There will not be any Weekly Re-Cap for the week of Sept 22 – Sept 30 2017. We are away for some needed R&R.

The staffs at EGS.

“We’re not going to play a winning hand every day.” John Paulson

1. Q3 GDP to Take a Major Hit from Harvey — Hurricane Harvey is expected to be one of the costliest disasters in postwar U.S. history, and a likely drag on third-quarter economic growth by a full percentage point, Goldman Sachs said in a weekend research note. Meanwhile, Hurricane Irma has knocked out power to nearly 4M homes and businesses in Florida, threatening millions more as it creeps up the state’s west coast. While the storm made landfall as a Category 4, it has weakened to a Category 1.
2. Daimler Next to Jump on EV Bandwagon — Mercedes-Benz will offer electric versions of all its models by 2022, according to parent company Daimler (OTCPK:DDAIF), which said it would similarly convert its Smart city car brand to become fully electric. Also, China is developing a timetable to end gas and diesel auto sales, but it hasn’t delineated a timeframe like the U.K. and France, which will ban the vehicles by 2040. Chinese-owned carmaker Volvo (OTCPK:GELYY) confirmed in July that all its new car models would have an electric motor from 2019.
3. Equifax CEO to Testify before House Panel on Hacking — Equifax (NYSE:EFX) CEO Richard Smith will testify about the company’s massive data breach at an Oct. 3 hearing of the House Subcommittee on Digital Commerce Consumer Protection, according to the committee’s chairman and another member. Since the attack, Symantec’s (NASDAQ:SYMC) LifeLock has seen six times its normal web traffic, and signups per hour are up ten folds.
4. AAII Weekly Sentiment Swing Back in Bull Camp — courtesy of BIG, this week’s survey showed a surge in optimism as the percentage of investors putting themselves in the bullish camp rose from 29.28% up to 41.29%. That’s the largest one-week increase in bullish sentiment since the end of April and the highest weekly print since January.

From last week’s level of 34.98%, bearish sentiment cratered to 21.97%. The last time bearish sentiment was this low was in early April.

5. China Moves to Halt Exchange Bitcoin — Chinese policy makers will move quickly on a previously reported plan to end exchange trading, their most far-reaching measure to rein in the growth of cryptocurrencies. China’s crackdown, which includes a ban on initial coin offerings announced last week, has fueled an abrupt reversal in bitcoin after the digital currency soared more than 700 percent in the 12 months through August. BTC China, one of the country’s largest cryptocurrency venues, said it would stop handling trades by month-end.

The week ahead — Economic data from Econoday.com:

