05Sep2016 Pre-Market Commentary: US Markets Closed For Labor Day, Crude Prices Spiked 5% Earlier, Gold Climbing, US Dollar Softening

Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.24% while the CAC 40 gains 0.16%. The FTSE 100 is off 0.18%.

Biggest jump in a month for stocks as oil boils

LONDON (Reuters) – World shares saw their biggest jump in over a month on Monday and the dollar slipped, after weaker-than-expected U.S. jobs figures gave investors another excuse to push back Federal Reserve interest rate rise expectations.

Oil pares gains after Saudi, Russia sign pact

LONDON (Reuters) – Crude oil futures pared gains on Monday after top producers Russia and Saudi Arabia said they have agreed to cooperate on stabilizing the oil market, including limiting output.

BOJ’s Kuroda says room for more easing, including new ideas

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda signaled his readiness to ease monetary policy further using existing or new tools, shrugging off growing market concerns that the bank is reaching its limits after an already massive stimulus program.

EU seeks to coordinate consumer action against Volkswagen over Dieselgate

BRUSSELS/FRANKFURT (Reuters) – The European Commission will meet consumer groups this week to make sure they are doing enough to seek compensation for European drivers affected by Volkswagen’s cheating of diesel emissions tests.

Barclays nabs JPMorgan’s Throsby to head investment bank

LONDON (Reuters) – Britain’s Barclays has hired JPMorgan banker Tim Throsby to head its Corporate and International division, ending a six-month search for the number two job under Chief Executive Jes Staley.

Hanjin Shipping filed for U.S. bankruptcy protection: WSJ

SEOUL (Reuters) – Troubled container shipper Hanjin Shipping Co Ltd has filed for bankruptcy in the United States to protect its vessels from being seized by creditors, the Wall Street Journal reported, citing a filing by the South Korean firm.

Macau approves 150 tables for new Sands casino resort

HONG KONG (Reuters) – Macau casino operator Sands China Ltd said on Monday the government has granted 150 gaming tables for its $3 billion casino resort, a figure analysts said will be sufficient to support its revenues in the world’s biggest casino hub.

German finance minister lauds efforts to crack down on tax evasion

HANGZHOU, China (Reuters) – German Finance Minister Wolfgang Schaeuble on Monday said the G20 leaders agreed that the BEPS process to crack down on tax “base erosion and profit sharing” was working and further steps were needed to implement it, including in the digital economy.

Olympus in legal dispute with whistleblower Woodford over pension

LONDON (Reuters) – Olympus , the Japanese medical equipment and camera maker, is suing former CEO and whistleblower Michael Woodford in a multimillion-pound legal row over allegations of wrongdoing surrounding an executive pension plan.

Labor Day Summary: Wage Earners Have Taken A Beating

Submitted by Charles Hugh Smith from Of Two Minds

Let’s honor Labor Day by reviewing what’s happened to wage-earners in the eight years since central banks “saved the financial system” with free money for financiers: wage-earners have taken a beating and been dumped in a ditch. It’s really very simple: wage-earners have seen their real earnings (as measured by purchasing power) stagnate or decline while those chosen few with access to near-zero interest borrowed capital have seen their net income and wealth explode higher.

Do the math, people: annual wage increases once real-world inflation is factored in (roughly 7% to 10% annually for those who rent, have significant healthcare expenses or buy higher education) are either negative or are measured in the hundreds of dollars–in other words, trivial increases for all but the very top echelon of wage earners.

Increases in wealth for those with central bank-supplied free money for financiers are measured in the millions of dollars. Even small-fry with capital invested in bubble markets have experienced gains in the hundreds of thousands of dollars–entire lifetimes of earned income for those earning $25,000 to $35,000 annually.

There are forces at work that are beyond the power of central banks: the technologies of automation, robotics and software are replacing human labor not just in low-skill sectors but increasingly in sectors that provided the bulk of middle class jobs.

One reason why automation is gaining ground is the soaring cost of healthcare (paid by the employers and employees in America, except for those on federally funded Medicaid). Healthcare expenses are labor overhead–employers don’t pay labor overhead on robots or software.

While wage earners see their tiny raises wiped out by inflation, employers …

Dr. Drew Asked To Retract Hillary Health Comments – Received “Scary, Creepy” Phone Calls

Submitted by Joseph Jankowski via PlanetFreeWill.com,

Eight days after Board-certified medicine specialist and TV personality Dr. Drew Pinsky expressed his grave concern over Hillary Clinton’s health and the healthcare she was receiving, his popular show on HLN, the sister channel of CNN, was cancelled.

Appearing on KABC’s McIntyre in the Morning, Pinsky said he and his colleague Dr. Robert Huizenga became “gravely concerned……not just about her health but her health care” after analyzing what medical records on Hillary had been released.

Pinsky pointed out that after Clinton fainted and fell in late 2012, she suffered from a “transverse sinus thrombosis,” an “exceedingly rare clot” that “virtually guarantees somebody has something wrong with their coagulation system.”

According to sources close to Pinsky, the medicine specialist had been asked to retract his statements on the democratic nominee’s health and also received a series of nasty phone calls and e-mails over the his comments.

