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20Sep2017 Market Close: Wall Street Closes Higher After Fed Keeps Rates Steady, Will Start Portfolio Drawdown In October, WTI Briefly Hit The Low 51 Handle, US Dollar Climbed Higher

Written by Gary

Large caps closed flat to fractionally higher, while the small caps closed fractionally lower (SPY +0.04%). Indexes slid lower after Fed's response and then the DOW set another new historic record at the close.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Fed keeps rates steady, to start portfolio drawdown in October

WASHINGTON (Reuters) - The U.S. Federal Reserve left interest rates unchanged on Wednesday but signaled it still expects one more increase by the end of the year despite recent weak inflation readings.

Wall St. falls after Fed signals another rate hike this year

(Reuters) - Wall Street's three major indexes were lower on Wednesday after the Federal Reserve signaled that it expects another rate hike by year end and disclosed timing for reducing its balance sheet.

Holiday sales forecasts indicate strong growth for retailers

(Reuters) - Early holiday sales forecasts are indicating a largely stronger season for retailers than last year, helped by higher online sales and increasing spending power due to a strong labor market.

Toshiba to sell chip unit to Bain Capital-led group for $18 billion

TOKYO (Reuters) - Japan's Toshiba Corp agreed on Wednesday to sell its prized semiconductor business to a group led by U.S. private equity firm Bain Capital LP, a key step in keeping the struggling Japanese conglomerate listed on the Tokyo exchange.

Apple concedes new watch has connectivity glitch

(Reuters) - Apple Inc's on Wednesday conceded its latest smartwatch unveiled a week ago has problems with its most important feature: the ability make phone calls and access data without an iPhone nearby.

Pfizer files suit against J&J over Remicade contracts

(Reuters) - Drugmaker Pfizer Inc on Wednesday filed a lawsuit against Johnson & Johnson , saying its rival's contracts with health insurers for blockbuster rheumatoid arthritis drug, Remicade, were anticompetitive and blocked sales of Pfizer's new biosimilar.

How $5 billion of debt caught up with Toys 'R' Us

(Reuters) - Toys "R" Us Inc has been making $400 million in interest payments on its debt every year, largely due to its $6.6 billion leveraged buyout in 2005. This week, it succumbed to its debt burden, leading to the biggest bankruptcy of a U.S. retailer since that of Kmart in 2004.

Waymo seeking $2.6 billion from Uber for one trade secret: lawyer

SAN FRANCISCO (Reuters) - Alphabet Inc's Waymo unit is seeking about $2.6 billion from Uber for the alleged theft of one of several trade secrets in a lawsuit over self-driving cars, a lawyer for Uber said on Wednesday.

Google close to buying smartphone maker HTC's assets: Bloomberg

(Reuters) - Alphabet Inc's Google is close to acquiring assets of Taiwanese smartphone maker HTC Corp , Bloomberg reported, citing a person familiar with the matter.

Warren Buffett Predicts Dow 1,000,000; But There's A Catch...

The Wall Street Journal won the award for the greatest "Shock And Awe" financial headline of the day when it published a story earlier entitled "Warren Buffett Says the Dow Is Going Over One Million." The 'Oracle of Omaha' apparently made the 'bold' prediction at the 100-year anniversary celebration of Forbes magazine in which he also said that "being short America will continue to be a loser's game." Here are the highlights from WSJ:

You heard it from Warren Buffett first: the Dow Jones Industrial Average is headed above one million.

The blue-chip stock benchmark is likely to be above that milestone in a hundred years' time, the Berkshire Hathaway Inc. chief executive and chairman said Tuesday night.

"The Dow will be over a million and that is not a ridiculous forecast at all if you do the math," he said.

"Being short America has been a loser's game," he said. "And it will continue to be a loser's game."


And while the title may make you want to drop everything you're doing, throw all your cash in the DOW and retire early...a bit of simple math reveals that a more appropriate title for the Wall Street Journal's "Shock And Awe" piece from early today might have been: "Warren Buffet Predicts Dow Will Massively Underperform Historical Returns Over the Next Century."

In reality, 'Dow $1,000,000' in 100 years would indicate an abysmal CAGR of just 3.9% ...

