David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Siemens boosts software business with $4.5 billion deal

    This article by Maria Sheahan for Reuters may be of interest to subscribers. Here is a section: 

    Mentor sells software and hardware used to design electronics for the semiconductor, automotive and transportation industries. The company reported a loss of $10 million in the six months ended July 31, compared with profit of $21 million in the same period last year, according to an Aug. 18 regulatory filing. The company forecast revenue of $1.22 billion for the 12 months through January.

    Under Kaeser, Siemens has pushed deeper into software applications that are crucial to run its industrial equipment.

    At the same time, Siemens is simplifying its sprawling portfolio, and the company announced last week that it wants to list its health-care subsidiary, among the biggest makers in the world of diagnostics and imaging equipment.

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    Email of the day on gold

    Gold is soft.  It's had some savage moves in the last few days.  Is it possible this due to new currency notes in India?  India is a large market for the jewellery trade.

    Thank you for all your good work.

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    Abe Faces Challenges to Follow Trump With Fiscal Spending Burst

    This article by Connor Cislo and Maiko Takahashi for Bloomberg may be of interest to subscribers. Here is a section:

    A third supplementary budget is on the drawing board to reconcile current-year spending and revenue figures, according to government officials familiar with the talks who asked not to be named per ministry policy. As to whether it goes beyond being a clerical package and takes on stimulus measures, that’s a function of what happens with politics, they said.

    A policy shift at the Bank of Japan and doubts about how much more Abe will accomplish in structural reforms is likely to increase pressure for a fiscal fillip.

    "We can’t put any more pressure on monetary policy, so the government will have to do more with fiscal spending," according to Koya Miyamae, an economist at SMBC Nikko Securities Inc.

    Yet tax revenue for the 12 months ending March 31 is likely to be lower than originally expected, as economic growth has been weaker than initially forecast, and government debt is already about 2.5 times the size of the economy.

    Japan’s budget deficit was 5.8 percent of gross domestic product in 2014, compared with 3.9 percent in the U.S.

    Asked about the need for another stimulus package this fiscal year, LDP Secretary General Toshihiro Nikai said last month it was "one option," according to Kyodo News.

    Trump has indicated he’ll spend $550 billion on infrastructure, with his plans forecast to add more than $5 trillion in debt.

    Satoshi Fujii, an adviser to Japan’s Cabinet Office, advocates looking at more fiscal stimulus as part of efforts to escape deflation. He said in a telephone interview on Nov. 11 that a third extra budget this year and a large initial budget next fiscal year may help Japan "fit very well with Trump’s policies."

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    It Is All Bullish in the End as Stocks Post Best Week Since 2014

    Here is the opening of this report from Bloomberg:

    A stretch that goes down as the best week for U.S. stocks in two years has been anything but easy money for the traders who had to navigate it.

    Three distinct narratives have driven trading, combining to lift the S&P 500 Index more than any time since 2014 and give the Dow Jones Industrial Average its best week in five years. Stocks rallied on Monday and Tuesday on speculation Hillary Clinton would win the presidency, then posted almost equally big gains Wednesday and Thursday as investors warmed to Donald Trump’s fiscal stimulus policies.

    The week ended on a down note for the S&P 500, as gains in banks and drug stocks were pared. In the middle was an hour-long election night plunge that would’ve lopped $1 trillion from the S&P 500 had it come during regular trading hours.

    “The last two to three days have had everything to do with re-pricing in a complete regime change,” said Kevin Caron, a Florham Park, New Jersey-based market strategist and portfolio manager who helps oversee $180 billion at Stifel Nicolaus & Co. “You have markets that now have to contend with the idea of a much larger fiscal push then they were expecting just a few days ago. You’re seeing a big rally in economically sensitive assets.”

    The S&P 500 rose 3.8 percent in the five days, while the Dow rallied 959.38 points for its best week since 2011. Small caps in the Russell 2000 Index surged 10 percent. The Nasdaq 100 Index added 1.5 percent.

    Along the way, the Dow also closed at record for the first time in three months as investors snapped up what they calculated would be beneficiaries of a Trump presidency. The surge in stocks following a presidential election echoed 1996 and 1972, when the blue-chip index made fresh highs after victories by Bill Clinton and Richard Nixon.

    Exchange-traded funds tracking U.S. equities took in $16.3 billion of fresh cash on Wednesday and Thursday, data compiled by Bloomberg show. It included $8 billion of inflows into a security tracking the S&P 500 that was the biggest in 14 months. It was the first week in history that had two days with more than 12 billion shares traded.

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    Trump Victory Bodes Well for Investors, for Now

    With benefit of hindsight, what’s extraordinary is how few professional investors saw it coming. Mr. Trump was derided as the candidate of “uncertainty,” which markets typically abhor, and many of his stated policies are vague, incoherent or inconsistent. But there was nothing uncertain about his overall pro-growth, pro-business and America-first tendencies, now backed by the firepower of a Republican House and Senate.

    He is, after all, a real estate developer.

    “We see tremendous opportunity for economic growth,” said John Engler, a former governor of Michigan who is now president of the Business Roundtable, an influential group of chief executives that was often at odds with Mr. Trump during the campaign, especially over trade and immigration. Now that the results are in, though, Mr. Engler sees a silver lining. “The Republicans understand,” he said, “that they’re on the spot to produce results.”

    Simon Lack, founder of SL Advisors, an investment advisory firm and operator of a mutual fund that focuses on energy, carried the theme further. “Trump’s win is unambiguously positive” for many sectors of the economy, “especially energy infrastructure,” he said.

    The doomsayers also ignored a century of market reactions to presidential elections. “We’ve done extensive research that suggests presidential elections don’t affect markets,” said James Stack, president of InvesTech Research. “The reality is that the market is influenced to the greatest extent by economic factors and monetary policy.”

    “In almost all technical and macro aspects, this is still a bull market,” Mr. Stack said, and Mr. Trump’s election does not change that.

    Markets generally rally the day after a presidential election, said Jeffrey Hirsch, editor of the Stock Traders Almanac, because elections, whatever their outcome, eliminate a measure of uncertainty. “It doesn’t matter if it’s a Republican or Democrat,” he said. Returns tend to be higher when an incumbent president is replaced or the party in power changes, as happened this week. And previous instances of the election of both a Republican president and Republican Congress have been followed, on average, by a first-year performance of 14 percent.

    There are more specific reasons as well that investors applauded Mr. Trump’s victory:

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    Email of the day

    On gold and mining shares:

    Dear David, hello and hope everything is fine up there at beautiful London. Has the time arrived to exit gold and miners? Are we witnessing a new paradigm with higher rates, lower taxes and fiscal stimulus? Does it make sense to hold gold with this new scenario? Your thoughts will be very appreciated. Thank you very much!

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    Trump Team Promises To 'Dismantle' Dodd-Frank Bank Regulations

    This article by Marilyn Geewax from NPR may be of interest to subscribers. Here is a section:

    During his presidential campaign, Republican Donald Trump said he would "get rid of" Dodd-Frank — the sweeping legislation passed in 2010 to address problems underlying the 2008-2009 financial crisis.

    Many Republicans hate the 2,300-page law, saying it is layered with far too many regulations. But Democrats say it provides valuable oversight of an industry that they believe took too many risks on Wall Street and too much advantage of customers on Main Street.

    Now President-elect Trump's transition team is promising to "dismantle" the complex Dodd–Frank Wall Street Reform and Consumer Protection Act.

    "Bureaucratic red tape and Washington mandates are not the answer" to improving the financial system, the team said Thursday on its website.


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