US President Donald Trump has tweeted this morning pleas to lawmakers regarding his tax cuts and reforms. He said that due to Hurricanes Harvey and Irma has given some urgency to passing the tax overhauls necessary for growth. Recovery in the areas ravaged by these storms will need to take precedence over other issues pending. The market preps for those tax cuts yet the lawmakers in Washington cannot seem to come together on which cuts they prefer to back. The middle class were promised those tax cuts yet there is little agreement on what is to be cut. US Fed Chair Yellen left traders with little to hint at the next monetary policy change. She did address issues of regulatory reforms going back to 2008 as having a positive effect in the financial arena. She seems concerned over the Trump stance on loosening those reforms. She emphasized how resilient the system has become due to the reforms. She hoped that the current leadership may make the reforms “modest” thus continuing the resilience in the economic future of the country. The next FOMC is slated for September 19th and 20th. Sentiment is leaning towards no monetary policy changes at this particular meeting, but there may be a surprise. In the midst of the geopolitical concerns of a government shutdown and the anxieties over North Korea’s threats of nuclear conflict, the Fed may be bound and determined to unwind the monetary easing despite the inflation misgivings. The Fed has referenced the unwinding as “relatively soon”, thus keeping the timeline close. Yellen’s term may be up January of 2018.
Less damage in Florida and less global tensions this weekend allowed the market to soar as confidence returns. The market was up today as hurricane Irma failed to deliver that horrendous damage as projected. The National Flood Insurance Program expires on September 30th and will require Congress to make reforms and authorize the program before it lapses. The assessments of damage created by Hurricane Harvey are still not final. US President Donald Trump spoke about offering details of his tax reforms within the next two weeks. He spoke briefly on simplifying the tax code and giving tax breaks to the working middle-class sector. He also worked on an extension for the debt limit to December 15th along with disaster aid for Hurricane Harvey victims and a governing funding bill. The flooding damage in Texas may take months to assess.
The MBA Mortgage Applications Composite Index for the week of September 8th was 9.9 % while the previous reading was 3.3 %. The Purchase Index was 11.0 % while the previous reading was 1.0 %. The Refinance Index was 9.0 % while the previous reading was 5.0 %. The PPI-FD for August was 0.2 % while the previous reading was -0.1 %. The PPI-FD excluding food and energy was 0.1 % while the previous reading was -0.1 %. The PPI-FD excluding food, energy and trade services was 0.2 % while the previous reading was 0.0 %. The last monthly employment report showed the Nonfarm Payrolls at 156.000 while the previous reading was 209,000. The Unemployment Rate was 4.4 % while the previous reading was 4.3 %. Private Payrolls was 165,000 while the previous reading was 205,000. Manufacturing Payrolls was 36,000 while the previous reading was 16,000. The Participation rate was unchanged at 62.9 %. The Average Hourly earnings was 0.1 % while the previous reading was 0.3 %. The Average Workweek was 34.4 hours while the previous reading was 34.5 hours.
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Today’s E-Mini S&P 500 (December) traded $2495.50 to $2489.00 an inside to slightly higher day. The E-Mini S&P 500 is in a bullish stance unless it can penetrate $2443.50. Thursday’s range for the ESZ7 could be $2503.50 to $2483.50, an inside to higher to outside day. The VIX was down -0.76 % to $10.50. The VIX may trade inversely to the E-Mini S&P 500. Note: Friday is Quadruple Witching where the index futures, index options, stock options and single stock futures all expire at the same time.
The EIA Crude Oil Inventories for the week of September 8th were a build of +5.9 million barrels. The Gasoline was a draw of -8.4 million barrels. The American Petroleum Institute reports the Crude Oil Stockpiles a build +6.2 million barrels. The API Motor Gas Stocks were a draw -7.9 million barrels. The EIA Preliminary Estimates are showing for Crude Oil forecasts of a build +3.25 million barrels and Motor Gasoline Stocks a draw -2.00 million barrels. OPEC reports commercial stockpiles in OECD countries decreased to 3.002 million bpd during July. The OPEC data showed the cartel crude oil production was down by 79,000 bpd and the non-OPEC supply was decreased by 32,000 bpd for August. Energy analyst at Goldman Sachs projects that the estimated US Crude Oil demand may decline by about 900,000 bpd due to the impact of the hurricanes. Saudi Energy Minister agrees with UAE that it may be considered to extend the oil supply reduction past the March 2018 time frame.
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