ABRAHAM GULKOWITZabe@gulkowitz.com917-402-9039

2017 issue 1January 9, 2017

Lift Off ?The promise of Donald Trump's extraordinary election and new prospects of corporate tax cuts and other initiatives and reforms have turnedsentiment around in financial markets and in all confidence indicators. Consumer confidence is at its highest in 15 years, for example. After anastonishing campaign and election, markets have moved decisively to bet on a new spurt of growth, centered mainly in the U.S. This majorshift goes beyond new found optimism but offers up the hope of a significant demolishing of the old political array. Indeed, it is easy to argueaccordingly that a major risk stems from the new administration not making evident progress on its agenda by mid-year. As a result, bondyields have become a key focal point. One can envision an expansion of fiscal policy and the normalization of monetary policy. Indeed, it maysignal the end of the largest monetary experiment in history, at least for the U.S. Whether this transition is smooth or rocky will become adominant issue for 2017. Despite the current applause from financial markets, it is hard to interpret some of the key economic and politicalevents of 2016 as being singularly upbeat. It is difficult to script the UK’s vote to leave Europe or the amazing election of Donald Trump asmaking the world more predictable. Add in severe geopolitical considerations, the headlines out of China centered on fx issues, capital flightand the country’s high levels of debt and you have to wonder whether a straight-line run makes sense even in the world of Trump.

China’s sovereign bonds extended losses sending the 10-year yield to a 16-month high, on speculation the central bank’s efforts to tighten up onwealth-management products will exacerbate a debt selloff. The yield ongovernment securities maturing in November 2026 rose 10 basis points(bps) to 3.5 percent. That’s the highest for the similar-maturity benchmarksince August 2015. China’s bond market tumbled last week with tighterliquidity triggering a rout that sparked a chain reaction among banks, mutualfunds and brokerages as losses spread.

The U.S. dollar rose toa fresh 14-year high

The recent jump in mortgage rates could restrain homebuying activity headed into 2017

Americans are more confident in the economythan at any point in 12 years, according to aclosely followed survey that showed highexpectations for growth during the new Trumpadministration.

A jump in consumer spending in the final stretch of December significantly offset a slow start to the U.S. holiday shopping season, and is likely to help many retailers beat sales forecasts, industry research groups said

Re‐Energized Dollar Looms Over the Rest of the World Emerging-market companies and governments that have borrowed heavily in the U.S. currency will find their debt more difficult to service.

Samsung, Hyundai Motor see growing business uncertainties in their sectors

This may be the largest transition ideologically and in terms of substantive policy that we’ve seen in the U.S. in our lifetimes…

Offshore Yuan Soars Most In One Year On Fears Of Capital Controls

Growth in U.S. manufacturing activity accelerated bymore than anticipated in the month of December,according to a report released by the Institute forSupply Management. The ISM said its purchasingmanagers index climbed to 54.7 in December from53.2 in November, with a reading above 50 indicatinggrowth in the manufacturing sector.

Ford announces shift from Mexico expansion to US based e-car expansion

The U.S. economy likely grew at a 2.9 percent annualized pace in thefourth quarter following the latest data on inventory, spending,investments and net exports, the Atlanta Federal Reserve's GDP Nowforecast model showed on Tuesday. The latest fourth‐quarter grossdomestic product (GDP) estimate was higher than the 2.5 percent growthrate calculated on Dec. 22, the Atlanta Fed said on its website.

U.S. LIBOR breaks above 1 percent for first time since 2009

Extra Libya Production Constrains Oil Price Increase

US wage growth accelerated last month to thequickest pace since 2009, underscoring risinginflationary pressures

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January 9, 2017

In This Issue

Headlines and data appearing in The Punch Line came from widely available publications including national and international newspapers, trade journals, economic and industrial bulletins and news websites.