“To finish first, first you need to finish.” — Warren Buffetts

1. Houston Employers Business & Valero Refineries Reopen — Houston large employers, universities and transit centers reopened Tuesday following the devastation of Hurricane Harvey, which flooded the Houston area and killed at least 60 people after making landfall Aug. 25. In more moves toward recovery, some barge traffic has resumed to the large oil refinery in Port Arthur, Texas. In addition, Valero Energy says its 293K bbl/day Corpus Christi refinery and 225K bbl/day Texas City refinery, both shut down by Hurricane Harvey, have recovered to pre-hurricane levels of operation.
2. Powerful Hurricane Irma Strikes Florida — traders are bracing for another hurricane to hit the U.S., as Hurricane Irma has strengthened into one of the most powerful storms ever recorded over the Atlantic Ocean. Shares of insurers already coping with damage from Hurricane Harvey and re-insurers providing insurance companies with backup protection against major disasters ended last week ‘s trading with sharp losses. Reinsurer Everest Re (NYSE:RE) fell nearly 7%, making it the biggest loser on the S&P 500, and XL Group (NYSE:XL) slumped 5.8%. November orange juice futures soared 6.2% to $1.45 per pound, the highest for a most actively traded contract since May 2016. Cruise ship companies that operate in the Caribbean, including Royal Caribbean (NYSE:RCL) and Carnival (NYSE:CCL), also fell sharply.
3. Trump’s Move to End “Dreamers” Program — President Trump revoked the so-called “Dreamer” program that shields young unauthorized immigrants from deportation, giving Congress six months to draft a legal path for amnesty. As early as March 2018, some of the 800,000 young adults brought to the U.S. illegally as children who qualify for the DACA program – Deferred Action for Childhood Arrivals – would become eligible for deportation without a congressional fix. In reaction, a wide range of business leaders – including JPMorgan Chase’s (NYSE:JPM) Jamie Dimon, Facebook’s (NASDAQ:FB) Mark Zuckerberg, Apple’s (NASDAQ:AAPL) Tim Cook, Google’s (NASDAQ:GOOG) Sundar Pichai and Cummins’s (NYSE:CMI) condemned the decision.
4. Senate Passes Bill for Debt Ceiling & Approved More than $15B in Aid Funding for Hurricanes Harvey and Irma — the Senate has approved more than $15B in aid funding for Hurricanes Harvey and Irma, attached to a debt ceiling extension and temporary government funding, by a vote of 80-17. If the House passes the bill and President Trump signs it, Congress will knock out an end-of-September deadline to raise the debt limit and avoid risking a default or government shutdown.
5. Florida Braces for Hurricane Irma — Miami is preparing for its largest evacuation in more than a decade as Hurricane Irma threatens to turn into the most expensive storm in U.S. history. U.S. orange juice and sugar futures are rallying on the news, as well as home improvement retailers like Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW), while insurers including Progressive (NYSE:PGR) and Allstate (NYSE:ALL) have stopped issuing policies in some Florida counties. The property and casualty players and the reinsurers have suffered in the wake of Harvey and ahead of Irma. Those with heavy Florida exposure are being hit the hardest: HCI Group (HCI -9.5%), Universal Insurance (UVE -10.2%), United Insurance (UIHC -8.1%). Others: Travelers (TRV -2.2%), Allstate (ALL -1.5%), Chubb (CB -1.4%), Cincinnati Financial (CINF -1.8%), Progressive (PGR -1.7%), Alleghany (Y -2.6%).

The week ahead — Economic data from Econoday.com:

“Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes.” — George Soros

1. Tropical Storm Harvey Effects on Market — Floodwaters from Tropical Storm Harvey rose with forecasts for another 10 to 20 inches of rain in the coming days. Insured losses could be as much as $10B-$20B, according to JPMorgan, putting it among the top 10 costliest hurricanes to hit the U.S. Impact on stocks. Furthermore, U.S. fuel prices continue to rise as more Gulf Coast refiners cut output, leaving more than 13% of the country’s refining capacity offline. Gasoline for September delivery climbed as much as 2.77 cents to $1.74 a gallon, while crude prices dipped slightly to $46.50/bbl.
2. Renault-Nissan building EVs in China — tapping into a boom for “new energy” vehicles, Nissan (OTCPK:NSANY) and its alliance partner Renault (OTCPK:RNLSY) are setting up a new joint venture with Dongfeng Motor (OTCPK:DNFGY) to design and build electric cars in China. The project will be called eGT New Energy Automotive. It follows a similar move by Ford, which announced a comparable joint venture last week with Anhui Zotye Automobile.
3. Buffett Exercises BofA Warrant Makes Berkshire Biggest BofA Shareholder — Warren Buffett has become the biggest shareholder in Bank of America (NYSE:BAC), with a 6.6% stake, after exercising an option to take hold of 700M shares at a heavy discount. The move was signaled in June to take effect after BofA officially raised its quarterly dividend to $0.12 from $0.075. That translates into annual dividends of $336M for Berkshire Hathaway (BRK.A, BRK.B).
4. S&P500 Index Moving Averages “Sloped Down” On The Downturn — according to BIG, the S&P500 Index has really deteriorated in the last few weeks. After getting as high as 95.8% earlier this year, at the June and August peaks, the percentage only reached as high as 88%. But after that second peak in early August, the percentage of industry groups with rising 50-DMAs has come crashing down to just 33.3%. That’s the weakest reading we have seen since the days just after the election.

The week ahead — Economic data from Econoday.com: