September 8, 2017

The major stock market averages opened mixed today as Hurricane Irma—downgraded to category 4—approaches the US. The Dow is up 30 points and the S&P 500 is flat. The head of FEMA says the storm is likely to “devastate the United States in either Florida or some of the Southeastern states.” At the moment, It is on track to hit Florida by Saturday. Energy and telecom sectors are down over 1% in early trading. Strangely enough, banks are up about 1%. Even more surprising, insurance stocks are up nicely. The VIX Index is up around 12 and VIX September futures are trading around 13. No panic yet. Commodities are mostly lower on the day. WTI crude oil is down 1.7% to $48.30/barrel. Bonds are mostly unchanged. The 5- and 10-year Treasury yields are hovering around 1.65% and 2.07%, respectively. The 10-year, of course, reflects inflation expectations, which have declined this year. Famed economist Mohamed El-Erian says, “we don’t understand very well why inflation is low.” It should be higher given the low level of unemployment. 

Yesterday afternoon, Equifax (EFX) announced a data breach by hackers that resulted in the loss of sensitive financial information for over 100 million Americans. (And remember, there are only about 320 million of us out there to begin with.) Equifax, of course, is one of three major consumer credit monitoring agencies in the US. Among the stolen data were 209,000 credit card numbers. Analysts estimate the breach could cost the company $300mil or more. The stock is down almost 15% this morning. 

The House of Representatives just passed a bill raising the federal debt ceiling for a temporary period of three months. The provision was tacked onto a Hurricane Harvey relief aid bill. Republicans wanted a longer term debt ceiling fix, but the president and House Democrats negotiated a temporary stop-gap. 
 


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