• Engines of GrowthThe U.S. is facing a revolution… a repudiation of key fiscal, trade, economicand regulatory assumptions. We will continue to monitor the outlook for thisseismic shift. Weak world trade, along with high debt levels and policylimitations, continue to cloud the global economic outlook. Despite extensiveand massive easing, most of the global economy still faces woefullyinadequate growth prospects and difficult policy options. The U.S. stands alonein the shift in monetary policy and the improvement in job markets. Veryobvious financial vulnerabilities and serious geopolitical concerns areaggravating the uncertainty. And let’s not forget that many of the challengesare not fleeting, and many cannot be resolved easily or quickly…

(pg 10)

• Direction Hints… (pg 11)

• The Likelihood of Unlikely Events... (pg 12)

• The Market Roar… (pg 13)

• Dislocation, Dislocation (pg 14)

• Credit… (pg 15)

• The DNA of Business… (pg 16)

• Real Estate and Construction… (pg 17)

• Will Life Ever be the Same? (pg 18)

• Liftoff?The promise of Donald Trump's extraordinary election and new prospects ofcorporate tax cuts and other initiatives and reforms have turned sentimentaround in financial markets and in all confidence indicators. Consumerconfidence is at its highest in 15 years, for example. After an astonishingcampaign and election, markets have moved decisively to bet on a new spurtof growth, centered mainly in the U.S. This major shift goes beyond newfound optimism but offers up the hope of a significant demolishing of the oldpolitical array. Indeed, it is easy to argue accordingly that a major risk stemsfrom the new administration not making evident progress on its agenda bymid-year. As a result, bond yields have become a key focal point. One canenvision an expansion of fiscal policy and the normalization of monetarypolicy. Indeed, it may signal the end of the largest monetary experiment inhistory, at least for the U.S. Whether this transition is smooth or rocky willbecome a dominant issue for 2017. Despite the current applause fromfinancial markets, it is hard to interpret some of the key economic and politicalevents of 2016 as being singularly upbeat. It is difficult to script the UK’s voteto leave Europe or the amazing election of Donald Trump as making theworld more predictable. Add in severe geopolitical considerations, theheadlines out of China centered on fx issues, capital flight and the country’shigh levels of debt and you have to wonder whether a straight-line run makessense even in the world of Trump. (pg 1)

• In This Issue (pg 2)

• A Trump Bump … pg 3)

• U.S. Job Growth… (pg 4)

• You Can’t Handle the Truth ! (pg 5)

• The Future… (pg 6)

• Careful Reading (pg 7)

• Households…. (pg 8)

• How Do You Figure? (pg 9)

Contact information:

Abraham Gulkowitz

phone: 917-402-9039 email:   abe@gulkowitz.com

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January 9, 2017

A Trump Bump

U.S. Consumer Confidence Climbedto Highest Level Since 2001After reporting a significant improvement in U.S.consumer confidence in the previous month, theConference Board released a report on Tuesdayshowing that consumer confidence continued toimprove in the month of December. TheConference Board said its consumer confidenceindex jumped to 113.7 in December from anupwardly revised 109.4 in November."Consumer Confidence improved further inDecember, due solely to increasing Expectationswhich hit a 13-year high," said Lynn Franco,Director of Economic Indicators at The ConferenceBoard.The report said the expectations index surged up to105.5 in December from 94.4 in November, reachingits highest level since December of 2003.Consumers expecting business conditions toimprove over the next six months jumped to 23.6percent from 16.4 percent, while those expectingbusiness conditions to worsen dipped to 8.7 percentfrom 9.9 percent. The outlook for the labor marketalso improved markedly, as consumers expectingmore jobs in the months ahead increased to 21.0percent from 16.1.

All of a sudden everyone is raising outlook for growth, inflation - - here and overseas

Fed to counter Trump…U.S. government debt yields are on the riseas investors priced in more interest ratehikes. The Federal Reserve's Decemberminutes showed President-elect DonaldTrump's proposals to stimulate growth maytrigger inflationary pressures. The CentralBank may have to raise rates at a fasterpace to counter these price pressures.

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January 9, 2017

U.S. Job GrowthJob growth still so-so…. But wages areheating up. Average hourly earnings grew0.4% month-over-month, which was betterthan the 0.3% expected. It was also asignificant improvement from the 0.1%decline in November.