Hurricane Maria Floods San Juan, Knocks Out Power Across Puerto Rico

Even after weakening to a category 4 storm shortly before making landfall along the southeastern coast of Puerto Rico, Hurricane Maria has caused unprecedented devastation to the cash-strapped island, knocking out electricity for all residents. Worse still, the island's governor has said it could be months before power is restored to all customers, according to the Associated Press.

The strongest storm to hit Puerto Rico in nearly 90 years tore off roofs and doors and caused flooding across the island - including in downtown San Juan, including the capital's Hato Rey financial district. Its 20+ inches of rain, 9 nine-foot storm surge and 155 mph winds hammered the island's fragile power grid, which had yet to be fully repaired from the damage caused by Hurricane Irma just two weeks ago.

Many of residents had yet to see their power restored after Irma's assault, and thousands remained in government-run shelters.

Rivers overflowed and the winds downed trees and damaged homes and buildings, including several hospitals. The storm was downgraded to a category 3 with 115 mph gusts as it traversed the island, according to Bloomberg.

Back To Rehab Or Continue Chasing The Dragon

Authored by 720Global's Michael Lebowitz, via,

"There is no other agency of government which can overrule actions that we take."

- Alan Greenspan

The Federal Reserve (Fed) currently expects real economic growth for the foreseeable future to average below 2.00%. Japan, the United Kingdom, and the European region are forecasting an even more anemic pace. On numerous occasions, we have detailed the reasons the United States and many foreign nations are mired in economic stagnation. At the top of our list, is the over-reliance on debt and the burden that decades of debt-driven-consumption policies have inflicted upon economic activity. To not only accommodate existing debt, but promote more debt, Keynesian schooled central bankers have presided over extremely easy monetary policy for years. Policy has been administered through a combination of low-interest rates and more recently, as desperation escalates to keep the economic engine from sputtering, money printing.

In "How Much is too Much" we shared the following graph that plots the exponentially increasing amounts of stimulus supplied by the Fed to combat recessions and "sub-par" economic growth.

The graph above, and many others compari ...

Yellen "Does Not Fully Understand Inflation" So Here It Is Explained In Just One Chart

In what has been the most stunning admission by Janet Yellen so far during her press conference, the Fed Chair said that "we don't fully understand inflation" and added that the "shortfall of inflation this year is more of a mystery."

With all due respect, it's not. But since the Fed is often confused, we would like to do the central bank a favor and "explain" inflation, or the lack thereof as the Fed laments, with just one chart.

To simplify enough that everyone on the FOMC will understand, here it is:

Real economic prices: no inflation.

Asset prices: rampant, and in some case soaring, inflation.

And just in case there is still confusion, here is Goldman:

The long economic cycle that we have been enjoying is, in part, a reflection of loose monetary conditions and low interest rates. Exhibit 17 is a simple but effective way to demonstrate this effect. Taking data back to 2009, the start of the period of extraordinary monetary policy, we can see a very big difference between 'prices' in the real economy - measures of wages, consumer price inflation, house prices, commodities - and asset prices. Also shown here is the long-run average nominal GDP growth and nominal GDP growth over this period for the US and Europe (in red). Financial assets have significantly outstripped both nominal GDP growth and inflation in the real economy, largely as a result of rates staying low.

So, dear Janet, the next time you are so worried about the "shortfall" in inflation, maybe just pull up a r ...

Adobe's Cloud Hits First Headwind

Larger deals have been taking longer to close, but software maker's cloud transition still packs a lot of growth ahead.

Murky World of Drug Rebates Gets Airing in Lawsuit

The closely guarded world of drug pricing is getting a public airing in a feud between two of the industry's biggest companies. The attention drawn to rebates could hurt the profits of some very successful drugs.

Call It 'Fintech' and Watch the Valuation Soar

China's ZhongAn insurance company wants to be seen as tech play, rather than a boring old insurer.

Key Words: Cassidy and Kimmel continue their Obamacare back-and-forth

The back-and-forth between Bill Cassidy, medical doctor and U.S. senator, and Jimmy Kimmel, talk-show host and besotted parent, is turning into a pretty sustained rally.

Alphabet seeking at least $2.6 billion from Uber in self-driving legal battle

Alphabet Inc.'s self driving car unit Waymo LLC wants at least $2.6 billion in damages from ride-hailing giant Uber Technologies Inc. in its suit over allegedly stolen technology.

One very traditional and, arguably, sexist view of marriage has not changed

As more women have joined the workforce, some things have remained the same.

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