“CNN is so supportive of Clinton, network honchos acted like the Mafia when confronting Drew,” a source told …

With US On Holiday, Global Stocks Rise As Dollar Sinks, While Fireworks Break Out In Crude

With the US taking the day off to celebrate the unofficial end of the summer, global markets have been relatively quiet, aside from the dramatic moves in the energy sector over the past few hours, where crude soared in early trading as reported previously on a much-hyped joint statement by the energy ministers of Saudi Arabia and Russia, only to see the spike fizzle after the two disappointed in failing to implement any tangible action, merely revealing they would launch a “working group” to “monitor the market”, even as the Saudi said there was “no need for an oil production freeze for now.” With the market left wondering ‘if not now, when’, the initial HFT euphoria has promptly fizzled.

Stepping away from crude, the drop in the USD which started on Friday after U.S. payrolls data showed hiring moderated more than forecast, continued even as financial markets still reflect the potential for a September interest-rate increase. The chance of the Fed hiking this month ended last week at 32 percent, futures show, having been 34 percent on Thursday. The probability fell briefly to 20 percent in the wake of the jobs report, however was rescued by an unexpected Goldman report hiking the odds of a September rate hike to 55%.

However the main reason for the overnight plunge in the USDJPY was a speech delivered by the BOJ’s Kuroda in Tokyo on Monday, in which he did not signal aggressive stimulus is planned at central bank meeting on Sept. 2 …

Oil Soars Ahead Of Surprising Joint Saudi, Russian Statement, Which Fails To Freeze Oil Production

As the G-20 summit drew to its conclusion, a moment of sheer drama erupted earlier this morning as oil exploded higher following speculation Saudi Arabia was prepared to make a “significant” joint announcement with Russia (the market promptly assumed this meant a preliminary oil production freeze) following discussions over promoting market stability.

As the chart below shows, oil futures soared by several dollars in a matter of minutes, after Saudi Arabia and Russia agreed to work together to stabilize prices following Sunday’s meeting between Deputy Crown Prince Mohammed bin Salman and President Vladimir Putin. Saudi Energy Minister Khalid Al-Falih will make the announcement at the G20 summit in China on Monday, according to his chief of staff. Crude rose the most in two weeks on Friday as Putin said he’d like OPEC and Russia to agree to an output freeze. “The market seems to be positioning for the vague possibility of a substantial statement” by Saudi Arabia, Axel Herlinghaus, senior commodities analyst at DZ Bank AG said by e-mail.

And sure enough, this is what happened in advance of the announcement:

The actual announcement, however, when delivered was somewhat disappointing as Russia and Saudi Arabia announced they have signed a joint statement aimed at stabilizing the crude market, which would see the two nations create… working groups and monitor the market. In other words, more of the same. The document was signed by Russian Energy Minister Alexander Novak and Saudi Minister of Energy, Industry and Mineral Resources Khalid Al-Falih. According to the painfully vague “agreement”, the two countries will develop cooperation in the oil and gas sector to impl …

Bank of Japan’s New Unease With Negative Rates

Bank of Japan Gov. Kuroda says the central bank needs to consider the effects negative rates have had on banks, an important turn in his rhetoric.

Why Brexit Politics Now Trumps Economics

U.K. business sentiment has rebounded sharply as the Brexit vote shock has faded. The focus is now on Westminster.

Samsung Battery Fires Shouldn’t Leave Lasting Burn

Samsung’s share price already reflects the one-off impacts from having to recall Note 7s for exploding batteries.

Projecting The Long-Run Natural Rate Of Interest

from the San Francisco Fed

— this post authored by Kevin J. Lansing

The “natural” rate of interest – the real rate consistent with full use of economic resources and steady inflation near the Fed’s target level – is an important benchmark for monetary policy. Current estimates suggest that this rate is near zero, but it is expected to rise gradually in the years ahead as real GDP returns to its long-run potential. If the historical statistical relationship between the growth rate of potential GDP and the natural rate holds true in the future, then a 2% long-run growth rate would imply a long-run natural rate of around 1%.

How Does Available Credit Affect Finding Jobs?

from the St Louis Fed

When workers lose their jobs, the financial pressures of becoming re-employed can be substantial. Recent research has found that, in general, the more available credit one has, the longer it takes to find a job, but the better the job fit.

Metals Stocks: Gold, silver gain on more bets the Fed will take it slow on raising rates

Gold futures advance Monday, with analysts crediting the move to a U.S. jobs report that appears to lower the chances for an interest-rate increase by the Fed this month.

London Markets: FTSE 100 slips on RBS, Lloyds downgrades, but miners rise

U.K. stocks are slipping Monday, feeling the pinch from ratings downgrades for Royal Bank of Scotland and Lloyds Banking Group, as well as a climb in the pound’s value.

The Wall Street Journal: North Korea fires 3 ballistic missiles near Japan as G-20 holds talks

North Korea fired three ballistic missiles into the sea Monday, hours after South Korea’s president pleaded unsuccessfully with China’s leader to drop his opposition to Seoul’s plan to deploy a U.S. missile defense shield.