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January 9, 2017

YouCan’t Handle the Truth…Let's Take the “Con” out of Economics

The new outlook for Fed rate hikes sparked a globalbond sell-off that has seen seven consecutive weeks ofoutflows and around $3 trillion wiped off the value ofthe tradable market since the start of November

California's birthrate falls to its lowest level on recordCalifornia’s birthrate dropped to its lowest level ever in 2016,according to data released by the state’s Department of Finance.Between July 2015 and July of this year, there were 12.42 births per 1,000Californians, the agency said this week. The last time the birthrate cameclose to being that low was during the Great Depression, when it hit 12.6per 1,000 in 1933. But, unlike after the Depression, birthrates haven’tbounced back quickly as the economy has picked up.California has been experiencing a years‐long downward trend that likelystems from the recession, a drop in teenage pregnancies and an increasein people attending college and taking longer to graduate, thereforeputting off having children, said Walter Schwarm, a demographer at theDepartment of Finance. When people do complete their schooling,they’re interested in taking some time to pursue their careers or othergoals, he said.

Second largest union in US rethinks budgets… after electionSEIU, which represents nearly 2 million government, health-care, and building-services workers and wields an annual budget of $300 million, is the nation’ssecond-largest union and arguably the most politically significant. In the past fewyears, SEIU has mounted organized labor’s most effective political intervention withthe “Fight for $15,” a campaign that’s dragged Democrats—from city councilmembers to presidential candidates—further left on the minimum wage. At the sametime, it cultivated close ties with President Obama, played a key role in passingObamacare, and worked hard to elect Hillary Clinton.

Recent pickup in eurozone growth stats and inflation present ECB with dilemmaIncrease to 1.1% inflation revives calls for policy shift but analysts say region’s economy still weak

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January 9, 2017

The Future Ain’t What It Used To Be

At one time, it was emerging geographies that offered thegreatest disruption… One major disruption is underway inthe auto sector… four disruptive technology-driventrends in the automotive sector: diverse mobility,autonomous driving, electrification, and connectivity.

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January 9, 2017

Careful Reading

Manufacturing companies in China reported the strongest upturn in operating conditions since January 2013 at the end of 2016

China's choices narrowing as it burns through FX reserves to support yuanAs China's foreign exchange reserves threaten to tumble below the critical $3trillion mark, the biggest fear for investors is not whether Beijing can continue todefend the yuan but whether it will set off a vicious cycle of more outflows andcurrency depreciation.China's central bank raised the daily reference rate of the yuan by the mostsince mid 2005 on Friday, causing the overnight borrowing costs to jump… ThePeople's Bank of China fixed the yuan reference rate at 6.8668 against the U.S.dollar, versus 6.9307 on Thursday. According to Thomson Reuters data, this 0.9percent change was the biggest since 2005. The central bank last week said it isset to tighten the supervision on cash transactions and overseas transfers.

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January 9, 2017

Households – Brave New World

More than 60 million tourists visited New York in 2016, the most ever,attracted by the Statue of Liberty, the 9/11 Memorial, Broadway shows andfour-star restaurants.The number of tourists from across the United States and around the worldexceeded forecasts, city tourism officials said on Monday, and topped lastyear's record by 1.8 million."The iconic attractions are always a big draw," said Fred Dixon, president andchief executive of NYC & Company, the city's official destination marketingorganization. "These are the hallmarks of a New York City visit, especially forthe first-time visitor."The city's signature landmarks, including the Empire State Building andCentral Park, remain high on the list of must-sees, but lower Manhattan hasbecome a big draw for tourists as well.Tourists are eager to pay their respects at the 9/11 Memorial and Museum inthe Financial District, peruse the exhibits at the new Whitney Museum ofAmerican Art and take a stroll on the High Line on the west side of Manhattan.Many visitors are also venturing out of Manhattan to the so-called outerboroughs, Brooklyn, Queens, Staten Island and the Bronx, in search off-beatattractions and restaurants - trips that would have been inconceivable 40 yearsago, when the city fell to a financial and crime-ridden nadir.

Existing condominium and co-op salesjumped 10.0 percent to a seasonally adjustedannual rate of 660,000 units in November,and are now running 10.0 percent above ayear ago. The median existing condo pricewas $222,600 in November, which is 5.8percent above a year ago.

