With much of Europe and Asia, including the U.K., France, Germany and China markets closed for Labor Day, Asian stocks and the dollar rose buoyed by news that Congress had reached a deal to keep the US government funded through the end of September. S&P futures are up 4 points or 0.2%. Oil declined as rigs targeting crude in the U.S. rose for a fifteenth week and output from Libya rebounded.
One of the biggest political overhangs facing the market may have just been removed, when moments ago AP and other newswires reported that House Democrats and Republicans are said to have reached a $1 trillion spending deal to keep the government - which is currently operating thanks to a last minute one-week stopgap measure enacted on Friday - open until October 1.
BREAKING: Congressional Republicans, Democrats reach agreement on $1T measure to fund government until Oct. 1.
With the bank run at Home Capital Group hitting a crescendo on Friday, when in one day 36% of the liquidity at Canada's largest non-bank lender escaped through the front door, and only an emergency rescue loan yielding over 20% has prevent a liquidation at HCG so far, suddenly some are wondering if the dreaded "C" word is applicable to what Bloomberg has dubbed "one of the world’s strongest financial systems."
Just a month after PepsiCo said it would lay off 80-100 people due to the 'unintended consequences' of Philadelphia's new soda-tax, Philly Coke, the local Coca-Cola bottler, has cut 40 jobs amid a 32% plunge in sales.
Since all of this is taking place as previewed in a recent post: "The 'Soda Police' Just Learned A Valuable Lesson About Taxes", we doubt it would come as a surprise to anyone, although we are confident that Philadelphia city workers will be amazed by these unexpected developments.
Forget Trump, forget China, forget oil, forget central banks unwinding their balance sheets, forget Reuters trial balloons: there is a far simpler reason why the 'reflation trade' is about to hit a major pothole.