07Sep2017 Pre-Market Commentary: Wall Street To Open Flat, Things Have Been Going Up For Too Long – Goldman CEO, Devastation Caused By Hurricane Harvey Left Many Americans Unable To Work

Here is the current market situation from CNN Money

European markets are higher today with shares in Germany leading the region. The DAX is up 0.92% while France’s CAC 40 is up 0.66% and London’s FTSE 100 is up 0.40%.

Euro grinds higher before ECB, global stocks stutter

LONDON (Reuters) – The euro climbed and stocks inched higher on Thursday, as markets waited to hear just how close the European Central Bank is to scaling back its more than 2 trillion euro ($2.75 trillion) stimulus program.

Ex-bank manager to face charges in Philippines for cyber heist, others cleared

MANILA (Reuters) – Philippine prosecutors have recommended the filing of charges against a former bank manager for her part in laundering of tens of millions of dollars stolen from Bangladesh’s central bank last year but cleared two casino agents and a remittance firm.

The death of the car show?

PARIS/FRANKFURT (Reuters) – Frankfurt’s vast auto show, which opens next week, is already getting attention of the wrong kind – for its impressive list of no-shows.

Court challenge delays vote on CBS’ Australian TV station buyout

SYDNEY (Reuters) – CBS Corp’s buyout of struggling Australian broadcaster Ten Network Holdings Ltd will be delayed at least a week, after a court on Thursday said it would pause the deal to hear a challenge by a rival bidder.

Oil firms as U.S. Gulf refineries restart, dollar softens

LONDON (Reuters) – Brent oil prices firmed on Thursday, hovering near 3-1/2-month highs as U.S. refiners restarting after Tropical Storm Harvey increased their crude processing and the U.S. dollar declined.

India’s Eicher set to make $1.8 billion-$2 billion binding bid for Ducati: paper

BANGALORE/BERLIN (Reuters) – India’s Eicher Motors is set to make a $1.8 billion-$2 billion bid for Italian motorcycle manufacturer Ducati, the Economic Times daily reported on Thursday, although the sale of the brand by German owner Volkswagen remains in limbo.

EU national consumer bodies press Volkswagen on Dieselgate repairs

BRUSSELS (Reuters) – European national consumer bodies pressed Volkswagen to fix all emissions-cheating vehicles by the end of the year, in a joint letter on Thursday showing mounting impatience with the German carmakers response to the Dieselgate scandal.

GoPro expects to post adjusted profit in third-quarter

(Reuters) – Wearable camera maker GoPro Inc said on Thursday it expects to be profitable on an adjusted basis in the third quarter.

Amazon plans $5 billion second headquarters in North America

(Reuters) – Amazon.com Inc said on Thursday it plans to open another headquarters in North America and spend more than $5 billion for its construction and operation.

Is the High Cost Of Housing Crushing Wages?

Authored by Charles Hugh Smith via OfTwoMinds blog,

The authors’ thesis doesn’t explain the 47-year downtrend of labor’s share of the economy.

A provocative essay, Don’t Blame the Robots, makes the bold claim that “Housing Prices and Market Power Explain Wage Stagnation.” (Foreign Affairs) In other words, the stagnation of the bottom 95% of wages isn’t caused by automation or offshoring, but by the crushingly high cost of housing:

“Yet recent academic work in macroeconomics suggests that current wage stagnation has less to do with robots and more to do with real estate and market power.

Real wage growth is a function of two things: changes in productivity and changes in the share of national output attributed to labor. If the share of GDP going to workers doesn’t change, then real wages simply track productivity.”

The market power argument is straightforward: as competition declines, cartels and quasi-monopolies scoop up a larger share of the national income, leaving relatively less for labor.

The high housing costs crush wages argument is more nuanced. The high cost of housing means that much of the nation’s available capital stock is invested in housing, rather than in productivity-boosting capital investments. This diversion of capital from productivity to housing reduces the productivity gains that enable higher wages.

