Written by Gary
US markets closed higher in the green (SPY +0.3%), even after a disappointing report from the ISM being much more negative than expected. WTI crude prices have recovered from the sessions low point to the high 44 handle, the US dollar has fallen to the high 94’s again and gold is trending higher.
Todays S&P 500 Chart
The Market in Perspective
| Here are the headlines moving the markets. | |
 | Wall St. inches up on views Fed will hold off on rates(Reuters) – U.S. stocks edged higher on Tuesday as economic data bolstered views the Federal Reserve may decide against raising interest rates in the near term. |
| China’s online chatter muted ahead of Apple iPhone 7 launchSHANGHAI/BEIJING (Reuters) – Judging by the volume of online chatter, there’s a lot less buzz in China ahead of this week’s expected launch of the new Apple Inc iPhone, and people on the street say they’re more likely to “wait and see” what the latest device offers than rush out to buy. |
| Enbridge buying Spectra in $28 billion deal(Reuters) – Canada’s Enbridge Inc said on Tuesday it would buy Spectra Energy Corp of Houston in an all-stock deal valued at about $28 billion (C$37 billion) to create the largest North American energy infrastructure company. |
| Fed policymakers defend role of private bankers at central bankWASHINGTON (Reuters) – Two Federal Reserve policymakers plan to warn U.S. lawmakers against changing the Fed’s structure to reduce the role of private bankers at the U.S. central bank, according to statements seen by Reuters. |
| U.S. services sector activity hits a six and a half-year lowNEW YORK (Reuters) – U.S. services sector activity slowed to a 6-1/2-year low in August amid sharp drops in production and orders, pointing to slowing economic growth that further diminished prospects for an interest rate hike from the Federal Reserve this month. |
| Brent crude futures ease as hope for output freeze fadesNEW YORK (Reuters) – Global benchmark Brent crude fell almost 1 percent on Tuesday as hopes waned for an agreement between two of the biggest oil producers to freeze output to tackle a global supply glut. |
| Construction worker shortage weighs on hot U.S. housing marketDENVER (Reuters) – The drumbeat of hammers echoes most mornings through suburban Denver, where Jay Small, the owner of company that frames houses, is building about 1,300 new homes this year. |
| Starbucks to serve stevia-based sweetener in select cafes(Reuters) – Starbucks Corp, the world’s largest coffee chain, said it would serve its first stevia-based, zero-calorie sweetener at select cafes in the U.S. and Canada. |
| Volkswagen buys Navistar stake for $256 million in trucks pushFRANKFURT (Reuters) – Volkswagen has agreed an engine technology and purchasing alliance with truckmaker Navistar and will buy a 16.6 percent stake in the U.S. firm for $256 million, as global truck makers face steep development costs to meet global anti-pollution rules. |
| Clinton Campaign Unloads On NBC For Covering “Hillary’s Coughing Fit”With questions about Hillary’s health permeating much of the fringe media over the past month, if mostly absent from the mainstream coverage, yesterday’s not one but two dramatic coughing fits by Hillary, promptly blamed on Cleveland’s pollen levels (we showed earlier that Cleveland pollen was actually moderate, and is absent from the inside of a hermetically sealed airplane), led to another frenzy of inquiries: what exactly is wrong with her? It also led to a furious response by the Clinton campaign at an unwitting recipient: NBC News, which “dared” to cover the story (even if, as we first reported, MSNBC ultimately cut its live feed of Clinton’s Cleveland coughing fit). As The Hill first wrote, NBC News is “facing harsh criticism” from Hillary Clinton’s campaign and her supporters for publishing one article on the Democratic presidential nominee’s coughing fit. Lest there be any confusion, the 91-word report, had virtually no commentary aside from reporting the facts, which included her quote that she is “allergic to Donald Trump.” This is all that it said:
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| Warning to investors – DO NOT INVEST IN CURRENCIESWe see from time to time articles from investment groups talking about how they believe that the US Dollar will be strong for the next 18 months blah blah blah. It’s always positive to hear investment managers learning about FX. Unfortunately, as we explain in Splitting Pennies – FX isn’t like other markets. Investing in Currencies is an outright gamble. Let’s elaborate on this point, the difference between TRADING and INVESTING. When someone says that the US Dollar will be ‘up’ in the next 6 months – how do they know there won’t be a black swan event, such as an act of terror, a surprise interest rate increase, a coup, or any number of other events that can shake markets? The proof, or at least a strong argument – Goldman Sachs has lost billions for clients in FX, see this recent example:
Well, if Goldman can’t do it – you really think you are smarter than Goldman Sachs? And remember that Forex is a Monopoly, in which Goldman Sachs is a controller. They lose money in a market they ‘control.’ Why would an FX outfit warn investors not to invest in Currencies? Because we believe based on statistical evidence that the markets are random. Or to be more static – even if they aren’t random, if a strategy can work on random numbe … |
| For The First Time, Two European Non-Financial Companies Will Be Paid To Issue DebtToday was another historic day in the monetary twilight zone that is Europe, when two large European, non-financial companies were the first in history to be paid by investors to borrow, courtesy of the ECB’s corporate debt monetization program, which has unleashed an unprecedented scramble for frontrunning the central bank’s purchases of corporate debt and a historic collapse in bond spreads. As the WSJ reported earlier, German multinational Henkel AG and French drugmaker Sanofi SA are set to pay, pardon collect, a yield of minus 0.05% on new issues of short-dated bonds on Tuesday. The German household products is set to sell 500 million of two-year bonds that yield negative 0.05 percent, while Sanofi will be paid to issue three-year debt. As the WSJ conveniently adds, in case someone was still unaware, “the fund raising is another sign of how unprecedented monetary policy has turned conventional investment theory on its head.” Roughly 717 billion of eurozone investment-grade bonds traded at a negative yield as of the end of August, or over 30% of the entire market. The ECB had bought over 20 billion of corporate bonds as of Sep. 2, after launching its program in early June, with most of its purchases coming in secondary markets. The result is shown in the charts below:
In a note by Bank of America’s Barnaby Martin yesterday, the strategist said he was starting to “think the unthinkable”, namely what happens when double- … |
| How Enbridge and Spectra Inked a Clean Pipe DealA proposed pipeline deal between Canada’s Enbridge and Spectra of the U.S. should succeed because of simplicity, limited overlap and low commodity exposure. |
| The Single Life Suits Hewlett Packard EnterpriseInvestors have applauded Hewlett Packard Enterprise’s narrower focus. Now it must justify its recent rally when it reports fiscal third-quarter results on Wednesday. |
| Why the Market Is Betting on a Full Navistar TakeoverIf the strategic alliance works out, VW seems likely to take its investment in the U.S. truck maker further. |
| Hollywood had a horrible summer — except at the box officeIt was a summer of terrible reviews, blockbuster after blockbuster that failed to meet expectations and consumer rage about the abundance of sequels, franchises and reboots. |
| The Tell: Small-cap stocks aim high thanks to U.S. economyThe performance of small stocks in 2016 so far has been quite enviable |
| GE’s $1.4 billion push into 3-D printing sends sole ETF to record highGE is buying two European 3-D metal printing companies as it pushes to make lighter, more durable parts. |
Summary of Economic Releases this Week
Earnings Summary for Today
leading Stock Positions
Current Commodity Prices
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