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02Dec2016 Market Close: WTI Crude Climbed Back Up To Previous 51 Handle, US Dollar Index Trading At The100 Level, Oil Rig Count At 10-Month High

Written by Gary

US markets closed mixed and flat (SPY +0.02%) after a payrolls report did little to alter expectations for an interest rate hike from the Federal Reserve this month and bank stocks cooled for a second straight session. The dollar steadied today, trading unchanged against the yen and the euro and crude prices settled in the mid $51's.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Trump's dilemma: slower job growth or rising rates and inflation?

WASHINGTON (Reuters) - A drop in the U.S. unemployment rate last month to a 9-year low signals the risk of a collision between President-elect Donald Trump's plans to goose the economy and the Federal Reserve's efforts to tap the brakes with higher interest rates.

U.S. payrolls rise solidly; jobless rate falls to nine-year low

WASHINGTON (Reuters) - U.S. employers boosted hiring in November and the unemployment rate dropped to a more than nine-year low of 4.6 percent, making it almost certain that the Federal Reserve will raise interest rates later this month.

Wall Street edges lower as banks lose steam

(Reuters) - U.S. stocks edged lower on Friday after a payrolls report did little to alter expectations for an interest rate hike from the Federal Reserve this month and bank stocks cooled for a second straight session.

Deutsche Bank cuts ties with 3,400 clients in trading business

FRANKFURT (Reuters) - Deutsche Bank's Global Markets division will cut ties with about 3,400 clients in its debt and equities sales activities, the bank said on Friday. Deutsche Bank will immediately cease debt sales services to some financial institutions and hedge funds as well as equity sales activities, the execution of equities trading orders and equity structuring activities for some clients, a spokesman said, citing an internal memo.

Investor Cuban to testify at Senate hearing on AT&T-Time Warner deal

WASHINGTON (Reuters) - Billionaire investor Mark Cuban will be among the witnesses scheduled to testify at a U.S. Senate Judiciary panel hearing on Dec. 7 on AT&T Inc's proposed $85.4 billion acquisition of Time Warner Inc .

United to pay $2.4 million over 'Chairman's Flight': U.S. SEC

WASHINGTON (Reuters) - United Airlines' parent company will pay $2.4 million to resolve civil books and records violations after it reinstated an unprofitable flight route to accommodate the chairman of the Port Authority of New York and New Jersey, the U.S. securities regulator said.

Starbucks' CEO transition unlikely to stymie growth: analysts

(Reuters) - Starbucks Chief Executive Howard Schultz's decision to step down is unlikely to hamper growth at the world's biggest coffee chain as his successor Kevin Johnson is well suited to take the helm, analysts said.

Traders keep bets on Fed rate hike later this month

(Reuters) - Traders of U.S. short-term interest-rate futures kept bets on Friday that the Federal Reserve will raise interest rates later this month, after a government report showed the unemployment rate in November fell to a nine-year low.

Lufthansa's Eurowings in pay deal with cabin crew

FRANKFURT (Reuters) - German airline Lufthansa's budget carrier Eurowings has reached an agreement over pay with cabin crew staff, trade union Verdi said on Friday, staving off further strikes.

The Bureaucracy Is Now More Powerful Than Congress

Submitted by Gary Galles via The Mises Institute,

Who creates federal laws? Civics books say it is Congress, but the real answer today may be the executive branch. Earlier this year, James Gattuso and Diane Katz reported that just the 229 major regulations issued since 2009 added over $100 billion in annual costs (according to the regulatory agencies), $22 billion coming in 2015. With estimates of the total regulatory costs now exceeding income tax burdens at over $2 trillion annually, regulations were far more burdensome for many Americans than legislation.

Unfortunately, missing from this process is accountability to citizens. In response, some members of Congress have turned to supporting the "Regulations from the Executive in Need of Scrutiny" (REINS) Act, which would require Congress to approve major regulations before they could take effect.

Why is this necessary when the US Constitution specifically assigns all legislative powers to Congress? Because Congress has increasingly abdicated its lawmaking responsibility, delegating its power through vague laws and mandates to executive agencies, which then impose and enforce the actual regulations that legally bind Americans.

The REINS Act, by allowing major regulations to take effect only if passed by Congress, would end the effective delegation of legislative power to regulatory bureaucrats and restore some of the Constitution's eroded separation of powers. It would offer some real political accountability, by moving us back toward Americans' earlier understanding of legislative powers, gutted in

Chernobyl 'Safe' For Another Century Thanks To World's Largest Moving Structure

Over 30 years after a botched test at the Soviet nuclear plant sent clouds of smoldering nuclear material across large swathes of Europe, the world's largest land-based moving structure has been slid over the Chernobyl nuclear disaster site to prevent deadly radiation spewing from the stricken reactor for the next 100 years.