New U.S. single-family home sales rose more than forecast to a four-month high in November, likely as expectations of higher mortgagerates drew buyers into the market. Other data on Friday showedconsumer sentiment holding at near a 13-year high this month asAmericans anticipated that a stronger economy would create more jobs.The Commerce Department said new home sales increased 5.2 percentto a seasonally adjusted annual rate of 592,000 units last month.

U.S. auto sales rose 0.4 percent in 2016 and set an annual record high of 17.465 million vehicles, from 17.396 million in 2015, WardsAuto reported… December = 18.29 million SAAR

2016 12 = 18.3

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January 9, 2017

How Do You Figure?

China's crackdown on exhaust-spewing factories that shut orslashed output this week at sites including steel mills, textile andcement factories and coal-fired power plants will ripple acrossmajor bulk commodity markets into 2017.City and regional governments shut thousands of plants in China's industrialheartland, from Hebei province that surrounds Beijing to Shandong southeast of thecapital, to combat smog that blanketed the country's north for five days this week.Many plants reopened on Thursday as winds cleared the polluted air.But closures on this scale could put the brakes on China's better-than-expectedoutput of major commodities, hurt demand for raw materials, like iron ore and coal,clog global supply chains and get business for the world's second-largest economyoff to a subdued start in 2017.

Britons are holding onto their cash ina sign that they may be hunkeringdown in the face of economicuncertainties, according to the BritishBankers Association.Personal deposits grew an annual 4.8percent in November, data compiledby the BBA show. They increased by32.4 billion pounds ($39.7 billion) inthe first 11 months of the year,outstripping the 19.8 billion-poundgrowth in the same period of 2015.British investors and savers wereshaken by the June decision to leavethe European Union, which promptedthe Bank of England to cut interestrates to a record-low 0.25 percent.While the economy has held up wellso far, most economists foresee aslowdown in 2017 as businesses seekmore clarity on the nation’s futurerelationship with the world’s largesttrading bloc.

ASEAN Manufacturing PMI deteriorates at steepest pace since November 2015 …  accompanied by intensifying inflation  ► Both output and new export sales decline at quicker rates► Aside from bridges, roads, railways and airports, investment 

is needed in telecommunications and computing. 

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January 9, 2017

Engines of Growth…

China, Russia Hit With 5-Year EU Anti-Dumping Tariffs on SteelChina’s government bonds plunged as a sliding yuanand hawkish comments from the Fed hamperedexpectations of further monetary easing in the country.These factors are converging with other negatives,including rising inflation, accelerating capitaloutflows, tightening money markets, and heightenedgovernment concern about asset bubbles. Thisintensified investors’ concern that a long, credit fueledbull market was coming to an end.

Emerging Assets Tumble as Fed Ushers in Tighter Financing Era

Russia Retail Sales Drop 4.1% YoY In November Retail sales in Russia decreased 4.1 percent year-on-year in November of 2016,following a downwardly revised 4.2 percent drop in the previous month andworse than market expectations of 4 percent slump. Sales declined at a slowerpace for food (-5.1 percent from -5.3 percent in October) while fell more for non-food (-3.2 percent from -3.1 percent in October). On a monthly basis, retail tradewent down 0.9 percent.

Switzerland's watch exports declined in November,data from the Federation of the Swiss Watch IndustryFH showed…Exports decreased 5.6 percent year‐on‐year to CHF1.86 billion in November. The decline was drivenagain by precious metal watches. The main marketswere down overall in November. Watch industryexports to Hong Kong remained practically stable. Onthe other hand, the United States registered one of itsworst results of the year after March.

China house price growth slows as lending curbs take hold

Measures to cool overheated real estate market appear to be having an impact

Stimulus and Property Sales Keep China Growing

GLOBAL DISORDER: terror attacks, Brexit and Syria, Trump Revolt

China policymakers are counting on growth in the services sector to helpcounter the ill effects of the restructuring while weak global demand andpersistent weakness in exports drag on the world's second-largest economy. Asthe economy's old growth drivers lose momentum, the new ones are still not robust enough tosubstitute them, which is the biggest problem for China's economy at present, said HuangYiping, a member of the central bank monetary policy committee. "Reforms should targetfacilitating economic restructuring and eliminating 'old capacity' from the market," he toldXinhua in an interview published recently… Separately, Huang also said that as more Chineseresidents look overseas to diversify their investment portfolios, capital outflows will "last for acertain period".► China's manufacturing sector expanded for a fifth month in December, but growth slowed

a touch more than expected in a sign that government measures to rein in soaring assetprices are starting to have a knock‐on effect on the broader economy.

