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29Aug2017 Market Update: Wall Street Higher, DOW Up 11 Points, SP500 Slipping Back Into The Red, Small Caps Up Over Two Percent, US Dollar Showing Fractional Strength, Investors Worried About A Sudden Reversal Today

Written by Gary

US stocks climbed out of steep losses at the opening to trade higher, mostly in the green this afternoon (SPY -0.04%). Investors have apparently ...


Here is the current market situation from CNN Money

North and South American markets are mixed. The Bovespa is higher by 0.15%, while the IPC is leading the S&P 500 lower. They are down 0.09% and 0.04% respectively.

... shrugged off concerns over NOKO's latest missile test. Consumer confidence surged to a five-month high and Crude prices slipped more than 1.5 percent lower.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall St edges higher as North Korea concerns ebb

(Reuters) - U.S. stocks rebounded from steep losses to trade slightly higher on Tuesday afternoon as investors shrugged off concerns over North Korea's latest missile test.

U.S. consumer confidence hits five-month high; house prices rise

WASHINGTON (Reuters) - U.S consumer confidence surged to a five-month high in August as households grew increasingly upbeat about the labor market while house prices rose further in June, suggesting a recent acceleration in consumer spending was likely to be sustained.

Oil prices fall 1.5 percent as storm shutters more refineries

New York (Reuters) - Crude prices slipped more than 1.5 percent lower on Tuesday as the market grappled with the shutdown of more than 16 percent of refining capacity in the United States after a hurricane ripped through the heart of the country's oil industry.

Despite new U.S. sanctions, Russian oil traders say it's business as usual

MOSCOW (Reuters) - Russian oil companies will quickly find ways to work around tighter restrictions imposed this month by the United States on the foreign finance they can use, multiple Russian oil industry sources told Reuters.

Mexican minister heads to Washington after Trump NAFTA threats

MEXICO CITY (Reuters) - Mexico's foreign minister Luis Videgaray will travel to Washington on Tuesday after threats by U.S. President Donald Trump to scrap the North American Free Trade Agreement, although a foreign ministry source said the trip was pre-planned.

Homeowner's lawsuit says Wells Fargo charged improper mortgage fees

NEW YORK (Reuters) - A homeowner has filed a proposed class action lawsuit accusing Wells Fargo & Co of improperly charging thousands of customers nationwide to lock in interest rates when their mortgage applications were delayed.

Harvey threatens more U.S. Gulf refineries, others remain underwater

HOUSTON (Reuters) - Heavy rains and flooding from Tropical Storm Harvey on Tuesday triggered more oil refining outages in Texas, bringing the total offline to more than 16 percent of overall U.S. capacity as the storm took aim at plants along the Louisiana coast.

Best Buy says strong sales not 'new normal,' shares skid

(Reuters) - Best Buy Co Inc reported another strong quarter of same-store sales on Tuesday, but shares of the No.1 U.S. consumer electronics retailer fell after it cautioned that the performance should not be seen as a "new normal."

Murdoch pulls Fox News from Sky platform as UK mulls takeover deal

LONDON (Reuters) - Rupert Murdoch has pulled his Fox News channel from the Sky platform in Britain, where the government is assessing a bid by the media mogul to buy the broader Sky pay-TV company for $15 billion.

"Liberal Socialism" - Another False Utopia

Authored by Richard Ebeling via The Mises Institute,

Very often bad and failed ideas do not die, they simply reappear during periods of supposed social and political crisis in slightly different intellectual garb, and offer "solutions" that would merely help to bring about some of the very types of crises for which they once again claim to have the answers. Socialism in its various "progressive" mutations represents one of the leading ones in our time.

The latest manifestation of this appeared on August 24, 2017 in the New Republic online in an article by John B. Judis on, "The Socialism America Needs Now." He is heartened by the wide appeal, especially among younger voters, that Bernie Sanders received during the 2016 presidential contest. He thinks that this may herald a rebirth and a renewed possibility for a socialist alternative to the current American political and economic system.

Having traveled over the decades from the 1970s to the present from being a radical, revolutionary socialist to a more "moderate" one today, Mr. Judis admits that the Marxian-style socialism of the nineteenth and the first half of the twentieth centuries is now long passé. The embarrassing experience of "socialism-in-practice" in the form Lenin and Stalin created in the Soviet Union or by Chairman Mao in China will not fly anymore.

From Soviet Central Planning to "Liberal Socialism"

Central planning seemed not to work too well, and the "communist" variation on the socialist theme also had a tendency to be "authoritarian" with some draw ...

