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05Sep2017 Pre-Market Commentary: Wall Street To Open Fractionally Lower, US Refineries Coming Back On-line, Elon Musk Predicts World War III

Written by Gary

US stock market index futures are lower this morning (SPY -0.2%) following global falling markets after NOKO's nuclear test Sunday. US crude prices have risen, US dollar is slipping.

Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.48% while the CAC 40 gains 0.14%. The FTSE 100 is off 0.06%.

What Is Moving the Markets

Here are the headlines moving the markets.

United Tech to buy Rockwell Collins for $30 billion

(Reuters) - Aerospace supplier United Technologies Corp has struck a $30 billion agreement to buy avionics and interiors maker Rockwell Collins Inc , the companies said on Monday, in a deal that bulks up UTC's power with plane makers by creating one of the world's largest makers of civilian and defense aircraft components.

U.S. stock futures lower as North Korea tensions rise

(Reuters) - U.S. stock index futures were lower on Tuesday after North Korea conducted its most powerful nuclear test over the weekend, rattling investor sentiment.

Exclusive: EPA eyes limits for agricultural chemical linked to crop damage

(Reuters) - The U.S. environmental agency is considering banning sprayings of the agricultural herbicide dicamba after a set deadline next year, according to state officials advising the agency on its response to crop damage linked to the weed killer.

Lego to cut 1,400 staff as decade-long sales boom ends

COPENHAGEN (Reuters) - Lego said it would lay off 8 percent of its staff and revamp its business after reporting its first fall in sales in more than a decade on Tuesday.

Exclusive: Under pressure, Hyundai clashes with China partner over suppliers - sources

BEIJING/SEOUL (Reuters) - Hyundai Motor Co is at loggerheads with its Chinese partner over efforts to cut supplier costs, as they grapple with cut-throat competition and the impact of a stand-off between Beijing and Seoul, four people familiar with the dispute said.

Noble Group in talks to extend $2 billion credit facility deadline

SINGAPORE (Reuters) - Noble Group is in discussions with its North American lenders to extend an October deadline for a $2 billion credit facility, while also taking steps to sell parts of its business to cut debt, its chairman said on Tuesday.

Exclusive: Western Digital offers to exit Toshiba chip bid for better JV terms - sources

TOKYO (Reuters) - Western Digital Corp has offered to drop out of a bid for Toshiba Corp's lucrative semiconductor unit after their talks stalled, seeking instead a stronger position in the two companies' chip joint venture, two sources said on Tuesday.

GM August China vehicle sales up 12 percent year on year

BEIJING (Reuters) - General Motors Co's vehicle sales in China rose 12 percent in August from a year earlier to 328,425 units, following a 6.3 percent increase in July, the Detroit-based automaker said on Tuesday.

U.S. crude rises, gasoline falls as refineries restart

SINGAPORE/LONDON (Reuters) - U.S. oil prices rose on Tuesday and gasoline fell as the gradual restart of refineries in the Gulf of Mexico that were shut by Hurricane Harvey raised demand for crude and eased fears of a fuel supply crunch.

WTI Pops, RBOB Drops As Refiners/Pipelines Restart, Irma Looms

WTI crude prices are testing above $48 this morning (and RBOB prices tumbling) as refiners and pipelines come back on line faster than expected and fears of Hurricane Irma's path impacting Gulf production edge higher.

As Goldman notes, the recovery from Hurricane Harvey has accelerated over the weekend, with prolonged dry weather helping the decline in flood levels. We estimate that half of shut-in refinery capacity will likely be back online by Thursday, September 7.

Yet the corresponding level of outages of 2.0 mb/d remains elevated relative to the limited damages reported by both producers (0.3 mb/d currently offline) and midstream operators. With nearly all ports reopening, the key to a normalization in crude and petroleum product supply will therefore hinge on how long some refineries may be forced to stay offline, with guidance that at least 1.4 mb/d of capacity could still be offline past mid-September. In addition, curtailed NGL fractionation capacity could over time prevent and in fact reverse the recovery in shale production.