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January 9, 2017

Direction Hints

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January 9, 2017

The Likelihood of Unlikely EventsUncertainty is Widely Misunderstood…

Global Disorder Cyber Risk Focus Rising for Corporates and GovernmentsThe need for cybersecurity is increasing as interconnectivity and technology progress► United Kingdom to strengthen cybersecurity

nationally … The UK has published its new five-year plan for cybersecurity in 2016-21

► Yahoo sets hack record at 1 billion accounts

The United States received failing scores for itsefforts to prevent the laundering of criminalproceeds by shell companies, accountants and realestate agents, the Financial Action Task Force(FATF) said in a report released

Yahoo! Hack Shows U.S. is Headed for a 'Cyber Pearl Harbor'

House price growth in London has slowed to the lowest rate in more than three years, according to research. A report by property market analysts Hometrack found that the rate ofhouse price growth in the 12 months to November in the capital fell to7.6pc, the lowest level for 39 months, and far below the same periodlast year, when growth was at 11.8pc.

China orders roads and factories to be closed as it chokes under toxic smog and warns that it’s likely get WORSE ⁕ 23 cities in the world's most populous nation have issued red alerts for pollution⁕ Worst air pollution this year shuts schools and delays deliveries⁕ Chinese malls entice shoppers by pledging respite from smog

Italy’s new government is unlikely to last longThe new prime minister will ensure stability in the short term, but early elections are likely

Geopolitical stress will be widespread as the world reconsiders its options on key stress points….

Foreign Exodus From Treasuries May Put Damper on Any Rally

Britain’s exit talks are in disarrayafter Sir Ivan Rogers, one of theUK’s top negotiators, stepped down

China’s Debt Boom Looks Eerily FamiliarThe IMF says Beijing must act with urgency to fix the problem before it becomes too late

Speculative Money Fueling Oil Rally

Trump and Russia: Expect a change in tone, but in substance?

China’s forex reserves continued to fall in DecemberPressure on the renminbi continues as Chinese seek to get money out of the country 

Germany's domestic security chief warned Sundaythat the country's radical Islamist scene is not onlygrowing, but becoming more decentralized, posinggreater challenges to surveillance operations.

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January 9, 2017

The Market Roar… History May Not Repeat, But It Often Rhymes

Forget about Dow 20K: Bitcoin's about to hit $1,000Digital currency Bitcoin has seen its value top $1,000 (£815) for the first time in three years after itended as the best-performing currency of 2016. Bitcoin has seen a volatile 2016 amid uncertaintysurrounding the Brexit vote in June and the US presidential election in November. Thecryptocurrency rallied from $432 at the start of the year to more than $750 in the days ahead of theUK's vote to leave the European Union, but it fell back below $500 in August as traders digestedthe outcome. But bitcoin has gained 92.5% since then, with a good portion of that (~30%) comingsince the US election. The cryptocurrency had tumbled to below $200 in early 2015 following thecollapse of MtGox and other bitcoin exchanges. Bitcoin has only briefly traded over $1,000, andthat was in late 2013. Bitcoin believers warn of bubble after

‘wild west’ currency doubles in value

Digital currency bitcoin fell more than 20percent in the space of four hours of tradingon Thursday, putting it on track for its worstdaily performance in nearly two years.

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January 9, 2017

Germany 10Y still running at about 0.25. Historically,the Germany Government Bond 10Y reached an alltime high of 10.80 in September of 1981 and a recordlow of -0.19 in July of 2016.

Mexico braced for malaise as cloud hangs over NAFTARenegotiating trade deal will bring risk of slower growth if not recession, warn analysts

The Organization of Petroleum Exporting Countries and non-OPEC membersover the past few weeks agreed to lower output by almost 1.8 million barrels perday (bpd) from Jan. 1. While major OPEC producers including Saudi Arabia andIraq have told customers that supply will be cut in line with the OPEC deal,Libya and Nigeria are exempt because conflict has already curbed their output.Libya's National Oil Corp hopes to add 270,000 bpd to national production overthe next three months after announcing on Tuesday the reopening of pipelinesleading from two major fields, Sharara and El Feel.