Bank of America; "This Could Get Ugly, We Think"

Instead of finding new and creative ways of BTFD, overnight the BofA credit team did something so few finance professionals bother with these days: they looked at fundamental data to reach a conclusion that is independent of how much AAPL stock the SNB will have to buy to send the Dow Jones green. Specifically, the bank looked at the liquidity situation in the bond market (specifically the IG space), and found that while for the time being there is little to worry about, once the central bank put melts away, that's when the real test will take place. And, as BofA puts it bluntly, "this could get ugly, we think."

As the bank's credit strategist Hans Mikkelsen explains, high grade corporate bond trading has doubled over the post-crisis years (Figure 1). However, as the size of the market tripled that means the overall market has become less liquid due to a number of post-crisis changes, including financial regulation and most prominently the Volcker Rule, but also less leverage in the system. For example, while annual trading volumes in the HG corporate bond market were 135% of the size of the market back in 2006, that same tracking statistic is only 86% for 2017 (figure 2).

And yet, according to Mikkelsen, despite the top-level implication that liquidity in this environment should be declining, "market-based measures of liquidity - such as off-the-run/on-the-run spread premiums are back to pre-crisis levels." He then adds that "this is true for bid/ask spreads as well, although we are no fan of them as measures of liquidity as we have no information on the true cost to trade more than just a small block of bonds."

...

The Average American Had A Bigger Savings Account... In 1997

Authored by Simon Black via SovereignMan.com,

Quite literally as a I write these words to you, the heads of the world's largest central banks are packing their bags and heading home after a three-day symposium in Jackson Hole, Wyoming.

Central bankers aren't exactly mega-celebrities, so their conferences don't make international news outside of financial circles.

But if people understood what was at stake, they'd probably pay more attention.

Central bankers wield totalitarian authority over their nations' interest rates.

Setting interest rates means they have direct influence over the price of money. In other words, they influence the price of EVERYTHING-

How much you pay for your mortgage. The price of your home. How cheap (or expensive) it is for a business to borrow money for expansion... which directly affects how many people they hire.

Their influence over rates helps determine how much interest the government pays each year on its debts, which ultimately impacts tax rates and other spending programs.

It's extraordinary power.

And whereas nearly every branch of government has some system of checks and balances to ensure no single body has too much authority, central banks aren't technically part of the government...

... so their power is nearly entirely unchecked.

To be fair, I'm sure they're all very nice people with good intentions.

Central bankers are not moustache-twirling villains plotting a takeover of the world.

But the decisions they make have serious implications over the lives of hundreds of millions of people.

Just like politics, every action they take has winners and losers.

Venezuela's Grim Reaper - A Weekly Report

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

The Grim Reaper has taken his scythe to the Venezuelan bolivar. The death of the bolivar is depicted in the following chart. A bolivar is worthless, and with its collapse, Venezuela is witnessing the world's worst inflation.

As the bolivar collapsed and inflation accelerated, the Banco Central de Venezuela (BCV) became an unreliable source of inflation data. Indeed, from December 2014 until January 2016, the BCV did not report inflation statistics. Then, the BCV pulled a rabbit out of its hat in January 2016 and reported a phony annual inflation rate for the third quarter of 2015. So, the last official inflation data by the BCV is almost two years old. To remedy this problem, the Johns Hopkins - Cato Institute Troubled Currencies Project, which I direct, began to measure inflation in 2013.

The most important price in an economy is the exchange rate between the local currency and the world's reserve currency — the U.S. dollar. As long as there is an active black market (read: free market) for currency and the black market data are available, changes in the black market exchange rate can be reliably transformed into accurate ...

Apple, Samsung Taking Phone Prices to the Edge

The newest smartphones are taking their screens to the edge. Apple and Samsung Electronics seem to be doing the same with their prices, in what amounts to a gamble to revive growth.

Why Won't Wages Rise?

The weekly jobless claims report suggests a very good nonfarm payrolls figure for August, but disappointing wage growth is likely to continue to vex economists.

Investors Overestimate Nestlé's Appetite for Radical Change

Finding a new recipe for growth at food giant Nestlé could take longer than investors like New York activist Dan Loeb seem to think.

Adamas Pharma says its new Parkinson's drug isn't just a more expensive, long-acting version of generic

Adamas' Gocovri will cost between $10,000 and $30,000 a year.

Energy stocks pummeled again as Harvey dumps more rain on Texas

Rain and flooding from deadly Hurricane Harvey, downgraded to a tropical storm, continue to sow destruction at the heart of the U.S. energy industry.

Currencies: Dollar index falls to lowest level since early 2015 after North Korea missile launch

The U.S. currency claws back some lost ground against main rivals, but investor appetite remains geared toward haven assets such as the Swiss franc and the Japanese yen after North Korea launched a ballistic missile over Japan.

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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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