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01Sep2017 Market Close: Wall Street Closes Fractionally Higher, DOW Up 39 Points, Minor Long Weekend Selloff At The Close, WTI Crude Settles In The Low 47 Handle

Written by Gary

US stock markets ended up fractionally (SPY +0.2%) after having slipped off session highs. US job growth slowed more than expected after two straight months of hefty increases.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street gains as rate hike bets in check after jobs data

NEW YORK (Reuters) - Wall Street gained on Friday as a tepid U.S. jobs report did little to change bets for another interest rate hike this year, while investors were on track to kick off a typically dour month for stocks on a positive note.

Looming debt ceiling deadline pushing some U.S. fund managers to cash

NEW YORK (Reuters) - A potential standoff over the U.S. federal debt ceiling is raising alarm bells among fund managers who fear a repeat of 2011 when a protracted showdown over increasing the government's borrowing limit and subsequent downgrade of U.S. credit quality led to a more than 15 percent slump in the S&P 500 stock index.

Federal Reserve finalizes rules to help unwind big banks

WASHINGTON (Reuters) - The Federal Reserve on Friday finalized a new rule that should make it easier to wind down systematically important U.S. banks by creating a safe harbor for financial contracts after a firm defaults.

Dow, DuPont complete planned merger to form DowDuPont

(Reuters) - Dow Chemical Co and DuPont said on Friday the companies had successfully completed their planned $130 billion merger to form DowDuPont.

U.S. job growth slows in August; wage growth retreats

WASHINGTON (Reuters) - U.S. job growth slowed more than expected in August after two straight months of hefty increases, but the pace of gains should be more than enough for the Federal Reserve to announce a plan to start trimming a massive bond portfolio accumulated as it sought to bolster the economy.

Automaker shares rise as Texans must replace drowned cars

DETROIT (Reuters) - Shares of the Big Three Detroit automakers rose on Friday despite lackluster August sales, with investors focusing on a likely surge in demand as residents of the U.S. Gulf Coast replace flood-damaged cars and trucks.

Nine years on, another Lehman Brothers bankruptcy

WILMINGTON, Del (Reuters) - Two affiliates of Lehman Brothers, the U.S. investment bank that collapsed in 2008 and fueled an economic crisis, filed for Chapter 11 bankruptcy late on Thursday, a reminder of the complexity of unwinding a global financial institution.

Fed investigated Dudley's omission of sibling at Wells Fargo

NEW YORK (Reuters) - The New York Federal Reserve said on Friday its president, influential U.S. policymaker and bank regulator William Dudley, violated its code of conduct by failing to disclose that his half-sister was an employee of Wells Fargo & Co .

Lululemon is leaning toward men to bolster growth

(Reuters) - Lululemon Athletica Inc is coming off two straight quarters of solid growth and is forging ahead with expansion plans that include a focus on menswear, a move that could breathe life into an ailing athleisure market.

Petition To Label George Soros A "Domestic Terrorist" Has 80,000 Signatures

In less than two weeks, a WhiteHouse.gov petition demanding that billionaire investor George Soros be declared a "domestic terrorist," and that authorities seize his multibillion-dollar fortune, has garnered nearly enough signatures to force the Trump administration to issue a formal response.

The petition, which has attracted 80,000 signatures so far - just 20,000 shy of the 100,000-signature threshold where a response would be required - accuses Soros of being guilty of sedition by financing groups that help support violent Antifa counter-protesters and other dangerous leftist groups.

Last week, we reported that a similar petition, this one asking that President Donald Trump declare Antifa to be a terrorist group, had reached the threshold. The petition is still awaiting a formal response, but in one promising development, Politico reported today that the Department of Homeland Security had described the group's actions as "domestic terrorist violence" in private memos.

Over the past week, the mainstream media narrative has turned decidedly against Antifa, with the Washington Post, Bloomberg and the Atlantic publishing stories criticizing the group's violent tactics.

Ford Touts 'Positive' Impacts Of Hurricane Harvey As August Auto Sales Slump

Earlier this week when we noted that Hurricane Harvey was likely to have destroyed more cars than Katrina (see post here), we concluded by predicting that auto OEMs would spin the utter devastation in Houston as a 'positive' for their inventory crisis. Here's what we said:

"Of course, when the auto OEMs report abysmal sales this Friday they will undoubtedly also tell you how Hurricane Harvey is great for long-term sales because of all the salvaged cars that have to be replaced."

Now, fast forward just a couple of days and it's almost as if Ford prepped their August sales call notes from our previous post. Speaking to analysts this morning, Ford's CEO gleefully touted all of the upside potential for the auto industry in the wake of Hurricane Harvey noting that replacement demand will be "a little more positive" than even he expected.

We think that the effect of the backfill of demand from Harvey, while we believe we can do that, but trend that a little more positive there as there's going to be replacement demand in the secondary used market.

In terms of our overall impact in the month of August, from a new vehicle or fleet basis from Harvey and possible to say at this point we know it had some impact, which I think is further accretive. So we actually we had a pretty good August numbers, because there had to be some impact. We know as a percent of our internal targets of Houston used in the region which was far and away our weakest performance, if you would expect.

Of course, it's ...

Amazon Has Twice As Many Fulfillment Centers As The Rest Of The Entire US Retail Industry

Ask a number of analysts what is the secret to Amazon's retail (if not overall) success, and 9 out of 10 times the answer will be its meticulous, seamless, and incredibly efficient distribution and logistics system. Or, as Credit Suisse puts it, Amazon has stumbled on (really created) a new distribution model: a "pull" (or demand) model in which the Distribution Center is at the center of the shopping/retail experience, vastly different from the old "push" model, which centered around the retail store.

It's also what Credit Suisse calls the "Amazon Effect", and is the biggest (not so) secret behind the company's retail success. Here is how Credit Suisse describes it:

Amazon has helped fuel the demand chain by offering best-in-class fulfillment capabilities and guaranteeing quick response delivery of packages. Amazon commits to providing free 2-day and deeply discounted 1-day shipping to Prime members (~50M-plus).

In this quick response world, inventory availability within a close enough proximity to the customer is key. Amazon has worked to build out its distribution center network with 230 active fulfillment centers (ex. pantry/fresh food DCs) in the United States.

In our opinion, Amazon's network enables the company to fulfill in the new "pull" distribution model. This is in vast contrast to companies in our coverage which follow the traditional "push" model and only have a few key distribution centers located around the country.

This is also known as the Amazon moat, or why Jeff Bezos' company, well ...

A Jobs Pause That Refreshes

The labor market may be cooling just enough to put the Federal Reserve's mind at ease about slack in the economy, making further rate increases in 2017 much less likely.

Meg Whitman Has a Different Mess to Clean Up

Hewlett Packard Enterprise faces many challenges, including earnings next week and the question of why its CEO was looking elsewhere.

Wait Before Investing in Music Industry's Recovery

Upbeat results from the world's largest music company aren't enough to make parent company Vivendi an appealing investment.

As Juicero offers refunds, here are 10 foods you should make — NOT buy

These pricey foods are easy to rustle up at home.

Media companies need authenticity and consistency to survive, says Time Out CEO

In the last five years, Time Out has made a number of big changes: making the magazine free, launching a new business segment that which saw revenue increase 115% last year, it hired a new CEO, went public on the London Stock Exchange and is experiencing growth in a publishing and media landscape that is facing more than its fair share of challenges.

Market Extra: Dow faces an important change to how it's calculated

The owner of the 121-year-old Dow Jones Industrial Average is set to tweak an important component of the blue-chip gauge on Friday: its divisor.

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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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