Market News 7-4

(JPM on Syria) Initial indications coming out of the WH and Pentagon suggest the Tomahawk missiles are a discrete action and not the start of a broader campaign.
(JPM on macro) The single most important determinant for the SPX in the near-term remains the direction of TSYs (both absolute yields and the shape of the curve) as investors look to this as a gauge for nominal growth – the TSY rally from Wed didn’t continue on Thurs but yields didn’t rise either and until they do (in conjunction w/a steeper curve) the SPX will likely continue to struggle. Taking a step back, investors are still debating the same issues/themes/questions – can the multi-Q nominal growth improvement persist (the Mar auto sales were a red flag but other data suggests ongoing strength), will the qualitative tone from mgmt. teams on upcoming Q1 calls sound more cautious vs. Jan.
(WSJ) Movement to raise the minimum wage hits resistance – after waves of recent minimum wage increases, some state and local governments are beginning to resist the push for higher hourly pay. Some in the gov’t are growing worried that pushing minimum wages higher will discourage hiring and encourage automation.
(WSJ) A loos at the evolution of the US workforce over the last few decades; in a major shift, Americans are now more likely to work for a large employer instead of a smaller one.
(Bloomberg) Trump is preparing to issue an executive order that would expand offshore oil drilling.
(Bloomberg) — Investors have reacted to the Federal Reserve’s plan to shrink the balance sheet so far in exactly the opposite way that policy makers had feared. News about the U.S. central bank’s strategy to start reducing its bond holdings, which began taking shape over the past week, has actually led to easier financial conditions via lower interest rates. That contrasts with the surge in Treasury yields that occurred during the so-called “taper tantrum” of 2013, when then-Fed Chairman Ben Bernanke hinted the central bank would reduce its purchases of Treasuries and mortgage-backed securities that were designed to bring down long-term interest rates.
(Bloomberg) — Two of Wall Street’s most influential CEOs — Larry Fink andJamie Dimon — are raising warning flags over the nation’s economy. BlackRock Inc.’s Fink said Thursday that U.S. growth is slowing on concern whether the Trump administration’s agenda will get through Congress. Dimon lamented that “it is clear that something is wrong” with the nation in a letter to investors Tuesday. Both CEOs are part of a group of business leaders that advise President Donald Trump. Larry Fink “There’s a greater worry that these proposed changes are going to be harder and harder to execute,” said Fink, speaking on CNBC Thursday. “You’re seeing a slowing down of our economy.” Fink said the U.S. may be the slowest-growing economy in the first quarter among the G-7 nations. Japan, Canada and Europe are expanding faster than anticipated six months ago while the U.S. is lagging expectations. Without tax reform and deregulation, he said, the markets will suffer setbacks. Dimon used his 45-page annual letter to list ways America is stronger than ever — before jumping into a much longer list of problems. Since the turn of the century, the U.S. has dumped trillions of dollars into wars, piled huge debt onto students and forced legions of foreigners to leave after getting advanced degrees, he said in the letter. He called for infrastructure investment and reducing corporate taxes.

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