Time Waits For No One

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DOW + 5 = 21,012
SPX + 0.09 = 2399 (record)
NAS + 1 = 6102 (record)
RUT – 5 = 1391
10 Y + .02 = 2.38%
OIL + .28 = 46.50
GOLD – 1.90 = 1227.00

Emmanuel Macron defeated Marine Le Pen in France’s presidential election. The euro fell from six-month highs against the dollar in what looks like a “sell the news” reaction.

The dollar rose with Treasury yields on confirmation of Macron’s widely expected victory. The CBOE Volatility Index dropped to 9.77, marking its lowest close since 1993. The S&P 500 and the Nasdaq Composite traded at new intraday record highs. Macron won by a margin of 66 percent to 34 percent.

The rise of Le Pen’s National Front and France’s persistent economic and industrial problems made this campaign a referendum on Europe and globalization. Macron repeated that the big divide was between those who see an open economy as an opportunity and those who, like Le Pen, seem to fear the challenges it offers.

Macron’s decisive triumph over the anti-euro Marine Le Pen will likely strengthen the EU and deal a blow to the populist wave that has roiled western democracies for the past year.

On assuming office next Sunday as France’s youngest leader since Napoleon, the 39-year-old Macron faces the immediate challenge of securing a majority in next month’s parliamentary election to have a realistic chance of implementing his plans for lower state spending, higher investment and reform of the tax, labor and pension systems.

With the two mainstream parties – the conservative Republicans and the left-wing Socialists – both failing to reach the presidential runoff, his chances of winning a majority that supports his election pledges will depend on him widening his centrist base. Macro’s toughest task may be keeping the Euro Union intact.

The largest global banks in London plan to move about 9,000 jobs to the continent in the next two years. Thirteen major banks including Goldman Sachs (GS), UBS, and Citigroup (C) have given an indication of how they would bulk up their operations in Europe to secure market access to the European Union’s single market when Britain leaves the bloc.

Last week Standard Chartered and JPMorgan were the latest banks to outline plans for their European operations after Brexit. Talks with financial authorities in Europe have been underway for several months, but banks are increasingly firming up plans to move staff and operations.

Demand for bank loans from commercial and industrial firms was weaker in the first quarter. The Federal Reserve survey of senior loan officers showed standards for loans were basically unchanged. The officers said that they continued to tighten standards for commercial real estate, a process that economists said started in late 2015. Many officers cited regulatory reasons for tightening commercial real estate standards. There was also weaker demand for auto loans and credit cards.

The Arizona Regional Multiple Listing Service (ARMLS) reports that overall sales in in the Phoenix market April were up 4.5% year-over-year.Cash Sales (frequently investors) were down to 22.5% of total sales. Active inventory is now down 11.0% year-over-year.  This is the sixth consecutive month with a YoY decrease in inventory following eight months with YoY increases. Supply and demand formulas would indicate higher prices.

Black Knight Financial Services reported that in the fourth quarter of 2016, 44% of refinances were cash-outs. The housing ATM is now back in working order. This percentage was the highest level of cash-outs in the last eight years.What was happening eight years ago?

Straight Path surged more than 30 percent after an unnamed telecommunications company (possibly Verizon) raised its offer to buy the wireless spectrum holder for about $3.1 billion, topping a bid by AT&T (T).

Tyson Foods (TSN) was the biggest S&P loser, down nearly 6 percent after the meat processor reported a slump in quarterly profit.

Sinclair Broadcast Group (SBGI) said it would buy Tribune Media (TRCO), one of the largest U.S. television station operators, for about $3.9 billion cash and stock, and assume about $2.7 billion in debt. The $43.50 per share offer represents a nearly 8 percent premium to Tribune’s Friday close. Tribune operates 42 television stations in 33 markets.

Handbag maker Coach (COH) said it would buy Kate Spade (KATE) for $2.4 billion as it looks to tap the popularity of its smaller rival’s quirky satchels and totes among millennials. The $18.50 per share offer in cash represents a premium of 9 percent to Kate Spade’s Friday close.

Amazon (AMZN) has a knack for making simple hardware popular. First, it was the humble e-reader. Now, it’s the voice-controlled speaker. Amazon holds a 70% market share in the new category, which it invented with the Amazon Echo in 2014, according to research from eMarketer.

