Market Recon Wednesday

Good Morning,
                       European equities are green across the screen this morning, being led by the bank stocks that are in turn…being led by Deutsche Bank.  Huzzah !!  No hard news hear, just rumors that flew yesterday afternoon that the bank is considering downing a couple of bowls of it’s own Coco Puffs.  Who doesn’t need eight vitamins and minerals, right ??  Who, also may (will) need to issue these CoCo bonds again in the future, so …. in the name of those future borrowing costs…. better not let them go any lower than they already are !!!
                      Okay, sportsfans…today’s the day that we’ve been waiting for all week.  Our dear friend and neighbor, the Fed Chair Janet Yellen testifies this morning before the House Financial Services Committee.  Just in case you’re keeping score, she’ll also do the fandango tomorrow in front of the Senate Banking Committee, but any cat that might be trying to get itself out of the bag will likely do so today, perhaps during the Q&A session.  On top of that, the text of her prepared speech will be released at 08:30 ET, so the futures will bounce around a little, but hey… that’s like batting practice for us by now..
                      There will be many questions answered today, but likely…. unfortunately, the good doctor will be as vague as she can get away with, likely trying to leave many unanswered.  Obviously the markets just want to know, simply… if the FOMC’s concentrated thought direction on policy has changed much since the last time they checked in.  It doesn’t take a genius to see that the economy has hit something rougher than a soft patch.  Just speaking for me, and the good folks around me, seems more like a garbage truck going over a cliff during a hurricane.  It would appear to the armchair economist that prudence would reign supreme at a time like this.  Unfortunately, the armchair economist often holds down a real job, and thus… does not live in the same realm as those living in the castle.  Markets are facing numerous risks, and, quite obviously are in quite a flux due to those risks. Common sense says maybe putting future hikes for the Fed Funds Rate on a temporary shelf would be wise.  Unless….
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Enter Sandman
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                         Before you go expecting to be held by the hand, and having your belly rubbed…..any of you kids read James Rickards ??  I make a habit of reading people I consider to be  much smarter than myself, and trying to understand what they are telling me…..so I do read his stuff.  If you are unfamiliar, he is the economist, strategist, and best selling author of several books, including “Currency Wars”.  If you’ve never at least heard of that book, I can’t help you.  Rickards has had a habit over the last few years of seeing things (ahead of time) pretty clearly regarding direction of monetary policy, and he thinks that rather than adjusting the Fed’s outlook to market expectations that Janet Yellen will likely try to adjust market expectations to the Fed’s outlook.  In other words, the Fed’s intent (unchanged) is far more important to them at this time, than recent market activity, or even the most recent macro, as long as neither of those two actually hits what they consider to be catastrophic levels.  Not what we consider to be catastrophic levels.  Now, gang….wouldn’t that be a nasty kick in the pants?
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The Lineup
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08:30 ET:  The Text of Janet Yellen’s testimony is released.
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10:00 ET:  Fed Chair Janet Yellen testifies before the House Financial Services Committee.
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10:30 ET: Oil Inventories (Weekly):  Last week, this item blew the doors off of expectations with an increase in supply of 7.8 million barrels.  Today’s projections are for another increase, this time to the tune of 3.6 million more barrels.  Then again, that’s pretty close to what was expected last week.
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13:30 ET: San Francisco Fed Pres. John Williams speaks on the economy from Los Angeles, California.
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Wednesday’s Earnings Highlights
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Before the Open: DTE (.99), HUM (1.46), MRKT (.38), TWX (1.00)
After the Close: EFX (1.11), IFF (1.14), PRU (2.30), TSLA (.09), TWTR (.12), ZNGA (.00)

Mid-Day Thoughts

Good Afternoon,

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1) Our old friend, the “Ugly Stick” is back out and about.  Wanna find something ugly, step right up, and spin the wheel.  Every number wins a prize.  Red or black, makes no difference.
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2) Crude went through $29 like a hot knife through butter, and now threatens to go belwo $28.  Some folks think there’s support at $25.  Some are glad it can only go down another 28 .clams.
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3)  European Banks putting pressure….. on well…  everything financial related.
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4) The “Safety Dance” was a hit tune, back in the early 1980’s. Well, seems to me like it’s headed for a sudden rebirth in popularity.  Treasuries, Gold, the VIX, and the Utility sector all wearing green today.
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5) Looking for something of a short covering this afternoon, ahead of the 08;30 am release of the text of Janet Yellen’s testimony before Congress.
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6) SPX 1840 matters.  Stiff resistance up at 1860, Iffy support at 1831, better support at 1824.
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7) What, me worry?

