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07Sep2017 Market Update: DOW Up Low Double Digits, Nasdaq Flat, SP500 Down -0.1 Percent, WTI Trading In The Low 49 Handle, US Dollar Slips To The Mid 91 Level

Written by Gary

US stock market at the midday mark are mixed (SPY -0.1%) with the large caps fractionally in the green and the small caps swinging the exact opposite direction. Harvey, Irma, NOKO are twisting investors thoughts.

Here is the current market situation from CNN Money

North and South American markets are mixed. The Bovespa is higher by 1.75%, while the IPC is leading the S&P 500 lower. They are down 0.11% and 0.09% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Hurricane Harvey boosts U.S. jobless claims to more than two-year high

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits jumped to its highest level in more than two years last week amid a surge in applications in hurricane-ravaged Texas, but the underlying trend remained consistent with a firming jobs market.

Euro, stocks hold gains as ECB holds steady

LONDON (Reuters) - The euro and world stocks inched higher on Thursday, as markets waited for clues on just how close the European Central Bank is to scaling back its more than 2 trillion euro ($2.75 trillion) stimulus program.

Ex-bank manager to face charges in Philippines for cyber heist, others cleared

MANILA (Reuters) - Philippine prosecutors have recommended the filing of charges against a former bank manager for her part in laundering of tens of millions of dollars stolen from Bangladesh's central bank last year but cleared two casino agents and a remittance firm.

The death of the car show?

PARIS/FRANKFURT (Reuters) - Frankfurt's vast auto show, which opens next week, is already getting attention of the wrong kind - for its impressive list of no-shows.

Amazon scouts for second headquarters with $5 billion price tag

(Reuters) - Inc said on Thursday it was searching for a location to build its second headquarters in North America that would cost more than $5 billion and house up to 50,000 staff.

Lilly to cut 8 percent of jobs in bid to cut costs

(Reuters) - Eli Lilly and Co said on Thursday it would lay off about 8 percent of its employees as the drugmaker, which has suffered setbacks over the past year in the development of two potential blockbuster drugs, works to cut costs.

Jaguar Land Rover warns Brexit deterring suppliers, EU workers

LONDON (Reuters) - Britain's biggest carmaker Jaguar Land Rover has said it is starting to feel the first effects of Brexit, with EU citizens demanding improved contracts and international suppliers less willing to commit to the country.

Lyft to offer rides in self-driving cars in San Francisco area

SAN FRANCISCO (Reuters) - A self-driving car will soon be one ride option available from Lyft in the San Francisco Bay Area, as the ride-services company ramps up its efforts to become a serious player in autonomous vehicle technology.

Former CIA director Petraeus joins KKR backed security firm

SAN FRANCISCO (Reuters) - Former United States CIA Director David Petraeus said Thursday he has joined the board of a large cybersecurity company controlled by investment firm Kohlberg Kravis Roberts (KKR & Co. LP), taking his most prominent role in the private sector.

Trump Reportedly Wants To End The Debt Ceiling

If you are wondering what is dragging the dollar down to 32-month lows, perhaps you should add this to the calculus...

Politico reports that President Donald Trump suggested to congressional leaders on Wednesday morning that votes to raise the debt ceiling could be done away with altogether, according to three people familiar with the conversation.

In a meeting with GOP and Democratic leaders, in which Trump sided with the Democrats on a fiscal deal to raise the debt ceiling, the president said he believes the votes are unproductive, those people said.

With Congress set to lift the debt ceiling into December as part of the deal, Trump floated the idea that the next time Congress votes to raise the debt ceiling, it could be the last.

He said conversations should happen over the next three months, according to people in the room.

The Dems seem open to it...

Schumer said such a move could not be accomplished now, but indicated he would talk to his caucus about considering structural changes to the debt limit in December, a conversation Trump supported.

House Minority Leader Nancy Pelosi (D-Calif.) also appeared interested in the deal but was noncommittal. The debt ceiling is a key leverage point for members of the ...

Consumer Credit & The American Conundrum

Authored by Lance Roberts via,

What to do? This is not as an innocuous question as one might think. For most American families, who have to balance their living standards to their income, they face this conundrum each and every month. Today, more than ever, the walk to the end of the driveway has become a dreaded thing as bills loom large in the dark crevices of the mailbox.

What to do?

In a continuation of last week's discussion on consumer debt, the conundrum exists because there is not enough money to cover the costs of the current living standard.

"The average family of four have few choices available to them as discretionary spending becomes problematic for the bottom 80% of the population whose wage growth hasn't kept up with the standard of living."

