So, with the first quarter out of the way it seems as if the tone has certainly been set. The Fed has continued its rate hiking path and volatility has disrupted the eight-year long near linear equity climb in its tracks. Here’s what it means, writes Nell Sloane of Capital Trading Group.

We have noted that interest rates are the thorn in the equities side as the mathematics of our debt is most certainly going to become more and more a burden, not just for us, but the rest of the world as well.

Short-term interest rates have been bludgeoned and rightfully so given the path or our hawkish Fed. They bought a decade and it is no doubt just making room so that it can hit the #QE4EVR button once again.

Global Markets: Dollar, stocks climb Thursday in relief rally over trade spat.

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UBI: What is also scary is the thought of a UBI or Universal Basic Income that we have been hearing as of late. This is a dangerous socialistic path and one by which we would should definitely find alternatives to, nevertheless the drumbeats are getting louder and all the talk of AI and Robots replacing our workforce is adding to the hysteria.

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Trump dumps: The first quarter has also brought President Trump continuous cannon fodder for his Tweet storms and no industry, no celebrity, no corporation is off limits.

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Some notable Q1 2018 results on the upside were:
Corn was up 10.55%
NYMEX Crude was up 7.48%
The NASDAQ Composite was up by 2.89%

Some notable downside returns were:

US 5-year yields lost 18% in terms of basis points rise
The S&P 500 Index (SPX) was lower by 1.23%
Comex Copper was down 7.94%
The FTSE 100 lost 8.21%
Sugar lost 18.54%
Lean Hogs lost 20.24% although they are up around 8% to start the quarter!

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SOFR: The biggest development this week was the publication via the New York Fed of the new Secured Overnight Financing Rate or SOFR.

We expect the adoption to be widespread and as far as we are concerned it will replace the LIBOR rate because the mass manipulation and bad karma that comes with all the exposed LIBOR rigging. This means the powers that be need to shift the narrative to a new entrant and thus SOFR and its near $trillion in overnight usage.

Reuters: What is SOFR?

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Walmart Inc. (WMT) is holding preliminary discussions to buy U.S. health insurer Humana Inc. (HUM) No guarantee yet however, on a merger or partnership.
Walmart, which has seen its profits decline by 30% over the past 3 years, to $10.5 billion is on the hunt for growth. This diversification makes sense given their declining profits and will put them into the thick of the healthcare race, where mergers and acquisitions remain at a dizzying pace.

Aetna the insurance giant was bought by CVS Health (CVS) late last year for $69 billion.


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Earlier this year Express Scripts a pharmacy benefits manager was bought by Cigna (CI) for $54 billion.

The Walmart-Humana deal makes so much sense in the growing field of healthcare and in the shrinking field of providers. Walmart is certainly banking on leveraging its already dominating grocery business and in our opinion, this just makes perfect sense. Why not offer your customers two of the very basic necessities in life, food and healthcare?

In fact, Walmart’s future no doubt holds a blockchain, decentralized ICO and issuing their own tokens for their users which would benefit immensely from the seamless integration of providing a blockchain token that would enable Walmart shoppers.

We suppose the next link in the Walmart chain would be affordable housing mortgages, then their dominance would certainly be sealed.

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Barclays (BCS) was slapped with a $2 billion fine this week in civil penalties tied to U.S. Dept. of Justice claims for selling fraudulent mortgage securities during the financial crisis. So, nobody goes to jail and they get a slap on the wrist, $2Bln what a joke, they made that and 10x more no doubt.

Once again, if the bad actors don’t pay a legitimate penalty price, then the mantra that “crime does indeed pay,” still holds true.

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The financial market exchange giant CME Group (CME) this week purchased NEX Group PLC for $5.4 billion.

NEX owns BrokerTec, the largest electronic trading platform for U.S. Treasuries.

We are optimistic that CME lobbyists will go to Washington to change Rule 42.10 which restricts participation to only those entities with $45 million or more.
Chicago prop groups were at one time the dominant players in this sector but of course Fed oversight and regulation was fully intended to keep participation to a minimum.

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Tesla troubles: Also, out this week was more bad news for Tesla (TSLA), as they issued a recall for 123k Model S sedans built before April 2016. The recall is to retrofit the power steering component. Their bonds and equity have certainly both been victimized lately.

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AIG pay: News out this week that AIG (AIG) paid $67.3 million to its CEOs last year, the figure which included CEO Peter Hancock who resigned in March.
Remember, the Federal Reserve’s Maiden Lane II and III bailout package nine years ago gave AIG $185 billion so it wouldn’t fail, or so Goldman wouldn’t fail, or so none of the banks would fail, you choose…ahh, how nice to be in the club, wouldn’t it be great if the commoner could get a juicy bailout?

Remember AIG paid out soon after receiving that bailout $165 million in bonuses, must be nice right?

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Spotify Technology SA (SPOT) the Swedish music streamer is set to price a direct listing this week on the NYSE. Its set to open near above a $130 price target.
As of this writing, Citadel has priced the opening trade at $165.90, well above the $132 reference price set by the NYSE. This was not an IPO, but a direct listing, which saved Spotify millions in fees.

It was last seen trading near $149 which would put the market cap around $33 billion. With stiff competition in this land we will expect some volatility in pricing over the near term and for those looking to get in, please do your research!

Forbes: Three reasons not to buy Spotify stock.

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