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18Sep2017 Pre-Market Commentary: Wall Street Poised To Extend Record-breaking Run, US Dollar Volatile In The Mid 91 Level, NOKO's Jitters Ease As Investor Focus Remains On Cutting Debt As Higher Employment Fails To Have Expected Effect

Written by Gary

US stock market index futures are higher this morning (SPY +0.2%), as investors focus turns to Fed's rate-setting meeting. Bitcoin Price Falls 40% In 3 Days and WTI crude oil prices are back above $50.


Here is the current market situation from CNN Money

European markets are mixed today. The FTSE 100 is up 0.41% while the DAX gains 0.27%. The CAC 40 is even.

What Is Moving the Markets

Here are the headlines moving the markets.

Futures higher as North Korea tensions ease

(Reuters) - U.S. stock index futures were higher on Monday, indicating a continuation of last week's winning streak, as investor appetite for riskier assets increased on easing tensions on the Korean peninsula and ahead of Federal Reserve's rate-setting meeting.

Slack valued at $5.1 billion after new funding led by SoftBank

(Reuters) - Software startup Slack Technologies Inc said it raised $250 million from SoftBank Group Corp and other investors in its latest funding round, boosting the company's valuation to $5.1 billion.

Northrop Grumman to buy missile maker Orbital for $7.8 billion

(Reuters) - U.S. defense contractor Northrop Grumman Corp said on Monday it would buy missile and rocket maker Orbital ATK Inc for about $7.8 billion in cash, giving it access to lucrative contracts with NASA and the U.S. Army.

Walgreens to revise Rite Aid stores deal for antitrust approval: Bloomberg

(Reuters) - Walgreens Boots Alliance Inc is set to revise its agreement to buy some Rite Aid Corp stores, a move that may be enough for the drugstore chain operator to resolve outstanding antitrust concerns, Bloomberg reported.

U.S. appeals WTO ruling that it failed to withdraw Boeing tax break

GENEVA (Reuters) - The United States has appealed a ruling by the World Trade Organization which said it had not withdrawn a tax break for Boeing Co as required, a U.S. filing published by the global trade body showed on Monday.

In shedding bonds, Fed aims for boring end to crisis-era measures

NEW YORK/SAN FRANCISCO (Reuters) - The U.S. Federal Reserve is set on Wednesday to announce the start of a plan to trim its $4.5-trillion portfolio of assets, much of it amassed in response to the 2007-2009 financial collapse, marking another milestone in bringing to an end the crisis-era measures.

GM Ontario plant workers strike as talks with union fail

(Reuters) - Canada's Unifor union said its members at General Motors Co's CAMI auto assembly plant in Ingersoll, Ontario are on a strike from 1059 pm local time Sept. 17 as it failed to reach a tentative agreement with the automaker.

From grudge to nudge: tech firms help insurers shift gear

LONDON (Reuters) - Insurers are counting on real-time technology to help them cut back payouts, from a system warning ships of nearby pirates to an app offering to buy sleepy drivers a coffee on the motorway.

Airbus hits back against Austria in Eurofighter row

VIENNA (Reuters) - Airbus has filed a legal submission to Austrian prosecutors denying any wrongdoing in response to allegations of fraud and wilful deception linked to a $2 billion fighter deal.

Bitcoin Price Falls 40% In 3 Days Underlining Gold's Safe Haven Credentials

Bitcoin Price Falls 40% In 3 Days Underlining Gold's Safe Haven Credentials

- Bitcoin price action shows cryptos vulnerable to commentary and government policies
- Bitcoin falls to low of $2,980, down by $1,000 in week as China flexes muscles
- Volatility major issue: In 3 days btc fell 40% before bouncing 25% off lows
- BIS state risks of cryptos cannot yet be fully assessed and says technology still unproven
- Apple and Google developing a payment API for cryptos - may give governments full oversight
- Bitcoin and cryptos current volatility and exposure to governments underlines gold's safe haven status

"Most Draconian Measures Ever": China Expands Bitcoin Crackdown Beyond Exchange Trading

Last week bitcoin plunged over 40% from all time highs hit as recently as three weeks ago on news that China had ordered local exchanges to halt trading in the cryptocurrency. Since then, defying naysayers yet again, bitcoin staged a remarkable comeback, rising from under $3000 to $4000 in the last few days of trading, but China appears to be nowhere near done, and as the WSJ reports this morning, Beijing is moving toward a "broad clampdown on bitcoin trading, testing the resilience of the virtual currency as well as the idea its decentralized nature protects it from government interference" in what the paper dubs the "most draconian measures any government has taken to control bitcoin."

