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5 things to know before the stock market opens September 11, 2019

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1. Dow set for flat open as stock rotation happens ‘under the surface’

Traders work on the floor of the New York Stock Exchange (NYSE) on August 23, 2019 in New York City.

Eduardo Munoz Alvarez | Getty Images

U.S. stock futures were relatively flat on Wednesday morning, after the Dow Jones Industrial Average gained about a quarter-percent, and the S&P 500 and Nasdaq basically closed unchanged Tuesday. Little movement on the S&P 500 over the past two sessions “really does obscure a lot of drama under the surface,” according to CNBC’s Mike Santoli. He pointed out that more than 100 S&P 500 stocks were up at least 2%, while about 80 were down at least 2%, in a rotation from over-owned growth momentum stocks into neglected value names. CNBC’s Bob Pisani looks at the sectors investors are buying. Heading into Wednesday trading on Wall Street, the Dow was riding a five-session, 3% winning streak, putting blue-chips less than 2% away from their July all-time highs.

2. Bond yields continue higher ahead of key central bank meetings

Bond yields continued to move higher, as investors sold government debt over the past few sessions ahead of a flurry of central bank meetings over the coming days. The European Central Bank meets Thursday, with policymakers likely to announce an easing package that could include an interest rate cut. The Federal Reserve meets next Tuesday and Wednesday. U.S. central bankers are widely expected to reduce rates by a quarter-point for the second time this year. President Donald Trump has been pressuring the Fed to cut rates as the U.S.-China trade war threatens to slow global economic growth further.

3. Trump slams the Fed again, tweeting central bankers are ‘boneheads’

President Donald Trump announces his nominee for Chairman of the Federal Reserve, Jerome Powell (L), in the Rose Garden of the White House in Washington, DC, November 2, 2017.

Saul Loeb | AFP | Getty Images

The president was at it again Wednesday morning, tweeting that the central bank should cut rates to zero or even set negative interest rates. Trump called Fed officials “boneheads” for not cutting rates as much as other countries around the world, many of which have negative rates. The president also said the country should refinance its debt load. While it’s unclear how such an idea would work, the Treausry likely would have to be involved. There have been calls recently to issue longer-term debt, such as a 50-year or even a 100-year government bond.

4. China unveils plans to exempt certain US products from additional tariffs

China’s Ministry of Finance announced Wednesday plans to exempt 16 types of U.S. products from additional tariffs, including food for livestock, cancer drugs and lubricants. The exemption, which is scheduled to go into effect Sept. 17, will be valid for a year. The announcement comes as high-level trade officials from China and the U.S. prepare to meet in Washington next month, in hopes that a new round of negotiations can lead to the end of the two nations’ yearlong trade war. Each side has imposed billions of dollars of import tariffs. The American Chamber of Commerce in Shanghai said its latest member survey shows many U.S. businesses in China are getting hurt by the levies.

5. NYSE set to hold a moment of silence to remember 9/11

The nation remembers Sept. 11, 2001 on Wednesday, 18 years since terrorists hijacked four planes and killed 2,983 in New York City, at the Pentagon in Washington, D.C., and in a Pennsylvania field. The New York Stock Exchange, which had closed for six days after the 2001 attacks, pauses for a one-minute moment of silence at 9:20 a.m. ET on Wednesday morning. The 9/11 Memorial & Museum holds its remembrance ceremony, beginning at 8:40 a.m. ET. Remembrances around the nation also include events at the Pentagon and near Shanksville, Pennsylvania, where one of the planes went down.

CNBC’s before the bell news roundup

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The rise of solar power

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Elon Musk may have promised the world Tesla solar roof tiles in 2016, but turns out the solar industry may not need the upgrade.

The industry has been growing exponentially thanks to plain old solar panels. You can see the evidence both on people’s rooftops and in the desert, where utility-scale solar plants are increasingly popping up. Here in the U.S., of all new power capacity added to the grid in 2018, about 30% was from solar.

But the picture is not all rosy. Solar power is intermittent. The sun isn’t always shining, and the price of storage solutions like lithium ion batteries is still relatively high.

These are real problems that the industry needs to tackle if solar is going to reach its potential. However, if the recent past is any indication, solar power is going to help lead the transition to a carbon-free future, and it might do it faster than we all expected. Watch the video to learn more.

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India on course to be $5 trillion economy in five years: Nitin Gadkari

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Nitin Gadkari, Union Minister for Road Transport, Highways and MSME said the slew of economic measures and reforms being implemented by the Union government will act as a confidence booster for industry especially for the MSME sector and put the country on the path to become $5 trillion economy. He was speaking at the India Today Conclave 2019 being held in Mumbai.