The authors describe a second dynamic: the soaring cost of rents / purcha …

ECB Keeps Rates, Statement Unchanged; QE To Run Until “December 2017 Or Beyond”

The ECB has kept not only its three key rates and pace of QE unchanged, but also its most recent statement, reiterating that it sees QE “at the current monthly pace of 60 billion, are intended to run until the end of December 2017, or beyond, if necessary”, sees rates at present level well past the end of QE – according to more than half of economists in a recent Bloomberg survey, the ECB will keep its rates on hold until 2019 – and that QE will run until the inflation path has sustainably adjusted.

ECB SEES QE RUNNING UNTIL END OF DECEMBER OR BEYOND IF NEEDED

ECB: QE TO RUN UNTIL INFLATION PATH HAS SUSTAINABLY ADJUSTED

The Full statement:

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.

Regarding non-standard monetary policy measures, the Governing Council confirms that the net asset purchases, at the current monthly pace of 60 billion, are intended to run until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The net purchases are made alongside reinvestments of the principal payments from maturing securities purchased under the asset purchase programme. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjus …

‘Things Have Been Going Up For Too Long’ – Goldman CEO

“Things have been going up for too long…” – Goldman Sachs’ CEO

– Lloyd Blankfein, Goldman CEO “unnerved by market” (see video)
– Bitcoin bubble is no outlier says Bank of America Merrill Lynch
– Bubbles are everywhere including London property
– $14 trillion of monetary stimulus has pushed investors to take more risks
– We are now in a new era of bigger booms and bigger busts – BAML
– “Seeing signs of bubbles in more and more parts of the capital market” – Deutsche Banks’ John Cryan
– Global debt bubble and China very vulnerable too – warns Steve Keen
– Bubbles, bubbles everywhere … lots of potential pins … got gold?

Editor: Mark O’Byrne

Amazon Announces Plans For $5 Billion Second North American Headquarters

Amazon.com announced plans on Thursday to open a second headquarters somewhere in North America that will house up to 50,000 employees and cost $5 billion to build and operate. The company is soliciting bids from local and state government leaders for the project, dubbed Amazon’s “HQ2,” and said it would prioritize metropolitan areas with more than one million people.

“We expect HQ2 to be a full equal to our Seattle headquarters,” Amazon’s CEO Jeff Bezos said. “Amazon HQ2 will bring billions of dollars in upfront and ongoing investments, and tens of thousands of high-paying jobs. We’re excited to find a second home.”

The company also announced that its investment in Seattle from 2010 through 2016 has brought an additional $38 billion in investments to the local economy. It hopes to generate the same level of return in the new site: “In addition to Amazon’s direct hiring and investment, construction and operation of Amazon HQ2 is expected to create tens of thousands of jobs in construction and related industries, and generate tens of billions of dollars in additional investment in the city where Amazon HQ2 is located.”

Existing senior leaders will get to choose whether they locate their teams in the Seattle headquarters, HQ2 or both, the company said. Amazon is currently in an aggressive stage of expansion, buying up competitor companies and bricks and mortar stores as it looks to challenge the likes of Walmart in food retailing. According to the FT, the ecommerce giant has made about 130 acquisitions or investments since its debut in 1995.

The company’s Seattle headquarters is spread across 8.1 million square feet in 33 buildings and employs more than 40,000 people.

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Economic Report: Storm surge: Hurricane Harvey boosts jobless claims by 62,000 to 298,000

A large swath of devastation caused by Hurricane Harvey left many Americans unable to work, boosting new applications for unemployment benefits to the highest level in more than two years.

Bond Report: Treasury yields slip ahead of ECB news conference

Treasury prices fall, nudging yields slightly lower, Thursday morning ahead of the conclusion of a key meeting of the European Central Bank’s.

Caroline Baum: It’s time to get rid of the debt ceiling

The repeated political dramas over raising the federal debt limit have done nothing to control federal spending, writes Caroline Baum.