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U.S. STOCKS EDGE HIGHER

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U.S. STOCKS EDGE HIGHER

  • Movements in the world’s sovereign bond markets are driving both stocks and currencies at the moment.
  • The Bank of England left its key rate unchanged at the conclusion of its September monetary policy meeting Thursday.
  • Retail sales declined in August.
  • The number of Americans filing for unemployment benefits rose less than expected last week.
  • Apple was up 3%, its fourth straight day of gains, after the company said the first batch of the iPhone 7 Plus sold out.

US FINANCIAL MARKET

Poll: December Fed rate hike probability 70 percent, say economists

  • Still, the consensus view from over 100 economists polled by Reuters in the past week showed the fed funds target rate will rise to 0.50-0.75 percent in the fourth quarter, with a median 70 percent probability of a December move.
  • In last month’s poll the probability was 57.5 percent.

Apple says initial quantities of iPhone 7 Plus sold out

  • Supplies of the larger size of Apple’s new phone have been exhausted in all shades, and the smaller iPhone 7 has also sold out in the new jet black color, the company said.
  • Customers who enter Apple Stores Friday, when the gadgets hit shelves, will not be able to purchase the sold-out phones on site, but they can continue to place orders for their desired models online, Apple said.

Walmart Canada to extend Visa ban to more stores from October 24

  • Walmart Canada will stop accepting Visa cards at its 16 stores in the province of Manitoba starting on Oct. 24.
  • Walmart said in June it had been unable to agree with Visa on an “acceptable fee” and would no longer accept the company’s credit cards unless it got a better deal.
  • Walmart has over 400 stores in Canada.

U.S. prosecutors investigate Wells Fargo’s sales practices

  • U.S. prosecutors have begun an investigation related to sales practices at Wells Fargo & Co that led the bank to agree to a $190 million settlement with regulators.
  • The U.S. Attorneys’ Offices in Manhattan and San Francisco are investigating Wells Fargo, the person said, following a settlement announced on Sept. 8 over claims that some customers were pushed into fee-generating accounts they never requested.

Telia Asked to Pay $1.4 Billion to Settle Bribery Probe

  • U.S. and Dutch authorities are asking Swedish telecom carrier Telia Company AB to pay $1.4 billion to settle allegations it distributed hundreds of millions of dollars in bribes to secure business in Uzbekistan—the latest move by American prosecutors to target what they say are the spoils of corrupt practices overseas.

Pimco says Bill Gross leaked bonus data, showed bad faith

  • Pimco accused former star bond fund manager Bill Gross of leaking confidential bonus data and exercising “bad faith” in pursuing a $200 million lawsuit over his sudden departure from the firm in September 2014.
  • Pimco said Gross admitted to having revealed 2013 compensation data to a Bloomberg News columnist after leaving Pimco, as part of his “sad obsession” with attacking the firm he co-founded and his former colleagues.
  • In his lawsuit filed last October, Gross claimed that Newport Beach, California-based Pimco forced him to resign so it could distribute his bonus to others.

New Laws Haven’t Made Big Banks Safer, Paper by Lawrence Summers Says

  • Former Treasury secretary, co-author say stock prices don’t reflect decreased risk of failure.
  • In research to be presented Thursday at a Brookings Institution conference, Harvard University economist Natasha Sarin and Mr. Summers use a range of financial market data to measure bank risk, including gauges of volatility and expected returns.
  • The idea that banks are better capitalized, they argue, should be reflected in their stock prices—the less risky they are, the lower the expected return on bank debt, bank preferred stock and common stock.
  • That is not what they found when they looked at the biggest U.S. banks and their counterparts around the world.

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US ECONOMY & POLITICS

U.S. Retail Sales Fell in August

  • Drop of 0.3% the first monthly decline since March.
  • Sales at retail stores, online and at restaurants fell 0.3% in August to a seasonally adjusted $456.32 billion last month.
  • Retail sales were up 1.9% in August from a year earlier.
  • Thursday’s report showed sales for non-store retailers, a category that includes online merchants such as Amazon, fell 0.3% in August.
  • That was the largest one-month decline since January 2015.
  • The category is up 10.9% from a year earlier.

U.S. Jobless Claims Ticked Up Slightly

  • Initial jobless claims, a proxy for layoffs across the U.S. economy, increased by 1,000 to a seasonally adjusted 260,000.
  • Jobless claims have remained below 300,000 for 80 consecutive weeks, the longest streak since 1970.

U.S. producer prices unchanged, underlying inflation firming

  • The unchanged reading in its producer price index for final demand followed a 0.4 percent drop in July.
  • In the 12 months through August, the PPI was unchanged after decreasing 0.2 percent in July.

U.S. industrial output falls more than expected as utilities sag

  • Industrial output fell 0.4 percent last month after a downwardly revised 0.6 percent increase in July.
  • With overall output decreasing, the percentage of industrial capacity in use fell 0.4 percentage points in August to 75.5 percent, from an unrevised 75.9 percent in July.

Americans blame Washington gridlock for slow economic growth: study

  • Americans blame political gridlock in Washington for the country’s declining economic competitiveness and hold both Democrats and Republicans responsible, a Harvard Business School study released on Wednesday found.
  • The study noted that U.S. gross domestic product grew at a rate of about 2 percent since 2000, well below the 3 to 4 percent average in the prior half-century.
  • It said a range of factors including a complicated corporate tax code, tangled immigration system and aging roads contribute to the slow growth.

Obama administration targets corporate offshore tax avoidance

  • The Treasury issued legal guidance reducing the scope companies have to apply foreign tax credits against their U.S. tax obligations.
  • Analysts have speculated whether Apple would be able to cut its U.S. tax bill by claiming foreign tax credits for the extra taxes it has been told to pay in Europe.

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EUROPE & WORLD

Bank of England Flags Further Rate Cut as It Stands Pat

  • Monetary Policy Committee voted unanimously to maintain the benchmark rate at record low of 0.25%, the lowest in the BoE’s 322-year history.
  • The panel voted unanimously in September to press ahead with those asset purchases, totaling £70 billion ($92.7 billion).

Boeing challenges Denmark over choice of Lockheed Martin jets

  • Boeing formally challenged a decision by the Danish government to pick Lockheed Martin’s F-35 fighter jet over its own Super Hornet, saying on Thursday the choice was based on a “flawed evaluation process”.
  • A ministry report in May evaluating each fighter jet candidate was based on data estimating that the Super Hornet would have a service life of 6,000 flying hours, while Boeing thinks the right figure for Denmark is 9,500 hours.
  • The report also concluded that the total cost of the F-35 jet is 42.2 billion Danish crowns ($6.4 billion) while the Super Hornet would cost 60.6 billion crowns.

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TODAY in HISTORY

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The U.S. Department of Foreign Affairs changed its name to the Department of State (1789)

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Costa Rica, Guatemala, Honduras, Nicaragua, and El Salvador gained independence (1821)

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Alexander Kerensky proclaimed Russia a republic (1917)

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This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, Wall Street Journal.

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