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GM buyers and owners could soon start feeling impact of UAW strike

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General Motors Co. (GM) Chevrolet vehicles are displayed for sale on the lot at Phillips Chevrolet car dealership in Frankfort, Illinois.

Daniel Acker | Bloomberg | Getty Images

The strike against General Motors by 48,000 United Auto Workers Union members is set to enter its second week unless negotiators break through a series of reported logjams over the weekend.

The walkout is costly for both GM and the UAW, but the longer it drags on, the more likely it is to be felt by consumers, as well, both those looking to buy one of the automaker’s new products as well as owners of vehicles needing repairs.

In the weeks leading up to the contract deadline, Detroit’s largest automaker beefed up production to help pad dealer inventory, industry analysts noted. But that will only carry things for so long, especially with high-demand models, as well as hot new products like the 2020 Chevrolet Corvette.

Complicating matters, the closure of GM parts distribution warehouses is already posing problems, especially for owners needing collision and recall repairs.

“We got everything we need for this week, but that doesn’t mean that we won’t be short next week,” said Tiffany Sullivan, the manager at Rainbow Paint and Body, a collision repair shop in Savannah, Georgia, adding that she’s already been alerted about possible shortages by GM representatives.

For now, a number of the dealers that CNBC.com spoke to said they were in reasonably good shape when it comes to new vehicle inventory. Typically, automakers like to have somewhere between 60 and 65 days’ worth of inventory on dealer lots, said Michelle Krebs, a senior analyst with Cox Automotive.

But because of both the ongoing slowdown in the U.S. car market and a bump up in production in anticipation of a strike, GM was able to beef up its national inventory to about 77 days at the beginning of the strike, according to Cox data. The figures, however, vary sharply from one product line to another.

There were 93 days of Chevrolet Silverado pickups, but only 57 days inventory of the popular Chevy Tahoe SUV, below the industry norm. And even those numbers can be misleading, cautioned Tim Jackson, the president of the Colorado Auto Dealers Association. He expects GM’s retailers in the Rocky Mountain state to burn through their allocations quicker than those elsewhere considering that light trucks make up 82% of their sales, well above the national average.

“Right now, we have a cushion,” said Jackson, “but when you get to the hot products, like the high-end Silverado pickups (like the High Country model that can top $80,000), that’s where it’s going to be felt at the local level first.

Complicating matters, Jim Hoffa, the president of the International Brotherhood of Teamsters, last weekend declared that his union would not deliver any GM products that had not already reached showrooms ahead of the strike.

“Teamsters and the UAW have a decades-long relationship of having each other’s back,” Hoffa said. Neither GM nor the Teamsters would discuss how many vehicles might be tied up on factory lots or elsewhere, however.

The shoppers who could be most impacted as the strike stretches on are those that placed custom orders, said Carla Bailo, the head of the Center for Automotive Research, or CAR, in Ann Arbor, Michigan. They will have to wait until factories start operating again, and even then, it could take a few days, possibly a week or more, before production gets back to normal.

The strike will also hit hard those who have been waiting for many new 2020 models, especially those that were just getting into production. The highly anticipated, eighth-generation Chevrolet Corvette is one the products that could face the biggest backlog. GM and its dealers have already taken nearly a full year of orders, so those late on the list could be in for a much longer wait than expected, said Bailo.

But “the real Achilles Heel,” at least in terms of serving customers, will be felt when it comes to repairs, both in GM dealer service departments and at independent garages and repair shops, said the general manager of one of GM’s largest Detroit dealers, asking not to be identified by name.

Even a one-week shutdown, he said, can put his service department two weeks behind, in part, because it will have to wait until everyone is back to work and settled back in at GM warehouses before his dealership can place new orders. Having enough parts to meet ongoing recalls will be a problem for some dealers, but the bigger problem, he said, is with parts like bumpers and fenders needed to handle repairs, especially on older GM products.

“We don’t know who will wreck their car but we’d have to have a warehouse the size of another dealership to keep all the parts we might need in store,” he said.

People who’ve had collisions know they will have to wait, said CAR’s Bailo, but the longer the strike, and the longer the wait, the more likely “people are going to start screaming.” And while some might blame the union, it’s GM they’re most likely to get mad at.

Longer term, the strike could impact consumers in another way.

“We know the cost of (producing) vehicles is going to go up,” said Cox analyst Krebs, noting that consumers are already seeing the impact of things like President Donald Trump’s trade wars in terms of record prices at the showroom. In today’s competitive market, automakers have been trying to absorb costs, where possible, but the higher the price of an eventual settlement, the more likely it will be felt in rising sticker prices.

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