Additionally, concerns over the path of now Cat-5 Hurricane Irma are spooking energy markets as Goldman warns that RBOB prices could spike once again if Irma makes a violent landing on the Southern U.S. East Coast and Florida because the region is sparse on o ...

Bitcoin Falls 20% as Mobius and Chinese Regulators Warn

Bitcoin Falls 20% as Mobius and Chinese Regulators Warn

- Bitcoin falls 20% as Mobius and Chinese regulators warn
- "Cryptocurrencies are beginning to get out of control" - warns respected investor Mark Mobius
- Mobius believes governments will begin to clamp down on cryptocurrencies sparking rush to gold
- Yesterday China's PBOC ruled Initial Coin Offerings (ICOs) are illegal and all related activity to halt
- China is home to majority of bitcoin miners
- Paris Hilton latest celebrity to support an ICO
- Gold's return of 16% YTD look 'dull' or 'stable'?
- Bitcoin fell 23%, now down 16% from $5,000 high

The Trouble With Asset Bubbles: If You Stop Pumping, They Pop

Authored by Charles Hugh Smith via OfTwoMinds blog,

The idea that authorities can massage their pumping to keep asset bubbles inflated at a permanently high plateau is currently being tested.

The trouble with inflating asset bubbles is that you have to keep inflating them or they pop. Unfortunately for the bubble-blowing central banks, asset bubbles are a double-bind: you cannot inflate assets forever. At some unpredictable point, the risk and moral hazard that are part and parcel of all asset bubbles trigger an avalanche of selling that pops the bubble.

This is another facet of The Fed's Double-Bind: if you stop pumping asset bubbles, they pop as participants realize the music has stopped, and if you keep pumping them, they expand to super-nova criticality and implode.

There are several dynamics at play in this double-bind.

1. The process of inflating a bubble (for example, the current bubbles in stocks and real estate) requires pushing investors and speculators alike into risky asset classes. This puts the market at increasing risk as everyone is pushed to one side of the boat.

2. Those on the other side of the boat (i.e. shorts) are slowly but surely eradicated as the pumping keeps inflating the bubble. When the bubble finally bursts, there are no shorts left to cover, i.e. buy stocks at lower prices to reap their profits.

3. As the bubble continues to expand, the money available to enter the market and keep prices rising declines. The very success of the pumping process strips the markets of new sources of new money, leading to a point where normal selling exceeds new-money buying and the bubble collapses.

4. Money pumping by central banks and governments follows a curve of diminishing return. One analogy is insulin insensitivity: as the systemic di ...

Frontrunning: September 5

North Korea Plans New Missile Test as U.S. Calls for Action (WSJ)

U.S. crude rises, gasoline falls as refineries restart (Reuters)

Putin says tougher sanctions senseless (Reuters)

Trump Confronts Accelerating Russia Probes on Multiple Fronts (BBG)

Trump poised to rescind Dreamer program, pressure Congress to fix (Reuters)

United Technologies to Buy Rockwell Collins for $23 Billion (WSJ)

Latest Nafta Talks Near End Without Major Breakthroughs (BBG)

Houston's Environmental Threats Come Into Focus (WSJ)

September's Bringing Tons of Catalysts to Shatter Market Calm (BBG)

Verizon Wants to Build an Advertising Juggernaut—It Needs Your Data First (

A Jobs Pause That Refreshes

If payroll growth is indeed cooling, then the Federal Reserve can focus on hard data without worrying about labor market slack and could well be on hold for the rest of 2017.

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.

Need to Know: September stinks for stocks? No, this month actually looks like yet another winner

As if kissing goodbye to a three-day weekend weren't bad enough, North Korea has traders somewhat rattled again, and Congress is back in session. Today's call might cheer you up, as it suggests September isn't as bad for stocks as advertised.

Currencies: Dollar slips as investors gear up for Fed speakers

The U.S. dollar pulled slightly lower against most major rivals Tuesday, with a packed schedule of Federal Reserve speakers greeting investors coming back to trade after the Labor Day holiday.

Key Words: Elon Musk predicts World War III—but not for the reason you might guess

North Korea "should be low on our list of concerns,' says the head of Tesla and SpaceX.

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