Rising 360 feet into the air with a span of 850 feet and length of 540 feet, the shield is tall enough to cover the Statue of Liberty and longer than two Boeing 777 jets placed end to end.

As Yahoo reports, a concrete sarcophagus was hastily built over the site of the stricken reactor to contain the worst of the radiation, but a more permanent solution has been in the works since 2001.

Easily visible from kilometers away, the 36,000 tonne 'New Safe Confinement' arch has been slowly pulled over the site over the past four days to create a casement to block radiation and allow the remains of the reactor to be dismantled safely.

On Tuesday, a ceremony was held at Chernobyl to mark this major milestone in the decades of work to secure the site that has been funded by donations amountin ...

OPEC Deal Could Trigger Drilling Boom In U.S. Shale

Submitted by Nick Cunningham via OilPrice.com,

If anyone is cheering the news of an OPEC deal it is U.S. shale producers. The OPEC agreement sent oil prices shooting up this week, with WTI and Brent quickly surging above $50 per barrel.

Saudi Arabia has agreed to swallow the pain by lowering its oil production, reducing the global surplus to the benefit of everyone else. But it also managed to convince some of its intractable peers to chip in some production cuts, including Iraq, which had previously resisted any cuts. OPEC was even able to bring Russia on board for 300,000 barrels per day in reductions, even though Russia is not an OPEC member.

The result is significant by any measure. OPEC is planning to cut 1.2 million barrels per day beginning in January and non-OPEC producers could add another 600,000 barrels per day in reductions. The global supply-demand balance will likely flip from surplus to deficit when the deal is implemented, and Goldman Sachs sees oil prices rising to $60 per barrel in the first half of next year.

Surely there were champagne corks being popped in Texas as OPEC announced its decision. The share prices of more than 50 U.S. oil and gas companies shot up by more than 10 percent on Wednesday. The S&P 500 Energy Sector Index gained 5 percent, rising to its highest level since mid-2015.

The rebound in oil prices could lead to a revival in U.S. shale production. The U.S. has already lost about 1 million barrels per day (mb/d) since hitting ...

These Were The Best And Worst Performing Assets In November And YTD

In years to come markets may well look back at the month just passed as one of the most pivotal in recent memory, at least that's the assessment of DB's Jim Reid. The US election result just over 3 weeks ago sparked a huge divergence across asset classes and also between developed and emerging markets. In fact you could probably start this performance review from November 8th as assets were generally little changed in the first week and a bit leading into the election. Indeed for the first eight days 30 out of 39 assets had returns in a +/- 1% range and 35 assets in a +/- 2% range (the exceptions being commodities). That falls to 5 and 7 assets respectively for the full month however.

Most memorable of all moves perhaps last month was the significant repricing across global yield curves with yields spiking higher on the prospect of fiscal stimulus under President-elect Trump. Indeed in total return terms US Treasuries were -3% while Spanish Bonds and BTP's returned -2% and Bunds and Gilts returned -1%. However returns for European assets were boosted by a -4% decline for the Euro. In fact in dollar terms then Bunds (-4%), BTP's (-5%) and Spanish Bonds (-6%) were a lot weaker. Interestingly Gilts (+1%) outperformed with Sterling bouncing back +2% perhaps reflecting the fact that Brexit concerns became somewhat overshadowed. Meanwhile EM bonds (-8%) had their worst month of 2016 with Latam (-7%) in particular selling off sharply. Understandably then credit markets had a difficult month given the moves for rates. European fins, non-fins and HY returned anywhere from -4% to -5% in dollar terms while US credit markets were down anywhere from -1% to -3% with HY outperforming.

Meanwhile there's an obvious divergence across equity markets. The S&P 500 returned +4% and had its best month since March while there were also gains for the Shanghai Comp (+3%) and more intriguingly, Russia's Micex (+4%). It was the banking sector which stood o ...

Inventory Check: We Went to the Stores

Heard on the Street is conducting an experiment to see how retailers' claim that low inventory will mean less discounting is playing out.

Little Slack But Not Much Heat in Labor Market

Unemployment hits nine-year low but modest wage growth shows there is still some slack in labor market.

Chips Need a Nick, Not a Cut

Semiconductor stocks are vulnerable after big run-up, but strong fundamentals remain.

Market Snapshot: Stock market bounces around after jobs report

U.S. stocks struggle for direction Friday as investors digest a weaker-than-expected payroll report, holding the market uptrend in check and favoring the sectors of the economy that are viewed as safest in economically uncertain times.

Market Extra: Wall Street's Trump optimism comes with heavy dose of uncertainty

While stocks have largely rallied since the election, the president-elect is still viewed as a wild card who could exacerbate volatility in 2017 and beyond.

Currencies: Dollar steady against euro, yen after nonfarm-payrolls data

After gyrations immediately after the monthly jobs report, details of which were seen softer than expected, the dollar steadied on Friday, trading unchanged against the yen and the euro.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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