QUICK OVERVIEW

• Lots of talk (“so-called forecasts”), that the Dow/S&P is about to double in the first 4 years of the Trump admin. That would be a return of some 18% per year – undeniably “tremendous”!!

• Now the biggest single factor in the long-term direction of stocks is earnings “growth”. Currently the S&P 500 (you can trade it using SPY) is earning, per Barron’s Market Lab, $89.09, and $998 for the DJI. So, for the S&P to double, earnings would probably have to be somewhere close to $178 for the S&P and $2000 for the DJI in four years.
• Optimists see Trumps tax cuts adding about $13, and deregulation $7, for a total of $109 for the S&P. The difference would therefore have to come from somewhere else, perhaps accelerated GDP growth of well over 4%, which would probably result in higher interest rates (the Fed is planning to raise rates already) - creating competition. You can peruse the implications here.
• However, as you can see in the table, if rates should stay the same and earnings be $2000, the Dow could / should be trading at $84000 – now that would be a Trump rally, “tremendous indeed”!! And  that without considering the dividends -WOW!!

• Meanwhile, Trump’s administration will project gross domestic product growth of 3 to 3.5 % per year when hyping the economic impacts of proposed legislation. This could be a tad difficult to achieve according independent and nonpartisan agencies as well as private-sector economic forecasters -- some are calling it “Argentine-style data manipulation” ...

• In his annual letter to Berkshire Hathaway shareholders, the Oracle of Omaha said: “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients.
  “Both large and small investors should stick with low-cost index funds.”

• U.S. Agriculture Department data show that Turkey has become the biggest supplier of organic corn and soybeans to the U.S. last year. In 2016 it shipped 400,000 metric tons of organic corn, nearly quadrupling its prior-year total, while its soybean shipments climbed 8x, Other key suppliers to U.S. organic-food companies are now Ukraine, Argentina, Romania and India. This is prompted by U.S. consumers' demanding organic products - produced without synthetic pesticides or genetically engineered seeds.

• 3,000 Scientists Have Asked for Help Running for Office to Oppose Trump

• Mexico says it has no intention of accepting new “unilateral” immigration rules revealed this week by the Trump administration that include plans to deport non-Mexicans to Mexico.

• (Reuters) Amid trade tensions with the United States, Mexico plans to send a delegation next month to visit Brazilian corn, beef, chicken and soy producers as an alternative to U.S. suppliers, its representative in Brazil said on Friday.
• Mexican chargé d'affaires Eleazar Velasco said Brazil is uniquely positioned to expand agricultural commodity sales to Mexico if trade with the United States is disrupted because it is closer than other potential suppliers like Australia.
• "The United States unilaterally wants to change the established rules of the game," Velasco told Reuters. "This will evidently lead us to rebalance our trade relations."

• Germany’s environment minister, announced that the government would be instituting a ban on meat at official functions held by the Ministry of Environment, citing the environmental burden of meat production as the reason for the ban.

Daily charts are up-to-date

QUICK OVERVIEW

• Whatever might be going on in the White House, investors are keeping their faith in Trump -- so far. 

•  Mexican newspapers report Mexican Parliament anticipates to shift corn/soy imports to South America and were ready to source soybeans/corn from Brazil/Argentina.

•  German Consumer Price Index rose 1.9% 
• YoY German GDP came in at a seasonally adjusted plus 0.4% in Q4. 
• YoY the growth rate for 2016 was 1.9%, which was the strongest rate for half a decade. 

• (Reuters) U.S. President Donald Trump's vow to roll back government regulations at least 75 percent is causing anxiety for some pharmaceutical executives that a less robust Food and Drug Administration would make it harder to secure insurance coverage for pricey new medicines… "People often argue that the FDA is too restrictive," said Roger Perlmutter, head of research and development at Merck & Co Inc (MRK.N). "We have the sense that the balance is pretty right ... you have to have a well-characterized risk/benefit profile." 

• Solar now provides twice as many jobs as the coal industry: The solar industry is adding jobs much faster than the overall economy, but still makes up just over 1% of the country's total power supply. Clearly, there's room for growth.

