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Author: skywalker   |   Latest post: Fri, 22 Sep 2017, 11:44 AM

 

Wall Street Breakfast: Investors Ready For Jobs Report

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U.S. job growth likely slowed in August after two straight months of robust gains, but the pace of increase should be more than sufficient for the Fed to start shrinking its massive bond portfolio. The non-farm payrolls report this morning will probably show around 180,000 additions to the workforce, with average hourly earnings rising 0.2%, while the unemployment rate is expected to remain unchanged at 4.3%.

Economy

The death toll from Tropical Storm Harvey has risen to 44, and the storm could wind up being the most expensive natural disaster in American history. It could cost the economy about $190B, according to AccuWeather, which predicts it will total more than Katrina and Sandy combined. "You had the greatest rainfall ever measured in the continental U.S... damage to the supply chain across the country, jobs lost and health problems."

The Trump administration has a "very detailed" tax plan ready and "couldn't be more excited" about its prospects, according to Treasury Secretary Steven Mnuchin, who added that the debt ceiling issue won't hold America back. "Details will come out later this month, it's going to go through a committee process, and we expect the House and the Senate will get this to the president to sign this year."

The Federal Reserve's board of governors will conduct an open meeting today to discuss the "final rule establishing restrictions on qualified financial contracts of systemically important U.S. banking organizations" and the "U.S. operations of systemically important foreign banking organizations." It will take place at the Marriner S. Eccles Federal Reserve Board Building in Washington, D.C.

Mexico and Canada would remain in NAFTA even if the Trump administration abandoned the deal, Mexican Economy Minister Ildefonso Guajardo declared, noting that only the U.S. might consider leaving the accord. The statement comes as the second round of NAFTA negotiations begins in Mexico City, with the three countries pushing to modernize the 23-year-old trade agreement.

Slipping against the dollar and flat against the euro, sterling is on track to record its worst month since October, as Brexit uncertainty weighs on the currency. EU and U.K. teams agreed that "no decisive progress" had been made in the latest round of Brexit talks, with the EU's chief negotiator, Michel Barnier, criticizing the U.K. for "demanding the impossible."

Echoing the similar robust official data reported yesterday, Caixin/Markit's China Manufacturing PMI rose to 51.6 in August, compared with 51.1 in July. Total new business grew at the strongest rate in more than three years, while export orders saw the sharpest increase in over seven years, pointing to strong demand at home and abroad.

Iran is sticking by its nuclear deal with world powers by keeping its uranium stockpile and production capacity below set thresholds. The report, published by the International Atomic Energy Agency, is the third since the inauguration of President Trump in January. Is sanctions relief for Tehran and business with the Islamic Republic set to continue?

Russia has yet to study the U.S. decision to shut its consulate in San Francisco before considering possible retaliation, Foreign Minister Sergey Lavrov declared at the country's top diplomacy school. The Trump administration just gave Russia 72 hours yesterday to close three of its diplomatic facilities in America in retaliation for kicking out more than 700 U.S. diplomats last month.

Stocks

Some Texas operations crippled by Hurricane Harvey are back online as UPS and FedEx (NYSE:FDX) restarted flights at Houston's main airport. "The safety of our employees comes first and we will be resuming service as soon as it is safe to do so," said UPS spokesman Matt O'Connor. Two days ago, the storm stopped or sharply limited deliveries to more than 730 zip codes in Texas and Louisiana.

Amazon is working on plans to roll out its one- and two-hour membership delivery service into Canada later this year, a move that marks a broader push into the country by the retailer, WSJ reports. If the initial launch in Vancouver and Toronto is successful, Amazon (NASDAQ:AMZN) will consider expanding its Prime Now service to various Canadian cities in 2018.

According to a letter dated Aug. 11, the head of Western Digital (NYSE:WDC) apologized to Toshiba's (OTCPK:TOSYY) CEO for strained ties after it sued to keep their memory chip joint venture from being sold to rival bidders. Stephen Milligan also said the U.S. firm would address any concerns that Apple (NASDAQ:AAPL), a key customer of Toshiba's NAND flash memory chips, might have if a deal was struck with Western Digital.

Samsung is the latest company to get the go-ahead to test self-driving cars on California's public roads. In a statement to Reuters, Samsung (OTC:SSNLF) did not say what precisely what it planned to test in the U.S., but said it secured the permit "in pursuit of a smarter, safer transportation future." It also has "no plans to enter the car-manufacturing business."

Tesla's Gigafactory in Buffalo has started making solar cells for roofs, according to Bloomberg. "Like the vehicle production ramp, this starts off extremely slowly, but ramps up exponentially over time," said a spokesperson. Tesla (NASDAQ:TSLA) aims to reach 2 gigawatts of cell production annually at the plant, up from an original target of 1 gigawatt by 2019.

On the hook... Verizon's (NYSE:VZ) efforts to contain liability related to a massive data breach at Yahoo (now its subsidiary) hit a snag after a judge ruled Yahoo must face related litigation. "All plaintiffs have alleged a risk of future identity theft, in addition to loss of value of their personal identification information," said U.S. District Judge Lucy Koh.

Hewlett Packard Enterprise -20% premarket after completing the spinoff of much of its software business, which will merge with Britain's Micro Focus (OTC:MCFYY). The step marks the end of HPE's unhappy tangle with Autonomy, which it acquired for $11B to transform into an enterprise software leader. The ink was barely dry on the much-criticized deal when the company took an $8.8B writedown on it.

Standing at about 100 ft. tall, Six Flags (NYSE:SIX) has announced the world's largest "loop coaster," which is scheduled to open at its Great America amusement park in 2018. Six Flags shares have been on a roller coaster of their own this year. The stock rose about 10% since January to a peak of $65 in April, but has since plunged 15% on a not-so-thrilling ride.

There's seems to be an ETF for everything nowadays. A planned index fund is hoping to "make America great again" by investing in companies that support the Republican Party. The Point Bridge GOP Stock Tracker exchange-traded fund will list next month under the ticker "MAGA," catering to people hoping to express their social or political views when they invest.

A rare rebuke from the bank's second-largest shareholder... Vanguard voted against three directors at Wells Fargo (NYSE:WFC) this year, including Chairman Stephen Sanger, according to U.S. filings. The lack of support was disclosed as Wells announced it had uncovered more than a million additional accounts opened without clients' authorization, marking a 70% increase over the bank's initial estimate.

Elliott Management has raised its stake in BHP Billiton (NYSE:BHP) to 5%, stepping up a campaign to pressure the miner into boosting returns, ditching its dual listing and quitting its U.S. shale business. Under English company law, the threshold gives a shareholder the right to requisition a general meeting and circulate a resolution on which other investors can vote.

More than 200 companies are believed to have submitted designs for the proposed border wall, but the Trump administration has selected only four private firms to build initial prototypes. They include Caddell Construction, Fisher Sand & Gravel, Texas Sterling Construction and W.G. Yates & Sons. The models will be 30 feet tall, about 30 feet wide and will be tested in San Diego.

Thursday's Key Earnings

Lululemon (NASDAQ:LULU) +5.4% AH lifting guidance.
TD Bank (NYSE:TD) +4.4% beating estimates.

Today's Markets

In Asia, Japan +0.3%. Hong Kong -0.1%. China +0.2%. India +0.5%.
In Europe, at midday, London +0.2%. Paris +0.9%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude -1.1% to $46.71. Gold +0.1% to $1323.80.
Ten-year Treasury Yield +1 bps to 2.13%

Today's Economic Calendar

Auto Sales
8:30 Non-farm payrolls
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count

 

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