Shinzo Abe’s visit to Pearl Harbor comes at time of Asia uncertainty

Mexicans face new year shock at petrol pumpsPrice rises set to add to grim economic outlook for consumers in 2017

Switzerland moves further to end bank secrecyPlanned deal with US underlines shift away from reputation as tax haven

Mexico’s currency reached a fresh record low against the dollar on Wednesday onconcerns U.S. President-elect’s proposed policies will hurt the country’s economy.The peso fell about 1.5 percent versus the dollar to 21.4750, extending losses to morethan 3 percent in two days. On Tuesday, U.S. car marker Ford cancelled a planned$1.6 billion factory in Mexico following criticism from President-elect DonaldTrump. The Mexican peso was also weighed down by fears over inflations stirred bya major fuel price hike that took effect on January 1st.

Dislocation, Dislocation, Dislocation

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January 9, 2017

France's top lenders are suing the European Central Bankto get an exemption from holding capital against depositsparked with a state-owned fund, the most high-profilechallenge to supervision from Frankfurt to date.

Prices for government and corporate bonds in China havetumbled, spooking investors and prompting the government totemporarily restrain some trading and make emergency loans tostruggling financial institutions. A healthy bond market is crucial toChina’s restructuring plans: The country has been relying on it to bring marketdiscipline to the economy. Chinese companies need the money to cope with aslowdown in growth, but the price drops and rising yields have pushed borrowingcosts higher. And there could be more to come. “The adjustment has not yetfinished,” said Miao Zuoxing, a partner at the FXM Brothers Fund, in Shanghai. “Itwill continue and normalize until money is put where the government can see it.”The CBOE Volatility Index (VIX), often called Wall

Street’s fear gauge as it tracks demand for protectionagainst equity price swings, fell below 11 for the first timesince August 2015 … . Typically, a low VIX suggest thatinvestors are feeling content with current stock levels.The VIX index has tumbled from as high as 23 in the daysprior to the U.S. presidential election, with the currentrally taking all three major U.S. stock benchmarks torecord highs over the past month.

Southern Europe led a rise in Eurozone government bond yields asItaly’s troubled bank Monte dei Paschi appeared on track for a statebailout, putting a focus on the region’s struggling banks. Italian andSpanish bonds led a broad bond market sell‐off that wasexacerbated by a bigger than expected upward revision to the paceof U.S. GDP growth in Q3. Investors were also worrying aboutSpanish banks, which could be facing more than €4 billion of costsafter a European court ruling on a disputed mortgage clause.► Rush of deposit outflows adds to Monte dei Paschi’s woes► Italian finance minister attacks ‘rigid’ European Central BankCriticism follows central bank’s calculation that MPS needs €8.8bnof fresh capital

US credit card providers are fighting for market share withan array of perks and rewards. But they must convinceinvestors that new customers will stick around and spendand borrow enough to justify the costs.

Explosive expansion and volatility make ETFs ripe for scrutiny by regulators

Global corporates lead surge to record $6.6tn debt issuanceBorrowing levels beat 2006 mark but rising US rates set to cool demand Canada’s gross domestic product shrank unexpectedly in October as

factories suffered their worst month in almost three years, adding tosigns the country’s outlook is worsening. Output fell 0.3 percent,Statistics Canada said in Ottawa. Economists surveyed byBloomberg expected a flat reading, but widespread declines ingoods-producing industries contributed to the largest monthly dropsince May.

Renminbi faces confidence test as Chinese FX purchase quota resetsNew year allows residents to buy up to $50,000 worth of foreign exchange

Belgium Downgraded to 'AA-'Belgium's gross general government debt/GDP, forecast to be 107% of GDP in 2016, is the highest among 'AA' category sovereigns.

Credit Matters - Know RiskMany Excel in Strategy, Few in the Management of Risk

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January 9, 2017

The DNA of BusinessReconfiguring Industries to Define Growth

Linde AG (LING.DE), the German company that revivedmerger talks this month with U.S. rival Praxair Inc (PX.N), hascome to an agreement with its counterpart on key aspects of anall-share deal to create a $65 billion industrial gases group.Under the proposed merger, existing Linde and Praxairshareholders would each own about 50 percent of the combinedcompany and its chief executive would be based in the UnitedStates.

