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29Aug2017 Market Close: Wall Street Closes Higher, DOW Up 57 Points, Small Caps Close Over 4 Percent Higher, WTI Crude Off 45 Handle To Settle At 46.38

Written by Gary

US stock markets moved into green territory after starting off in the dumps (SPY +0.1%).The BTFDers are back as investors ease off seeking safe have havens.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street ticks up as fear over North Korea dissipates

NEW YORK (Reuters) - U.S. stocks recovered on Tuesday from steep early losses brought by fears of escalation of hostilities in the Korean Peninsula, with major indexes steadily climbing into positive territory.

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.

Harvey threatens more U.S. Gulf refineries, supply constraints emerge

HOUSTON (Reuters) - Record rains and flooding from Tropical Storm Harvey triggered more oil refining outages in Texas on Tuesday, 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.

S&P sees U.S. keeping AA+ rating if it avoids default

NEW YORK (Reuters) - Standard & Poor's said on Tuesday the United States would maintain its AA+ credit rating, its second highest, as long as the federal government avoids a default even if it does not increase the debt ceiling in a timely manner.

Bombardier out of running for $3.2 billion New York transit contract

MONTREAL (Reuters) - Canada's Bombardier Inc is out of the running for an estimated $3.2 billion New York City subway contract, in what the plane and train maker on Tuesday called a disappointment.

NBA star Durant takes shot at Under Armour, stock falls

(Reuters) - Shares of Under Armour Inc sank more than 3 percent on Tuesday, a day after National Basketball Association star Kevin Durant said young players do not like the company's shoes.

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.

U.S. court grants Dish affiliates new chance to win $3 billion in auction credits

WASHINGTON/NEW YORK (Reuters) - Two companies largely owned by Dish Network will have an opportunity to nullify about $500 million in fines and be eligible once again for $3.3 billion in credits for a wireless spectrum auction, if they can demonstrate that they are independent entities, a U.S. appeals court ruled on Tuesday.

25 Oil Tankers Stuck In Gulf, Unable To Offload Due To Harvey Port Closures

According to ship-tracking data compiled by Bloomberg, coupled with MarineTraffic real-time tracking, at least 25 tankers carrying almost 17 million barrels of imported crude oil are drifting near Texas and Louisiana ports, unable to offload because of closures from Tropical Storm Harvey.

Source: MarineTraffic

A Bloomberg further details, 20 Aframaxes, 3 VLCCs, 2 Suezmaxes are currently waiting off Texas ports of Corpus Christi, Freeport, Texas City, Houston and Galveston, as well as off Sabine Pass and Lake Charles, Louisiana. This is three more than the 22 ships that were "drifting" on August 28.

Follows a description of the stuck tankers' cargo:



6m bbl Mexican crude, including Maya

4m bbl Saudi oil

3.3m bbl Venezuela crude

2m bbl from Iraq

500k bbl Castilla from Colombia

500k bbl Ostra from Brazil

500k bbl Bonga from Nigeria

Additionally, here is a current status update of the various ports:

Corpus Christi:



Port shut since Aug. 24, sees return to normal operations by Sept. 4

Refineries planning restarts for this week:

Flint Hills may restart as soon as Tuesday

Valero, Citgo preparing for restart



Oil imports via Corpus Christi in 2016 were 225.8k b/d

Top suppliers, according to EIA data compiled by Bloomberg:

...

The Cleanest Shirt Is Actually Pretty Dirty

Authored by Kevin Muir via The Macro Tourist blog,

Remember last November when it seemed like everyone was a US dollar bull?

Either they thought Trump would usher in the next Reaganesque US economic free market nirvana, or they were convinced there was this massive US dollar emerging markets short position from the years of USD debt issuance.

http://themacrotourist.com/images/2017/08/DXYAug2917.png

Nothing better illustrates the one sided nature of US dollar sentiment than the early December 2016 issue of The Economist.

http://themacrotourist.com/images/2017/08/TheMightyAug2917.jpg

It was tough to find anyone who thought the US dollar might decline. Which is exactly why it did.

