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21Sep2017 Pre-Market Commentary: Wall Street To Open Near The Unchanged Line After Fed Signals Third Rate Hike This Year, US Jobless Claims Fall; Hurricanes Still Impacting Data, Dollar Gains Fractionally

Written by Gary

US stock market index futures are flat this morning (SPY -0.07%), a day after the FOMC signaled that it would likely raise interest rates in October.


Here is the current market situation from CNN Money

European markets are mixed. The DAX is higher by 0.27%, while London's FTSE 100 is off 0.14%. Shares in France are unchanged with the CAC 40 at 5,213.91.

What Is Moving the Markets

Here are the headlines moving the markets.

Futures flat after Fed signals third rate hike this year

(Reuters) - U.S. stock index futures were little changed on Thursday, a day after the Federal Reserve signaled that it could raise interest rates for the third time this year despite low inflation and disclosed plans to shrink its balance sheet.

U.S. jobless claims fall; hurricanes still impacting data

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits unexpectedly fell last week, but the data continued to be influenced by Hurricanes Harvey and Irma, muddying the labor market picture in the near term.

SEC says hackers may have traded using stolen insider information

WASHINGTON (Reuters) - The top U.S. markets regulator said on Wednesday that hackers accessed its corporate disclosure database and may have illegally profited by trading on the insider information stolen.

Google bets anew on smartphones, pays $1.1 billion for HTC's Pixel division

TAIPEI/SAN FRANCISCO (Reuters) - Alphabet Inc's Google said it would pay $1.1 billion for the division at Taiwan's HTC Corp that develops the U.S. firm's Pixel smartphones - its second major foray into phone hardware after an earlier costly failure.

Toys 'R' Us plans holiday hires including toy demonstrators

(Reuters) - Toys "R" Us Inc, the U.S. toy retailer that filed for bankruptcy protection this week, said on Thursday it is hiring part-time seasonal workers to staff its stores for the holidays, including for a new position of toy demonstrator.

Road to electric car paradise paved with handouts

JUDABERG, Norway (Reuters) - The Norwegian island of Finnoey has the highest density of electric cars in the world. The reason? They are exempt from the $6,000-a-year toll charges for the tunnel to the mainland.

EU eyes solo move to increase tax on online giants, risking U.S. anger

BRUSSELS (Reuters) - The European Commission said on Thursday it may seek to implement tax reform to raise more revenue from online giants without the backing of the United States and other rich nations, in a move that could spark a new transatlantic dispute.

What is at stake for Uber in U.S. bribery probe?

SAN FRANCISCO (Reuters) - A U.S. bribery investigation at ride-hailing company Uber Technologies Inc [UBER.UL] will likely go on for a year or more and could lead to snowballing legal and compliance costs if lawyers find systemic problems.

Carlyle targets first-close of new Asia buyout fund at over $4 billion: sources

HONG KONG (Reuters) - Carlyle Group is targeting the first closing of a new Asia buyout fund within the next couple of months at over $4 billion, three people familiar with the matter said, bulking up in a region that has become a key market for global funds.

Exactly How Many Warnings Do You Need?

Authored by Lance Roberts via RealInvestmentAdvice.com,

When I was growing up my father, probably much like yours, had pearls of wisdom that he would drop along the way. It wasn't until much later in life that I learned that such knowledge did not come from books, but through experience. One of my favorite pieces of "wisdom" was:

"Exactly how many warnings do need before you figure out that something bad is about to happen?"

Of course, back then, he was mostly referring to warnings he issued for me "not" to do something I was determined to do. Generally, it involved something like jumping off the roof with a queen-sized bedsheet convinced it was a parachute.

After I had broken my wrist, I understood what he meant.

With that in mind, there are currently plenty of warning signs individuals might want to consider before taking that leap. Here are four to consider.

Warning 1: Investor Confidence

There are several different surveys of retail investors which all currently show the same thing. Individuals have never been as hopeful as they are currently that the stock market will continue to grind higher. Last week, I discussed the Gallup poll which showed investor optimism at the highest levels since 1999.

The latest survey comes from the University of Michigan survey courtesy of Business Insider.

"So What Did We Learn From Yellen?": Deutsche, Goldman Explain

For those still unsure what Yellen's rambling, disjointed press conference meant yesterday, or are still in shock over the Fed's admitted confusion by the "mystery" that is inflation, here is a quick recap courtesy of Deutsche Bank and Goldman, explaining what we (probably) learned from the Fed and Yellen yesterday.