Rite Aid Corp, which is being acquired byWalgreens Boots Alliance Inc, said it would sell865 stores to Fred's Inc for $950 million incash. The sale is in response to concernsraised by the Federal Trade Commission overthe proposed $9.4 billion deal betweenWalgreens and Rite Aid.

Nokia sues Apple for infringing patents, industry back on war footing

Mobility services — ride hailing and othermeans of ferrying people to publictransportation — look to be a lucrativeand increasingly important sideline forcarmakers.

Chinese education giant helps its students game the SAT

Abbott gets U.S. antitrust approval to buy St. Jude MedicalHealthcare company Abbott Laboratories has won U.S. antitrust approval for its proposed $25 billion acquisition of medical device maker St. Jude Medical Inc , the U.S. Federal Trade Commission said

Equipment Rental⁕ Remember that both time utilization and rental rates

have been under pressure throughout most of 2016⁕ Sector needs push by new president’s policies⁕ Industry consolidation to continue

Reinsurers braced for year of cost-cuttingContract renewal season delivers weaker prices for the fifth year in a row

US ports are facing what could be a historically challenging2017 as changes in the rapidly evolving steamship industry —among them new alliances, consolidation, and escalating shipcapacity — heighten the already vigorous competitionbetween ports for cargo.The shocks of 2016 — Hanjin Shipping’s collapse, therealignment of carriers into new alliances, the pending mergerof the Big Three Japanese lines, and Maersk Group’sacquisition of German carrier Hamburg Sud — leave portsgrappling with a new, potentially more competitiveenvironment while they struggle to overcome challenges toport efficiency.

Airbus and Boeing expect turbulence in 2017 Aircraft makers struggle to hit sales goals as industry prepares for slowdown

Donald Trump will have a unique opportunity to reshape theagenda of the Securities and Exchange Commission, andthe next president’s picks may demonstrate his new power totake aim at corporate disclosure. Trump will have theopportunity not just to pick a new chairman but twocommissioners (though one will have to be a Democrat) onthe five-person panel. Several media reports now point toDebra Wong Yang, a former federal prosecutor in Californiaand now a partner at law firm Gibson, Dunn & Crutcher, asTrump’s top pick to run the Securities and ExchangeCommission.

Food giant Smithfield skips middlemen in grain supply chainSmithfield Food Inc [SFII.UL], the world's biggest pork producer, is buying grainelevators and purchasing grain directly from farmers, a move that hits grainhandlers already reeling from multiyear lows in corn and soybean prices.

Swedes looking forward to a six-hour workday just gotsome bad news: the costs outweigh the benefits. A two-year experiment cutting working hours while maintainingpay levels for nurses at Svartedalen old people’s home inthe Swedish city of Gothenburg is now nearing the end.The take away was largely positive, with nurses at thehome feeling healthier, which reduced sick-leave, andpatient care improving.

Carmakers increasingly look to hack-proof their connected andautonomous vehicles. One of the newer players in this field isKaramba Security of Hod Hasharon, Israel whose Carwall ECU securityplatform meets the goals set out in the US Department ofTransportation’s guidelines for the safe deployment of autonomous cars.

TSD (Tethys Solar Desalination) plans to disrupt thedesalination industry with a low-cost, off-grid, scalableand environmentally friendly module using only solarpower. The first TSD pilot site will be established inIsrael by mid-2017, followed by possible pilots incountries including China and the United States.

Peer-to-peer insurance companyLemonade, is disrupting the wayNew Yorkers buy homeownersand renters insurance. The onlineand mobile platform, powered byartificial intelligence andbehavioral economics, uses botsand machine learning to deliverinsurance and handle claims.

Macy’s Details Plans to Close Stores, Cut 10,100 JobsMacy’s Inc. outlined restructuring plans Wednesday thatwill eliminate more than 10,000 jobs at the strugglingdepartment store giant as it closes about 63 stores thisspring and looks to cut additional costs.Disappointing holiday season sales at Macy's Inc andKohl's Corp underscored the uphill task departmentstores face in winning back shoppers, who areincreasingly turning to online retailers and spending lesson apparel.