According to the WSJ, regulators have decided on a "comprehensive ban on channels for the buying or selling of the virtual currency in China" that goes beyond plans to shut commercial bitcoin exchanges. The still unofficial policy was communicated to several industry executives at a closed-door meeting in Beijing on Friday, "according to people who were at the meeting."

The move is notable because until last week, many China bitcoin entrepreneurs thought authorities might shut down only commercial trading activity while tolerating peer-to-peer, or over-the-counter, bitcoin platforms, which enable buyers and sellers to find each other and trade directly. However, it now appears that this was only the beginning as two years after we first warned that bitcoin will be used largely to circumvent Chinese capital controls (and said it would soar as a result when its price was just $2 ...

Frontrunning: September 18



Caribbean Braces for Another Hurricane: Maria (WSJ)

Trump, Haley to share spotlight at U.N. gathering (Reuters)

UN 'Club' Trump Derided Forges Unexpected Alliance on Key Issues (BBG)

'We've Been Breached': Inside the Equifax Hack (WSJ)

World stocks reach new peak as Fed-focused week begins (Reuters)

Korean peninsula draws range of military drills in show of force against North Korea (reuters)

North Korea says more sanctions will spur it to hasten nuclear plans (Reuters)

As ISIS Falters, Syrian Regime and U.S. Allies Maneuver for Advantage (WSJ)

Northrop Grumman to Buy Orbital ATK for $7.8 Billion (WSJ)

Saudis May Hike Domestic Gasoline Prices by 80% (

Deutsche Bank: "Global Asset Prices Are The Most Elevated In History"

In an extensive report published this morning by Deutsche Bank's Jim Reid, the credit strategist looks at the "Next Financial Crisis", and specifically what may cause it, when it may happen, and how the world could respond assuming it still has means to counteract the next economic and financial crash. While we will have much more to say on this study in upcoming posts, we wanted to bring readers' attention to one observation made by Reid, namely that "we're in a period of very elevated global asset prices - possibly the most elevated in aggregate through history."

Here are the details on what appears to be the biggest asset bubble ever observed, courtesy of Deutsche Bank:

Figure 57 updates our analysis looking at an equal weighted index of 15 DM government bond and 15 DM equity markets back to 1800. For bonds we simply look at where nominal yields are relative to history and arrange the data in percentiles. So a 100% reading would mean a bond market was at its lowest yield ever and 0% the highest it had ever been. For equities valuations are more challenging to calculate, especially back as far as we want to go. In the 2015 study ('Scaling the Peaks') we set out our current methodology but in short we create a long-term proxy for P/E ratios by looking at P/Nominal GDP and then look at the results relative to the long-term trend and again order in percentiles. Nominal GDP data extends back much further through history than earnings data. When we have tracked the two series where the data overlaps we have found it to be an excellent proxy. Not all the data in Figure 57 starts at 1800 but we have substantial history for most of the countries (especially for bonds).

Why P&G Investors Should Want Nelson Peltz on the Board

After some serious missteps, the once irreproachable consumer-goods giant has lost the right to say: Just trust me.

China's Backdoor Real-Estate Bailout

China's housing market is clearly in retreat. But that doesn't mean a collapse is near: The government is propping up the market in a new way.

Why U.S. Consumers Are Feeling Spent

The weak August retail sales report reflects the limited wherewithal Americans have to spend more.

Cancer vaccines, long considered failures, are hot again

Successful sister fields of cancer research have spurred scientists and investors to give cancer vaccines another look.

Market Snapshot: Stock market takes aim at fresh records to start the week

After a strong close at the end of last week, U.S. stock futures are pointing to a higher open Monoday. Helping out, investors continued to ease up on concerns surrounding North Korea.

Market Snapshot: Stock market's bull may now depend on what the Fed does next

Wall Street investors have shrugged off recent worries to carve out fresh all-time highs, but the Federal Reserve's policy meeting this week may provide investors the clearest sign yet about the health of the U.S. economy and how the central bank is construing stubbornly low inflation.

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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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