Midweek Market Update: September 2, 2015

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Check out the brief list below for an overview of the important developments on the markets on Wednesday.

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  • Productivity measures in the U.S. jumped during the second quarter, posting a 3.3% increase in productivity among American workers during Q2. The quarterly numbers were revised sharply upward after initially being reported around 1.3%.

 

  • The ADP payrolls report reveals that the labor market added 190,000 jobs during August. This was below expectations of 201,000 and follows a downward revision of July’s payrolls to just 177,000 new jobs. This is two consecutive months of sub-200,000 figures from the ADP, after the economy added more than 200,000 jobs in 9 of the previous 11 months.
  • European stock indices were up modestly by Wednesday’s closing bell, breaking a three-day losing streak for the region’s major stock averages. Equities in the U.S. bounced back even stronger, nearly recovering all of Tuesday’s losses (almost 3%).
  • Even as major firms around the world (across nearly all industries) struggle to squeeze out profits amid the ongoing global economic slowdown, iconic toy-maker Lego stands out, enjoying rising sales so far in 2015.

Newcomer Fiorina Advances in Polls

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Carly Fiorina, former HP CEO, is currently a leading GOP candidate.

Carly Fiorina, former HP CEO, is currently a leading GOP candidate.

While many are familiar with the Democratic field’s current top contender, Hillary R. Clinton, fewer know about the GOP’s so-called “undercard,” Carly Fiorina. Fiorina didn’t start as one of the GOP’s leading contenders. While she may not be leading the Republican field, Carly Fiorina is gaining momentum.

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Central Banks Still Fumbling in the Dark

Source: OptionsClick blog

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Ever since the “Taper Tantrum” that accompanied the Federal Reserve’s gradual move away from monetary stimulus measures popularly known as “quantitative easing,” the global markets have remained in a perpetual state of volatility. The transition from emergency-measure, accommodative central bank policies back to a normal rate environment has been fraught with difficulty thanks to the uncertainty swirling around what the world’s leading monetary authorities will do next. Not to mention that the longer the outlook for the global economy remains unclear, the farther these central banks venture into the dark unknown—potentially further and further in the wrong direction.

A great deal of attention will be placed on the next meeting of the Federal Reserve Open Market Committee (FOMC) two weeks from today, on September 16, when a considerable number of analysts still believe the Fed will announce its first increase to the federal funds rate in about a decade. Before then, the European Central Bank (ECB) governing council will meet on Thursday in Frankfurt.

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Economics May Unravel China-Russia Ties

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An unprecedented level of cooperation between China and Russia worried many in the Western world as the new alliance began to take hold during 2014. Some observers went as far as characterizing the Sino-Russian partnership as a challenge to the dominance of the U.S., and of the West in general.

Yet, the ensuing downturn for the global economy exacerbated the two countries’ own unique economic hardships—for Russia, its suffering under international sanctions and its over-reliance upon oil exports; for China, its overly ambitious growth targets and the popping of its equities bubble.

Now, the cooperation between Putin’s Russia and Communist China appears far less potent that it did 10 months ago.

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Rapid Fire: September 2, 2015

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Here’s your round-up of quick-hit news for Wednesday!

  • After trading concluded overnight on Wednesday, Chinese markets close for the country’s “Victory Day” holiday. They will reopen on Monday, giving weary traders a chance to catch their breath after 10 weeks of losses.
Source: Google Finance

The Shanghai Composite index over the last 12 weeks. Source: Google Finance

  • After opening lower, crude oil prices gain on Wednesday morning, though the world’s most traded commodity is unlikely to reverse its current downtrend. WTI crude traded above $45/bbl while Brent crude surged back above $50/bbl.
  • The New York Stock Exchange once again (4 out of 5 trading days) invokes the obscure Rule 48 on Tuesday, a volatility mitigation measure that drops the requirements for market makers to announce price indications (whether they are buying or selling) before markets open.

Walmart Rolls Back Employee Hours

Source: Youtube

Walmart stores across the nation have recently raised hourly wages for 500,000 workers. While this may sound like a positive, the decision could spell trouble for many of its employees as the company slashes employee hours.

Earlier this year, CEO Doug McMillon released a letter stating that the company would be raising wages to $9 an hour, 24% higher than minimum wage. The wage is expected to jump to $10 an hour by early next year. The concession comes after cries from disgruntled union workers recently reached a fever pitch. The retailer, the world’s largest in terms of annual sales, reportedly invested $1 billion in upping the hourly wage and training prospective employees. Basic economic principle, however, tells that if Wal-Mart does increase employee wages, they will find a way to cut expenses elsewhere.

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Stocks Begin September on Sour Note

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There was not much cause for celebration on the stock markets today. Unless, that is, you cashed in on a short position.

Global stock indices were down around 2% across the board on Tuesday in response to the release of particularly weak factory data from China. All three major U.S. indices (the Dow Industrials, S&P 500, and the Nasdaq Composite) were about 2.75% lower by 3 pm EST. As the disappointing manufacturing numbers from the world’s second-largest economy reverberates throughout the markets, investors are fleeing equities in favor of safe havens like gold. Spot gold was up $6, or about 0.5%, to $1,141/oz on Tuesday afternoon.

Anxiety over the Chinese slowdown have also taken their toll on crude oil prices. After its strongest 3-day rally in a quarter-century, crude sank 8% on Tuesday as a contraction for the Chinese economy would surely spell weaker energy demand.

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Build It From Scratch: How “Printing” Can Make a New Pair of Shoes

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From the production of the polio vaccine to the invention of the smartphone, science has made colossal strides in the past fifty years. Just this year, there have been numerous incredible innovations. Among the strides are some of the most unbelievable developments, which include work with the human genome and the introduction of additive and distributive manufacturing.

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