Qualcomm hails technology jumpThinner smartphones or more spacefor larger batteries are on the waythis year, thanks to a big reductionin the size of the latest mobileprocessors that power them.

China aims to cut the capacity of itscoal mines by 300m tonnes a yearuntil 2020 even as production andconsumption of the fuel increases,according to Beijing’s top economicplanner.

Sears Agrees to Sell Craftsman Brand in a Bid to Raise Cash

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January 9, 2017

Real Estate and Construction Outlook

This past year was peculiar for the commercial realestate sector. There were significant increases inproperty valuations, driven in large part by low ratesand what could be categorized as an insatiable demandfor trophy properties and apartment complexes.

Luxury transactions across all property types have fallensharply in Manhattan, where pricey new condos are pilingup after a post-recession development boom. While condosoutshone co-ops this year, contracts to buy them declined 17percent, Olshan Realty said. Deals for townhouses fell 14 percent.

LODGING… There has definitely been a downshift on valuationsamong buyers; sellers are not quite there yet. Given the deceleration inRevPAR increases, value growth momentum has left the house. Withslower revenue growth and accelerating cost inflation, buyers will haveto create every new dollar of valuation—there is no momentum to surf

Uncertainty over a new federal rule that would lower the threshold for overtime pay and potentially drive up labor costs is on the minds of many hotel operators.

Airbnb makes most of legal wiggle room to beat hotelsAccommodation rivals attack group over tax and regulatory advantages

U.S. construction spending rose more than expected in November,reaching its highest level in 10‐1/2 years, which could provide a lift tofourth‐quarter economic growth. The Commerce Department said onTuesday that construction spending increased 0.9 percent to $1.18trillion, the highest level since April 2006. It was boosted by gains inboth private and public sector investment., Construction spending inOctober was revised up to show a 0.6 percent rise instead of thepreviously reported 0.5 percent increase. Construction spending was up4.1 percent from a year ago in November. Economists polled by Reutershad forecast construction spending rising 0.6 percent in November.November's better‐than‐expected increase and October's upwardrevision to construction spending could prompt economists to raise theirgross domestic product estimates for the fourth quarter. Spending onprivate construction projects jumped 1.0 percent in November to itshighest level since July 2006 as single‐family home building, as well ashome renovations, increased.

Depressed Canadian, U.K. currencies cloud U.S. hotel horizon:According to a Hotel News Now roundtable of experts, depressedcurrencies, including those of Canada and the United Kingdom, willnegatively affect U.S. hotel performance, but that should be outweighed bystrong U.S. growth, robust tourism marketing campaigns and generalincreased hotel demand. The experts added the incoming Donald Trumpadministration should not change the landscape dramatically and therewill likely be improvement in the performance of U.S. oil markets.“Historically, an election in and of itself in the U.S. doesn’t move theneedle in any meaningful way on hotel demand, though subsequent policychanges may have a substantive influence,” said Carter Wilson, VP ofconsulting and analytics at STR, HNN’s parent company. “Generallyspeaking, the hotel economy is tethered to the broader economy, and ifthe overall economy continues to grow—even weakly—we shouldn’t expectany jarring changes in the hotel economy.”

The Trepp CMBS Delinquency Rate jumped againin December, with the new rate hitting its highestlevel in 14 months. The delinquency rate forUS commercial real estate loans in CMBS is now5.23%, an increase of 20 basis points fromNovember.

Vacancies Take Toll On US Malls Nationwide The national retail-property market is showing signs of a slowdown after years of steadygrowth, according to a report to be released Friday, as cities and towns across the U.S. grapplewith more empty storefronts. Vacancy rates in community shopping centers increased in 30 of77 U.S. metro areas last year, compared with 24 in 2015 and 19 in 2014, according to data fromreal estate researcher Reis Inc. Rents, which usually increase roughly at the rate of inflation inhealthy markets, decreased in two metro areas for the full year. In the fourth quarter, rents fellin 15 metro areas from the third quarter.

The PunchLine...

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January 9, 2017

Will Life Ever Be the Same?

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