Market Recon Tuesday

Good Morning,
                       You’ve got to just love a minor rally at the end of a two day “beat your face like a drum” sell-off that makes you feel slightly relieved.  A couple of shorties ringing the register?  You also have to ask yourself, if there is yet panic in the streets.  Panic in this era of electronic trading is far more difficult to detect that it once was.  Gone are the days of accounts screaming at trading assistants on the floor, and wishing all kinds of fatal illnesses upon their family members just to try to throw them off of their game.  There is time to eat, and use the restroom during trading hours, even on the busiest days.  No ripped shirts in the crowd.  No threats.  No sweat.  No tears.  So, how do you know?
                       Many of us like to look at the VIX, and on the day they run for the hills, that index will spike, but will it significantly signal to traders when it is time to break the glass?  I think your canary in the coalmine has to be the defensive posture being taken by many traders I speak to.  We have real traders hiding in cash.  We see yields on government debt shrinking rapidly.  In fact, the ten year yields 1.75% as I bang out this note, but the darn thing touched 1.68% in the overnight.  Then there’s gold.  Gold was left for dead.  Not relevant in the modern world.  Now they all wish they bought it $150 dollars ago.  For a chart-monkey like myself, Gold looks overbought, at least in the short-term, and likely will pull back a touch.  When I increased my allocation yesterday morning, I did not expect to see something like that move yesterday happen almost immediately.  That said, when fear drives decision making, technical analysis probably does not count for much.  TA works best when humans are not in control.
                      To conclude, there is not yet fear in the streets, but folks are thinking, and talking about it.  I do not hear too much about dollar cost averaging these days.  Know what I mean?  There are those playing defense, and there are those who are caught in the headlights.  I think the market will hear Janet Yellen out this week, and then…well, I’ll let you know then.  When you act, have a reason.  That always has been, and always will be rule one.
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Not the Droids You Were Looking For
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               Our best day for data this week will be Friday. Until then, the pickings will be pretty slim.  We do have some macro today, but nothing that will make the children dance, and the old ones sing songs of ancient victories.  That said, we might as well run through it, just so you know what is out there.
                Earlier today, we saw the January print for the NFIB’s Small Business Optimism Index.  That print came in at 93.9, which badly missed expectations.  In fact, this number indicates that American small business owners are more pessimistic looking forward than at any time over the last two years.  Sales expectations, hiring expectations, and economic outlook all took a hit in this survey.
           Still on the way, we have the weekly Redbook measure of chain store retail success at 8:55 ET.  This item has been steadily ebbing, though still showing improvement when measured year over year ever since the holiday season came to a close.  Last week, we saw a y/y increase of 0.8% in this space.
            We also have two 10am items that will likely fail to make headlines unless something comes in sideways.  December JOLTS are expected to print in the neighborhood of 4.7 million openings.  We all know that there is a jobs / skills mismatch, and this number is dated on top of that.  Another dated release will be the December Wholesale Inventories print.  Projections are for -0.1% m/m, coming off of November’s -0.3% m/m.
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Tuesday’s Earnings Highlights
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Before the Open: KO (.37), CVS (1.53), IR (.93), MAS (.26), TEN (1.14), VIAB (1.17), WEN (.11)
After the Close: SCTY (-2.39), DIS (1.45), WU (.42)
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Final Thought:  Help the guy or gal next to you in these markets.  If you feel that you’ve defended yourself, then try to help someone who seems a bit shaky.  If you are the nervous one, talk it out with a mentor type.  The is no victory if you only save yourself.  Sarge out.

