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02Sep2016 Pre-Market Commentary: Markets Expected To Open Higher, Gold Climbing Higher, US Dollar Falling, Jobs Report Below Expectations

Written by Gary

US stock future indexes reacted positively (SPY +0.2%) for today's crucial jobs report which came in improved, but below expectations. The Labor Department reports the U.S. economy added 151,000 jobs in August, below expectations for 180,000 jobs. The unemployment rate and the labor force participation rate remained unchanged.

Here is the current market situation from CNN Money

European markets are broadly higher today with shares in London leading the region. The FTSE 100 is up 1.28% while France's CAC 40 is up 0.70% and Germany's DAX is up 0.41%.

The first column is what was reported this morning. The second column is what analysts had forecast and the third column is the previous report. Full calendar HERE.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. nonfarm payrolls rise less than expected; wage growth moderates

WASHINGTON, Sept 2 (Reuters) - U.S. employment growth slowed more than expected in August after two straight months of robust gains and wage gains moderated, which could effectively rule out an interest rate increase from the Federal Reserve this month.

Irish cabinet decides to fight EU on Apple tax

DUBLIN (Reuters) - Ireland's cabinet agreed on Friday to join Apple in appealing against a multi-billion-euro back tax demand that the European Commission has slapped on the iPhone maker, despite misgivings among independents who back the fragile coalition.

Samsung issues recall for Galaxy Note 7 after battery fires

SEOUL (Reuters) - Samsung Electronics Co Ltd will replace all Galaxy Note 7 smartphones equipped with fire-prone batteries and halt sales of the flagship product in 10 markets, a devastating blow for what had been a revival in the firm's mobile business.

Exclusive: Google shelves plan for phone with interchangeable parts - sources

SAN FRANCISCO (Reuters) - Alphabet Inc's Google has suspended Project Ara, its ambitious effort to build what is known as a modular smartphone with interchangeable components, as part of a broader push to streamline the company's hardware efforts, two people with knowledge of the matter said.

U.S. trade deficit narrows as exports hit 10-month high

WASHINGTON (Reuters) - The U.S. trade deficit fell more than expected in July as exports rose to their highest level in 10 months, offering further evidence that economic growth picked up early in the third quarter.

Oil up but heads for biggest weekly loss in 8 months

LONDON (Reuters) - Oil edged higher on Friday, supported by the previous session's weakness in the U.S. dollar and Russian comments in favor of a production freeze, though contracts remained on track for the biggest weekly loss in nearly eight months.

Caterpillar says it may lay off 2,000 workers at Belgium plant

(Reuters) - Heavy machinery maker Caterpillar Inc said it could lay off about 2,000 employees at a plant in Belgium, as it considers shifting production to other facilities as part of a restructuring program announced last year.

Exclusive: Ford shelves compact car program for emerging markets, setback for India

NEW DELHI/DETROIT (Reuters) - Ford Motor Co has shelved plans to produce a new compact car family designed mainly for emerging markets like India and China, industry sources said, reflecting disappointing sales of mainstream models in the world's fastest growing car markets.

Your Last Minute Payrolls Preview: What Wall Street Expects

In just half an hour, the August payrolls report, critical in framing the Fed's September decision according to Stanley Fischer, will be released. As previewed earlier, here are the consensus expectations:

Change in Nonfarm Payrolls Exp. 180K, Prev. 255K, Jun. 287K

Unemployment Rate Exp. 4.80% , Prev. 4.90%, Jun. 4.90%

Average Hourly Earnings Exp. 0.20%, Prev. 0.30%, Jun. 0.10%

Broken down by bank, the expected payrolls change is as follows:

JPM +150k

Deutche Bank +160k

UBS +160K

Goldman +165k

Citi +170k

Wells +176k

BofA 180k

MS +185k

UBS +200k

Barclays +200k

Nomura +200k

CS +200k

SocGen +225k

As the graph below from Jim Reid shows, August has tended to be a weaker month relative to the rest of the year. Indeed since the start of the sample the average monthly payrolls reading is +186k while the average August reading is just +150k (which is the joint lowest with July). Although July's number went against this trend, will both July and August buck their seasonal trend?

Leading into the number the manufacturing ISM (49.4 vs. 52.6) showed broadbased weakness: New orders (49.1 vs. 56.9), production (49.6 vs. 55.4), employment (48.3 vs. 49.4) and inventories (49.0 vs. 49.5) all declined in August and this may have helped bring expectations down for today's payrolls below the consensus noted on Bloomberg. Fed rate hike probabilities weren't greatly moved (September down 2% to 34% and December unchanged at 60%) but we did see the Green ...

