Let’s All Go To The Movies

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DOW + 112 = 19,912
SPX + 14 = 2280
NAS + 48 = 5600
RUT + 21 = 1369
10Y + .07 = 2.47%
OIL + .31 = 53.06
GOLD – 8.90 = 1209.80

The S&P 500 and Nasdaq set record highs.

It was a busy first day for President Trump. Here are some of the highlights: Withdrew from TPP, promised to renegotiate NAFTA, placed a hiring freeze on federal employees, discussed slashing business regulations by 75%, reinstated the Mexico City policy on banning foreign aid groups from providing abortion counseling and vowed to stop the seizure of South China Sea islands. Trump had breakfast today with the heads of GM, Ford (F) and Fiat Chrysler (FCAU), as he pressures the Big Three car-makers to boost U.S. employment.

Australia has called for the Trans-Pacific Partnership to go ahead without the U.S. following President Trump’s withdrawal from the 12-nation trade agreement. China’s foreign ministry declined to say whether Beijing would consider any invitation to join the TPP, but a spokesperson instead cited rival trade pacts.

President Trump signed two orders today to move forward with construction of the Keystone XL and Dakota Access pipelines. Trump campaigned on promises to increase domestic energy industry production and before taking office indicated he supported completion of the Dakota pipeline and revival of the Keystone XL project.

Environmental activists broadly opposed the Keystone XL pipeline and campaigned against it for more than seven years. Shares of ETP, the company building the 450,000 barrel-a-day Dakota line, rose 3.5 percent. Trump owned ETP stock through at least mid-2016, per financial disclosure forms, and ETP’s chief executive, Kelcy Warren, donated $100,000 to his campaign. U.S. Energy Secretary nominee Rick Perry was until recently on ETP’s board.

Coincidentally, the Canadian government today reported a pipeline spill in the western Canadian province of Saskatchewan has leaked about 52,000 gallons of oil. The spill came seven months after another major incident in Saskatchewan, in which a Husky Energy Inc (HUSKF) pipeline leaked 60,000 gallons into a major river and cut off the drinking water supply for two cities.

Trump’s administration has also asked the Environmental Protection Agency to temporarily halt all contracts, grants and interagency agreements pending a review.

Rex Tillerson has been cleared by the Foreign Relations CommitteePresident Trump’s pick for secretary of state received backing with an 11-10 vote along party lines that “all but assures Senate confirmation,” according to the Associated Press. Meanwhile, the Senate confirmed Representative Mike Pompeo as President Donald Trump’s CIA director.  A U.S. Senate committee swiftly approved Wilbur Ross,Trump’s nominees for commerce, and Elaine Chao for transportation secretary by voice vote, signaling that they will face little resistance to approval by the full Senate.

On Jan. 11, Tillerson said China should not be allowed access to islands it has built in the contested South China Sea. Today, China responded, saying it had “irrefutable” sovereignty over disputed islands in the South China Sea after the White House vowed to defend “international territories” in the strategic waterway.

China claims most of the South China Sea, while Taiwan, Malaysia, Vietnam, the Philippines and Brunei claims parts of the sea that commands strategic sea-lanes and has rich fishing grounds along with oil and gas deposits. China’s Foreign Ministry spokeswoman said “the United States is not a party to the South China Sea dispute”.

White House press secretary Sean Spicer met the press again today, hilarity ensued. Spicer says Trump will announce a pick for the Supreme Court next week. Spicer confirmed that President Trump believes millions of people voted illegally in November’s election, despite a total absence of evidence to support this view.

The dollar slumped to the weakest level in six weeks yesterday after U.S. Treasury Secretary nominee Steven Mnuchin said an “excessively strong dollar” could have a negative short-term effect on the economy. The Dollar Index has reversed those declines this morning, moving back above 100.

The UK government lost its Article 50 caseThe decision handed down by the UK’s top court says the government must receive parliamentary approval before it can trigger Article 50, the mechanism that would begin the UK’s exit from the European Union.

The proposed merger of health insurers Aetna and Humana has been blocked on antitrust grounds. A federal judge said the tie up would threaten competition and would’ve resulted in higher prices and reduced services for seniors who buy Medicare Advantage. Aetna will owe Humana a $1 billion breakup fee.

You may recall that Aetna threatened the government last summer with pulling out of 11 of the 15 states where it participated in the Obamacare individual insurance markets, claiming it was a “business decision.” The threat was made while the Department of Justice was investigating the merger but before it filed its antitrust lawsuit. After the lawsuit was filed, Aetna followed through on its threat.

However, in an opinion on the case, the judge wrote that it wasn’t just a “business decision”, there was more to it: “Aetna tried to leverage its participation in the exchanges for favorable treatment from DOJ regarding the proposed merger.” Aetna then tried to cover up that connection between the threat to pull out of those markets and the antitrust investigation to the point where the “repeated efforts to conceal a paper trail about the decision-making process” bordered on “malfeasance,” he wrote.

US District Judge Bates determined that there was “persuasive evidence that when Aetna later withdrew from the 17 counties, it did not do so for business reasons, but instead to follow through on the threat that it made earlier.”

There is still a lot of uncertainty about the impact the Trump administration’s trade and business policies will have on the economy and markets. But all this was backdrop for earnings reports, which were pouring in throughout the session. Earnings are coming in generally better than expected.

Profits of S&P 500 companies are estimated to have risen 6.7 percent in the latest quarter, marking the strongest growth in two years. The S&P 500 is trading at about 17 times forward 12-month earnings, compared with the 10-year median of 14.2.

Powered by strong chip and display panel sales, Samsung Electronics’ (SSNLF) operating profit jumped 50% to $7.9 billion in the fourth quarter, helping the company bounce back from its costly Note 7 debacle.

BT Group (BT) saw its stock drop as much as 19 percent this morning – wiping out $9 billion in market cap – after the company cut its outlook for the coming years and revealed “inappropriate behavior” in its Italian unit had forced a tripling of provisions for losses there.

DuPont reported fourth quarter earnings beat estimates, while revenue missed estimates. DuPont also said it expected its merger with Dow Chemical (DOW) to close during the first half of the year.

Verizon (VZ) missed earnings estimates by 3 cents a share. Revenue beat Street forecasts. Verizon saw year-over-year revenue fall 5.6 percent as it added far fewer wireless subscribers than analysts had expected.

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