•  House Repubs voted to eliminate the only federal agency that makes sure voting machines can’t be hacked

• Republicans terminate the EPA https://www.congress.gov/bill/115th-congress/house-bill/861/text

•  (Fortune) In a new interview with Quartz, Microsoft founder Bill Gates makes a rather stunning argument—that robots who replace human workers should incur taxes equivalent to that worker’s income taxes. “Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed . . . If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”

• Catherine Rampell: National Endowment for the Arts budget, which Trump wants to eliminate: $148m Estimated annual cost (to NYC) to protect Trump Tower: $183m 

• The 10 biggest defense budgets in 2016 added to over $1.1 trillion. The U.S lead the way with $605 billion, followed by China with $145 billion.

•  U.S. annual inflation rate rose to 2.5% in January, from 2.1% in December.
  

Trump’s Most Chilling Economic Lie
 by    Joseph E. Stiglitz

The very Americans who have been among the losers of globalization stand to be among the losers of a reversal of globalization—including a trade war. History cannot be put into reverse. Technology has proceeded in a certain way based on the premise of global supply chains. Disrupting the global supply chains would be costly and would increase the prices of goods that Americans buy—especially the mass-marketed goods that have kept prices so low for the goods purchased by ordinary Americans.


 (IT) Inflation  = more money chasing fewer goods, and therefore prices increase...

Baltic Exchange Dry Index etc is up-to-date

QUICK OVERVIEW

• (WSJ) The Vanguard Group topped $4 trillion in assets for the first time at the end of January after a year in which it pulled in more money than all of its rivals combined.

 

•  U.S. Home ownership at 63.5% is the lowest since the 1980’s. China’s foreign currency reserves fell below $3 trillion, the lowest level since 2011. 
• China’s imports rose 16.7%, while exports rose 7.9%. 

 

• Brent crude at $56 as Opec sticks to one of the deepest cuts in its history. Mr. Trump is promising a “phenomenal” announcement on taxes in the next few weeks. NYSE short interest ratio is currently at 4.3 days.

•  QUICK OVERVIEW

• (Guardian) A new survey of business leaders found that 58% said the Brexit vote was already having a negative impact on their firm. Just 11% said it had helped business.

• (MarketWatch) -- President Donald Trump on Friday signed executive orders that would start a process of rolling back the fiduciary rule and the Dodd-Frank bank reform law. "Today we are signing core principles for regulating the United States financial system," Trump said.  
• Consequently the  Dow regains 20,000 level as broader market ends firmly higher on bank rally. Goldman Sachs (GS) was the biggest gainer among Dow components, jumping 4.6%, 

•  (Reuters) France's far-right party leader Marine Le Pen on Sunday told thousands of flag-waving supporters chanting "This is our country!" that she alone could protect them against Islamic fundamentalism and globalization if elected president in May. 

• Japan is hosting the 2020 Olympic Games and is looking to derive the medals from recyclable electronics. In all, organizers hope to collect 40 kilograms of gold, 2,920 kilograms of silver and 2,994 kilograms of bronze. 

• The "failing" NYT passes 3 million paying subscribers, most in history, plus 220 million unique visitors in November. 

•  An attack on the Dark Web left a whopping 20 percent of it in shambles. On Friday, a vigilante managed to hack into Dark Web hosting service, Freedom Hosting II, after realizing that it was allowing for child pornography sites.

Baltic Exchange Dry Index etc. is up to date

Overview is up-to-date

The decision by the Trump admin to withdraw from TTP (Trans Pacific Partnership) trade deal, and intentions to renegotiate NAFTA has created a major concern for US ag exporters. A trade war with your best customers (China biggest buyer of Soy / Mexico biggest buyer of corn) is historically not “that good” for business…

(The Hill)  The U.S. and Mexico are denying reports that President Donald Trump told his Mexican counterpart Enrique Peña Nieto that U.S. forces will handle the "bad hombres down there" if the Mexican authorities don't.

 

Corn CPI Adjusted

 Soy CPI Adjusted

Cheaper renewables to halt coal and oil demand growth from 2020: research

The falling cost of electric vehicle and solar technology will halt demand growth for oil and coal from 2020, according to research published on Thursday, posing a threat to fossil fuel companies unprepared for the transition. 

 Coal

 

 

 

 Oil

 

 Oil CPI adj.