Frontrunning: September 2

Donald Trump Revised Immigration Speech After Mexican Leader's Tweet (WSJ)

Hillary Clinton Raised $143 Million in August for Democrats and Her Campaign (NYT)

Putin says he doesn't know who hacked U.S. Democratic Party (Reuters)

Samsung issues recall for Galaxy Note 7 after battery fires (Reuters)

Putin Joins "OPEC Headline" Fray, Pushes For Oil Production Freeze, Iran Exemption (ZH)

Clinton announces plan to address 'unjustified' price hikes on life-saving drugs (Reuters)

How $1 Billion Made Its Way to the Malaysian Prime Minister (WSJ)

Behind China's Anbang: Empty Offices and Obscure Names (NYT)

A Chinese Mystery: Who Owns a Firm on a Global Shopping Spree? (NYT)

Life Insurance Customers Push Back Over Surprise Cost Increases (WSJ)

Uzbek President Karimov has died (Reuters)

Putin Blasts Trump and Clinton for 'Shock' Campaign Tactics (

Putin Joins "OPEC Headline" Fray, Pushes For Oil Production Freeze, Iran Exemption

Overnight the debate over the fate of the OPEC oil production freeze got a new and unexpected entrant when Russian president, Vladimir Putin said he'd like OPEC and Russia, producers of half of the world's oil, to reach a deal to freeze supply and expects the dispute over Iran's participation can be resolved. As Bloomberg first reported, Putin said that "from the viewpoint of economic sense and logic, then it would be correct to find some sort of compromise," speaking in an interview in Vladivostok. "I am confident that everyone understands that. We believe that this is the right decision for world energy."

Exclusive: Vladimir Putin on Russia's oil, an output deal, Saudi Arabia and Iran

— Bloomberg (@business) September 2, 2016

Just as surprisingly, Putin sided with Iran saying that oil producers recognize that the middle-eastern nation, which has mostly restored the output halted during three years of trade restrictions, deserves to complete its return to world markets. While talks collapsed in April over whether Iran should join in, countries now recognize the nation - freed just months ago from international sanctions - should be allowed to continue raising production, Putin said. The Russian president said he may recommend completing the plan when he meets with Saudi Deputy Crown Prince Mohammed bin Salman at the Group of 20 summit in China next week.

"Iran is starting from a very low position, connected with the well ...

70,000 Left Without Power As Hurricane Hermine Makes Landfall

Some 70,000 households were left without power after Hermine was became the first hurrican to make Florida landfall since 2005, slamming Florida's northern coast for, before it weakened to a tropical storm and ploughed its way overland toward the Atlantic Coast on Friday.

The hurricane brought heavy rains and packed top winds of 75 miles (120 kilometers) an hour on Friday, as it remained a Category 1 hurricane after making landfall near Saint Marks, Florida, the U.S. National Hurricane Center, causing damage and leaving tens of thousands of households without power along Florida's Gulf Coast. Hermine became the fourth hurricane of the 2016 Atlantic storm season.

Bad flooding along banks of Steinhatchee River. Boats washed onto roads. Lots of debris. Hurricane #Hermine.

— Vic Micolucci - WJXT (@WJXTvic) September 2, 2016

"It is a mess... we have high water in numerous places," Virgil Sandlin, the police chief in Cedar Key, Florida, told the Weather Channel. Strong gusts downed power lines and trees as widespread flooding inundated communities in Florida before the hurricane weakened into a tropical storm as it reached Georgia and South Carolina, where conditions deteriorated early on Friday morning.

The following photo showed just how extensive the blackout was.

Incredible thing to see. All of Florida State and Tallahassee, dark. #Hermine

— Matt Reagan (@reaganmatt) The Art of the Deal

Signs of slowdown are putting a cloud over software maker's pristine valuation.

Hanjin's Demise: Why Global Shipping Glut Isn't Going Away

A shipping company drowned at sea has kicked up a storm of worries. The gales should subside even if the industry's long-term problems don't.

Rail Week Ending 27 August 2016: All Rolling Averages Worsen And Remain In Contraction

Week 34 of 2016 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. This week, all rolling averages' contraction worsened.

Howard Gold's No-Nonsense Investing: Why investors are to blame for labor's woes

This Labor Day weekend, let's acknowledge why our job-creation machine is broken

Economic Report: U.S. trade deficit drops 11.6% in July to $39.5 billion

The U.S. trade deficit slid almost 12% in July to $39.5 billion as a surge in soybean shipments pushed exports to a 10-month high.

Economic Preview: Economy adds 151,000 new jobs in August

The pace of hiring in the U.S. slowed sharply in August as the economy added just 151,000 jobs, a smaller than expected increase that may prompt the Federal Reserve to keep interest rates at current low levels until after the presidential election.

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