First, here is DB's Jim Reid:

So what did we learn from the Fed and Yellen last night? Firstly we learnt that stopping reinvestment is a sideshow for now and that the market still cares more about the probability of a December hike and where the Fed thinks inflation is heading. Just briefly on the balance sheet run-off, they have committed to the plan from the June meeting of $10bn per month ($6bn USTs and $4bn Mortgages) with an incremental increase every 3 months until we get to $50bn. However on the rates and inflation outlook the committee and Yellen were on the hawkish side. As DB's Peter Hooper discusses in his note, barring negative surprises in the months just ahead, the Fed is on track to raise rates once more this year and three times in 2018. Yellen recognised that inflation has been running low recently but put a higher blame on one-off factors than was perhaps anticipated. At the same time she noted that monetary policy operates with a lag and that labour market tightness will eventually push inflation up.

The complication for markets though is that beyond 2017, the FOMC will see a huge upheaval in its membership which could easily mean current member's thoughts are meaningless in a few months time and also that Mr Trump's fiscal plans (or lack of them) have the ability to completely change the debate. So its difficult to read too much into the current FOMC's forecasts. However for now December is very much live with the probability of a December rate hike moving ...

South Korea Unexpectedly Approves Aid To Pyongyang As North Korea Calls Trump "Barking Dog"

There is no love lost in the endlessly escalating war of words and delightful soundbites between Trump and North Korea, and after the President threatened to "totally destroy" North Korea, the country's foreign minister said Trump's UN speech amounted to "the sound of a dog barking," adding that Trump's warnings are just a nonsensical "dog dream."

"If he was thinking he could scare us with the sound of a dog barking, that's really a dog dream," North Korean Foreign Minister Ri Yong-ho told reporters in New York on Wednesday, as cited by the Yonhap news agency. Along with other world diplomats, Ri was in New York to attend the UN General Assembly. In his debut speech to the UN on Tuesday, Trump vowed to "totally destroy" North Korea if the US was forced to defend its allies. Referring North Korean leader Kim Jong Un by a nickname he first used in in a tweet Sunday, Trump said: "Rocket man is on a suicide mission for himself and for his regime."

Responding to Trump's new nickname for North Korean leader Kim Jong-un, 'Rocket Man', Ri said: "I feel sorry for his aides."

North Korean diplomats were not present for Trump's speech.

According to CNN, US Secretary of State Rex Tillerson, who is also in New York, played down the possibility of a meeting with his North Korean counterpart. Pyongyang and Washington do not maintain formal diplomatic relations and the presence of North Korea's top diplomat in the US could have afforded a rare chance for high-level, face-to-face dialogue.

Tillerson told reporters he did not believe he could have a "matter-of-fact discussion with North Korea because we don't know how their means of communication and behavior will be.

Tillerson claimed there were signs that increased international pressure on North Korea was startin ...

Gold Investment "Compelling" As Fed May "Kill The Business Cycle"

Gold Investment "Compelling" As Fed Likely To Create Next Recession

- Is the Fed about to kill the business cycle?
- 16 out of 19 rate-hike cycles in past 100 years ended in recession
- Total global debt at all time high - see chart
- Global debt is 327% of world GDP - ticking timebomb...
- Gold has beaten the market (S&P 500) so far this century
- Safe haven demand to increase on debt and equity risk
- Gold looks very cheap compared to overbought markets
- Important to diversify into safe haven gold now

by Frank Holmes via Gold.org

Global debt levels have reached unprecedented levels, pension ...

What Google Wants With HTC's Smartphone Business

Google's $1.1 billion deal with HTC carries risks, but the internet giant needs more scale if it is to maintain its influence in the smartphone business.

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.

How the Fed's Unwind Will Ripple Through Banks

The gradual wind down of the Federal Reserve's balance sheet will have far-reaching effects throughout the banking system. For the most part, major banks stand to benefit.

16 September 2017 Initial Unemployment Claims Rolling Average Continue Above Level One Year Ago

Hurricanes Harvey and Irma impacted this week's claims. The market expectations for weekly initial unemployment claims (from Bloomberg / Econoday) were 285 K to 325 K (consensus 303,000), and the Department of Labor reported 259,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 262,750 (reported last week as 263,250) to 268,750. The rolling averages generally have been equal to or under 300,000 since August 2014.

Economic Report: Philly Fed manufacturing index accelerates in September

Manufacturing conditions in the mid-Atlantic region accelerated in September and suggest an economy picking up steam.

Need to Know: Jim Rogers says ETF holders will get mauled by 'the worst' bear market ever

Legendary investor Jim Rogers has a lot to say. Our call of the day looks at his big warning for the markets and for ETF holders in particular.

Economic Report: Jobless claims subside in mid-September despite hurricane damage

Applications for U.S. unemployment benefits fell sharply in mid-September, reflecting a smaller-than-expected increase in new jobless claims in Florida following hurricane Irma. Initial weekly claims in the period running from Sept. 11 to Sept. 16 fell by 23,000 to 259,000.

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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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