Mid-Day Thoughts

Dear Whack-a-Moles,

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1)  The “Ugly Stick” is out and about.  Financials..Bang !!  Tech stocks.. Bang !! Discretionaries.. Bang !!  Materials (less Miners) .. Bang !!  All ten sectors in beat-down mode.
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2) The Utilities, and Energy sectors, even with Crude fighting off that $30 support level, are our out-performers.. though the Energy sector index is off more than a percent.
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3) Where’s the money going ???  Gold, and Treasuries.  Gold approaches $1200, and Treasury yields have collapsed.
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4) Watch the Super Bowl ?  That’s right…. Defense wins Championships.
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5) Do I smell fear yet?  Not really.  Folks are watching everything though with caution.  The VIX has stabilized the 26’s.  European banks are getting drilled.  Janet Yellen is warming up her vocal chords for Wednesday, and not to mention Retail Sales loom on the Friday before a three day weekend.  ahhh, yaknow… scratch that last one, we already the macro’s gonna rot.
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6) Technically, I won’t feel better unless the S&P gets all the way to, and recaptures the 1958 level.

Market Recon Monday

Good Morning,
                        Tough week ahead… for a numbers nerd.  With the exception of Friday, which will  be headlined by January Retail Sales, we are in the middle of something of a macro “dead zone”.  We’ll have to look back at last Friday’s Employment Report, that really told everyone out there whatever it was that they wanted to hear…and we’ll have to look ahead to this Wednesday morning when Fed Chair Janet Yellen will testify before the House Financial Services Committee in Washington, DC.  The good doctor will give an encore performance on Thursday in front of the Senate Banking Committee, but it is doubtful that any stones that go unturned on Wednesday pop up on Thursday.
                        So, what was it about those January Jobs numbers that sent equity trader for the exits on Friday…and apparently have futures trader carrying that momentum on this morning?  Well, really, it was the duplexity of the report.  Those still bent on raising the Fed Funds Rate sooner rather than later could point to a lower headline Unemployment Rate, and actual, considerable wage growth.  Those thinking that the Fed must hold off due to all of the weakening macro, saw exactly that in this report.  When removing the seasonal adjustments, that 151K for NFP, becomes -3K.  Yep, that’s right, for the third month in five, this nation saw net job losses, not growth.  Seasonal adjustments are ironed out in the end, so while I do not believe in them, I do acknowledge the argument made by those who do.  Bottom line…those numbers on Friday do not support any kind of monetary policy going forward whatsoever.  Hence, uncertainly …always gnawing at traders, even on the best of days, has run amok.
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Allocation Change
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                         Oh, and while markets burn through support levels, everybody’s watching Gold, right?  If you’ll recall, I doubled my allocation for precious metals from 2.5% to 5% with the new year.  It appears (at least to me) that this was a bit too timid.  With the help of a suddenly less strong dollar, the yellow metal is up 11% this year so far, and is once again acting like a safe haven.  While I never tell anyone what to do… I just tell you what I’m doing, or thinking of doing….. with all of the uncertainly surrounding the state of the economy, and with all of us stuck in at least an “earnings recession”, I’m taking my precious metals allocation up to 7.5%.  The extra 2.5% will come out of my equity allocation, dropping it to 40%.  Cash remains at 35%, and bonds remain at 17.5%, with the concentration still on Treasuries.  Not a genius, so don’t think for a second that I am.  A ton of folks you meet everyday are very smart.  You can’t control things like raw IQ, or natural talent.  You can control work ethic.  Control what you can.  Let no human outwork you.  Not ever.
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Monday’s Earnings Highlights
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Before the Open: DO (.52), HAS (1.30), L (.77)
After the Close: OI (.40), YELP (.12)
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Super Bowl Note:  Call me crazy, but last night I felt like I was watching an old, open outcry auction market trader, with the help of those around him rise above.  He used what he had, and his guts to beat the younger, faster prototype that represented the new way of doing things.  Now imagine a market structure that valued price discovery over micro-second executions…ahhhh.  My alarm’s ringing.