The burden of debt that was accumulated during the credit boom can't simply be disposed of. Many can't sell their house because they can't qualify to buy a new one and the cost to rent are now higher than current mortgage payments in many places. There is no ability to substantially increase disposable incomes because of deflationary wage pressures, and despite the mainstream spin on recent ...

WTI/RBOB Drop After Harvey Prompts US Crude Production Collapse, Biggest Inventory Build In 6 Months

Last night's first glimpse of Harvey's impact on energy confirmed a sizable crude build but only modest gasoline draw. WTI/RBOB prices slid into the DOE print and extended losses (after a quick kneejerk higher) following a bigger than expected crude build (+4.58mm vs +4mm exp). Gasoline and Distilates saw bigger draws than API reported but it was the collapse in Lower 48 crude production that stood out with most of Texas offline.


Crude +2.79mm (+4mm exp) - biggest build in 5 months

Cushing +669k (+1mm exp)

Gasoline -2.544mm (-5.2mm exp) - biggest draw in 6 weeks

Distillates -610k


Crude +4.58mm (+4mm exp) - biggest build in 5 months

Cushing +797k (+1mm exp)- biggest build in 5 months

Gasoline -3.20mm (-5.2mm exp)- biggest draw in 2 months

Distillates -1.396mm

The inventory changes reported by the API were much smaller than those forecast by analysts. As a reminder, Saxo Bank's Ole Hanson notes that "inventory data later is a lot of moving parts which could be quite skewed away from what we've seen in recent weeks." Additionally, investors "are going to be skeptical of the data," James Williams, an economist at energy researcher WTRG Economics, told Bloomberg. "It might be pretty flaky data this week and next, so I don't expect to see a big market-mover"

Bloomberg's Fernando Valle notes energy's past week was all about Hurricane Harvey as refineries shuttered, choking output and hauling down inventories of gasoline and distillates.< ...

"We've Never Seen Anything Like This": Repo Market Snaps As 10Y Suffers "Epic Fail"

It's been a while since we saw any major dislocations in the Treasury repo market, i.e., collateral shortages as a result of surging TSY shorts, for the simple reason that after the first quarter when everyone was certain that Trump reflation trade would kick in but didn't, the record number of built up spec net shorts got trampled by the rising price, rapidly shifting over to record longs.

However, the peace and quiet quiet in the repo market was shattered this week, when almost overnight the 10Y went from "normal" in repo, at a rate of 0.50% on Friday, to a special -2.00% on Monday, and then a Super Special, if not record, "fails rate" of -3.50% this morning.

Commenting on this dramatic move in 10Y repo rates, Stone McCarthy's Alan Chernoff, in a note titled "Epic Fail", writes that "the 10-year note has been below the fails rate and shows no signs of moving! It opened at -350 basis points, and though pressure has eased off of it slightly, it is STILL below the fails rate at -300 basis points."

As a reminder, the fails rate is the 300 basis points below the lower end of the target fed funds rate, putting it at -200 basis points currently. And, if an issue falls below the fails rate, it becomes cheaper to just pay the fails charge of 200 basis points rather than deliver than issue, which is what is happening. In dollar terms, the agency repo fails nominal was at $131BN on Sept. 6 vs $153.6 BN on Sept. 5, above the 5-DMA $90.7b, according to DTCC data.

To be sure, some firms that want to maintain good client relationships will likely want to deliver the trade at such a low rate, alth ...

How to Gauge Whether Irma Will Be an Insurance Catastrophe

Hurricane Irma could be the costliest hurricane ever for insurers. But it may take a loss of more than $100 billion to turn the industry's tide of more capital and weaker returns.

A Healthy Dose of Profits at Cigna

Cigna has produced great growth and with pricing power and protection from government rules should keep growing.

Big Bank Plays Regulatory Hopscotch

Nordea is moving its headquarters from Sweden to the eurozone, where the bank hopes for better tax and capital treatment.

GoPro shares soaring after company forecasts adjusted profit

Shares jump the most in a month after the maker of wearable cameras said it expects to post an adjusted profit in the third quarter.

NewsWatch: U.S. stocks bounce around as investors wrestle with ECB, Hurricane Irma

U.S. stocks switch between gains and losses in early Thursday trade as investors track the affect of Hurricane Irma and focus on European Central Bank President Mario Draghi's comments about the future of economic stimulus in the eurozone.

House blocks medical marijuana budget amendment that would protect patients

The legal medical marijuana market took a major hit on Wednesday after the U.S. House Rules Committee blocked an amendment for medical marijuana protections from the House's 2018 budget bill.

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