies have been posting very good earnings in the past few weeks.  This is due to a global growth trending upwards, and the weakening dollar which is showing good profits for our large exporters.  The economy doesn’t look like it wants to pullback just yet, as we are seeing good things on the distant horizon.


 

Infrastructure:

In the yearly assessment of our great nation’s infrastructure, we have gotten the grade D minus.  Not so great, and this might be one of the reasons that Trump was running on the platform of infrastructure spending.  Another reason why we should think to improve our ever aging roadways, waterways, plumbing,  and electrical systems, is that we are seeing increase costs in consumer goods due to increases in transportation costs.  US companies who rely on waterways to distribute goods have to face frequent delays that are adding up to be quite costly.  Apparently, many barges are in “bumper to bumper” traffic due to aging locks, meaning that commodities are just sitting there.  It’s not like you can take a detour when there is only one waterway to your desired destination.  C’mon Trump give us your money to save the locks!


 

Financial Regulation:

The LIBOR rate (interbank lending rate) that was established in 1986 is being phased out over the next 5 years.  It was created to help banks set interest rates on big loans.  The rate is calculated by figuring out how much it would theoretically cost to borrow money from other banks.  In 31 years it has turned into a foundation of the banking system, and widely followed economic indicator.  The argument is that the calculations are ambiguous and just rough estimates, and could be manipulated by big banks in their favor.  Also, regulators argue that it played a part in the 2008 financial crisis, so the goal now is to create a comparable benchmark that are calculated using actual facts. i.e Transactions in the markets, and not theoretical borrowing costs.  I’m sure Trump and the big banks don’t like this, as he was supposed to bring deregulation to the banks, but the LIBOR is British by nature, so there’s nothing us Americans can do.

 

 

 

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