The report says Google (GOOGL) holds a 23% market share but may be poised to take more of the market in 2017. Researchers say 60 million Americans will use Amazon’s Alexa, Google Now, Microsoft’s Cortana, or Apple’s Siri at least once per month in 2017. For Amazon, this is great news.

The company has recently begun a campaign to make Alexa synonymous with voice assistants: Other developers can now use Alexa in their own applications, and the virtual personal assistant was shoe-horned into dozens of products on display at this year’s Consumer Electronics Show.

Amazon’s market share in voice-controlled speakers mirrors its success in another business, e-books. After killing off the competition from physical book stores like Borders, Amazon now enjoys a 74% share of the e-book market.

The Ira Sohn Conference is different things to different people. For young hedge-fund strivers, it’s high-priced networking. For the old guard, it’s a good show for a good cause. And for the hedge-fund presenters, the annual confab serves as a sort of debutante’s ball for new investment theses, a highly orchestrated and ritualized setting in which to trot out your most darling idea, primped and permed for the admiring gaze of the investing public.

Bill Ackman, Pershing Square, dragged one of his oldest investments out of the basement, threw a shiny new bow on top and presented it as if it were fresh goods. Ackman pimped Howard Hughes Corporation, a position he has held since its 2010 split from General Growth Properties. And it worked to the tune of a 4.5% gain today.

Meanwhile, Doubleline Capital’s Jeff Gundlach’s Sohn 2017 investment these: long emerging markets, short the S&P 500 (an actively managed index, Gundlach reminded us), and leverage it all once over. So, Jeff Gundlach wins Sohn 2017.

This weekend also marked a slightly more bourgeois shindig, the 2017 edition of the Berkshire Hathaway (BRK-A, BRK-B)annual shareholder meeting. Much of the discussion centered around the advanced ages of Warren Buffett and Charlie Munger; Warren is 86 and Charlie is 93. Both seemed to acknowledge that time waits for no one.

Buffet said he would continue to run Berkshire until he is buried in the ground. Charlie looks more and more like Yoda with each passing year. Charlie Munger said the Chinese stock market is cheaper than the American stock market. Charlie also says that single-payer healthcare is the answer to fix the nation’s healthcare system woes.

Mr. Buffett said, “The tax system is not crippling our business around the world.” A specter much more sinister than corporate taxes is looming over American businesses: health care costs. And chief executives who have been maniacally focused on seeking relief from their tax bills would be smart to shift their attention to these costs, which are swelling and swallowing their profits.

Warren riffed on his misses as much as his hits. The investing legends twice talked about their failure to invest in Amazon despite having high praise for CEO Jeff Bezos. The Berkshire executives issued a mea culpa on missing out on Walmart and Google. Buffett called missing out on the two growth stories his “worst mistake” and told the nearly 40,000 assembled that he “blew it.” Buffet admitted he was disappointed with IBM, and he has dumped about one-third of his position recently.

Buffett has defended the Brazilian buyout house with which he attempted to take over Unilever, by saying 3G was only following a “standard capitalist” stance to doing business by slashing costs and cutting staff. He also acknowledged, though, that cutting jobs can be a “painful process”.

It wasn’t all bad news. Berkshire’s net worth increased by $27 billion last year, and the conglomerate has $86 billion of cash on hand. Berkshire Hathaway disclosed it more than doubled its stake in Apple during the first quarter. The stock hit an all-time intraday high and Apple’s (AAPL) market capitalization topped $800 billion.

The good news for Americans: life expectancy in the US increased more than five years from 1980 to 2014, up to 79.1 years. The bad news for Americans: your actual life expectancy could vary by more than 20 years depending on where in the US you happened to be born.

University of Washington researchers reported in a study published today that the life expectancy from birth in the US varies from 67 years in Oglala Lakota County, South Dakota to 87 years in Summit County, Colorado. Counties with lower life expectancies tended to have higher rates of health conditions like obesity and diabetes, higher poverty rates, and higher proportions of minority residents.

In 13 counties across the U.S., Americans can now expect to die younger than their parents did. And the eight counties with the largest declines in life expectancy since 1980 are all in the state of Kentucky.

Globally, the US ranks 42nd in average life expectancy; Monaco has the longest, at 89.5 years, and Japan and Singapore tied for second with an average longevity of 85 years.

Disclosure: None. 

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