Fast forward to today. After six months of near constant dripping lower, suddenly with the break of some long term support, the pundits are now convinced the USD is headed much lower.

And maybe we are. Who knows? This market has certainly been difficult to trade lately, so perhaps we are due for an easy, trending, simple US dollar breakdown.

I don't have an outright view on the US dollar. Longer term, I am a mega bear, but over the short run, I am not sure I want to jum ...

Hurricane Harvey Likely To Destroy More Cars Than Katrina: "This Is Bad; Real Bad"

Hurricane Harvey's historic flooding in Texas is set to wreak havoc on the auto industry and its insurers with analysts now predicting the storm could damage more vehicles than Hurricane Katrina. In August 2005, Katrina wiped out some 500,000-600,000 vehicles but William Armstrong of CL King warns that Houston has about 5x more people than New Orleans did at the time.

Hurricane Harvey could damage more vehicles than Hurricane Katrina, driving business to the salvage auctions operated by Copart and KAR Auction Services, CL King analyst William Armstrong wrote in a note.

Katrina damaged 500,000-600,000 vehicles in August 2005, and the greater Houston MSA is five times as populous as pre-Katrina New Orleans.

The cost of dealing with catastrophes can be higher than normal given vehicle extraction, towing and temporary storage and auction locations, though both companies have grown their physical presence in Texas over the last year, which should lower the need for temporary locations.

It may be 2-3 months or longer until damaged vehicles are sold at auction.

Cars

Of course, storms of this magnitude bring not only millions in salvage-related charge offs for the auto industry but a loss of critical "selling days" for one of the biggest markets in the country. As CNBC points out this morning, Citi analyst Itay Michaeli figures Hurricane Harvey could knock about 500,000 units off the August auto SAAR to be reported later this week.

One Chinese Coal Power Company Employs 4x More Workers Than The Entire US Coal Industry

On Monday, China's government and president Xi blessed the merger between the country's top coal miner, Shenhua Group and China Guodian Group, one of the country's top five state power producers, in a deal that will create the world's largest power company, worth 1.8 trillion yuan, or $278 billion. Putting the sheer size of the two merged behemoths in context, the resulting entity will be the world's second-biggest company by revenue and largest by installed capacity.

As the following Bloomberg chart shows, the vast majority of the new company's power generation will be coal-driven.

A fascinating comparison emerges when putting just this one company in the context of the entire US coal industry: with an estimated 326,000 staff, the combined entity will have a workforce that is four times bigger than the entire U.S. coal-fired power industry in 2016 (at roughly 77,000).

Some other comps: the combined entity will have an installed capacity topping 225 gigawatts, eclipsing European energy giants EDF and Enel to become the world's biggest power company by capacity. It will also be the largest wind power developer in the world with 33 gigawatts of capacity and, more importantly, the biggest coal producer.

The giant Shenhua-Guodian tie-up is among the

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.

Will Harvey Soak Auto Insurers?

Home insurance doesn't cover floods, but auto insurers will have to pay up for all of those sunken cars in Houston.

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.

July 2017 Leading Index Review: Growth Trends Slow

Written by Steven Hansen

This post is a review of all major leading indicators follows - and their trends are generally indicating slower growth.

Market Snapshot: Dow up nearly 70 points; stock market shakes off geopolitical tensions

U.S. stock benchmarks on Tuesday stage a modest recovery from heavy selling earlier in the session, that came after a North Korean missile test over Japanese airspace rattled investors and sent Wall Street trawling for assets perceived as safe.

NFL star J.J. Watt of the Houston Texans has raised $2 million in two days for Harvey victims

He set out to raise $200,000 and is now aiming for $3 million.

Labor Day weekend car fatalities estimated at highest since 2008

An estimated 421 people may be killed and another 48,400 may be seriously injured in nationwide car crashes during the upcoming Labor Day weekend, the highest estimate by the National Safety Council since 2008.

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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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