Market Recon Friday

Good Morning,
                        So, I was in attendance last night at the MNI sponsored event at which Cleveland Fed Pres. Loretta Mester spoke.  Ever been the dumbest kid in a room full of 200 people?  Well, I can no longer say that I don’t know how that feels.  She spoke for about 45 minutes, and then they went into a question, and answer session.  My hand was up the whole time, but well, I was not called upon.  Perhaps they read my notes.  I was recognized by a few folks.  There were a few points made by Pres. Mester that stuck in my head.  Before I comment, she does seem very likable in person, so we do have that.
                       To Mester’s credit, she sounded as if,  while she thinks that normalization of policy is where we need to go, that any shock to the economy could change, or at least prolong her outlook on the progress of such policy.  Well, lah-di-dah.  Pretty sure that’s a part of every speech.  What I found extremely troubling, as I am sure every other economist in the room did…was though she did slip at one point, and refer to the recent “soft patch” in the macro…. for the most point, she stuck to the mantra the economy is fundamentally sound, growing at a moderate pace, and that it pretty much just needs to stay on track.  She went as far as mentioning that once the Fed Funds Rate gets to 1%, we can start tackling the balance sheet.
                       Mester also was asked about, and did her best to avoid saying anything substantive on the subject of diverging monetary policy among the world’s central banks.  She said, the US economy is different, which it is, but she did not color that answer with much detail.  She sounded, to me, kind of like a football coach of an 0-16 team game-planning the Super Bowl, you know, just in case.  She did acknowledge recent market volatility, but in my opinion, she downplayed this as somewhat normal.  (I’ve been in the markets since many of you were in diapers, and….this ain’t normal)  I just felt as if she wrote most of the speech four months ago, and never really  bothered to edit, or revisit said speech before delivering it.  Either that, or I very simply was not the dumbest kid in a room full of 200 people.
 
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The Employment Situation  (January)
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08:30 ET
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            There are many, many moving parts to the BLS report, but some of them won’t matter to traders, and some of them matter far more than other to the ground level US economy.  We don’t live in castles here.  We pretty much tell you the truth, even if isn’t real pretty, and even if it isn’t what the powers that be happen to be selling today.
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Non-Farm Payrolls:  For trader types, this is the one that moves the marketplace.  In December, we saw a “very strong” 292K in this space, which we all know was built with smoke and mirrors.  Today, consensus view is for 189K, which is close to being smack dab in the middle of the 170K to 215K range.  It is hard to say how the number today will be received.  With almost all of the US macro over several months now representing an economy that appears to be falling off of a cliff, would a second consecutive beat for NFP be poorly met by Mr. Market?  Oddly, there was very little talk on this item yesterday on the trading floor.  It’s usually a much higher priority with the crowd during “Jobs Week”.
Average Hourly Earnings:  Probably the second most important slice of the Employment pie for traders.  We are looking for a m/m increase in this space of 0.3%, which would be very welcome after last month’s 0.0%.  Any kind of lift in wages has been a very long time coming for plenty of folks on Main Street.  We have had several false starts for this one over the last half year or so, including two 0.4% m/m pops that found no traction.
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Participation Rate:  Taken far more seriously than the Unemployment Rate these days.  This item is mired near incredibly low levels.  That said, December’s 62.6% was the product of two consecutive increases in this space.  What was once awful looks a lot less awful when you’re moving the other direction.  After what we’ve been through in this space, baby steps are fine.
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Underemployment Rate or U-6:  This one not only includes the unemployed, but those working part-time who would prefer to work full-time.  In December, the BLS reported this one at 9.9%.  Just so your not buying your groceries all in the same place, for comparison’s sake, Gallup, the only other folks I know of who attempt to release a US Underemployment Rate, happened to print their number at 14% for December.  At least the two are close.  Uhm yeah.  Somebody’s wrong here.
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Unemployment Rate:  This one has completely fallen off of the radar in the financial community, perhaps because of the absurdity of throwing the long term unemployed out of the total, being labeled as discouraged.  That may have worked back when finding a job was almost as easy as looking for one.  Last month this print came in at 5.0%, and that is the expectation for today.  For your information, last month, Gallup printed this item at 5.5%.  Again…. pay no attention to that man behind the curtain.
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Other Macro
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08:30 ET
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Trade Balance  (December):  For the trading community, this one will pass by quietly.  Expectations are for something close to $-43.0B, with the Exports print coming in under $182B.
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13:00 ET
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Baker Hughes Rig Count (Weekly):  Last week, this data-point saw a drop in North American active rigs drop from 887 to 850, with 19 out of the 37 rigs that ceased operation being Canadian.  A further drop in this number would be a welcome boost for Crude, which under-performed most of the commodity complex yesterday.
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15:00 ET
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Consumer Credit (December):  Total credit increased in November by $14.0B, with $5.7B of that number coming in the form of revolving credit.  That, for those of you who do not follow this closely…was a big increase in the use of credit cards.  Many of these palookas are crowing about how confident that means you all are in the economy.  I suspect that somewhat less triumphant forces may be at work here.  Maintaining your standard of living becoming an issue?  What says you?
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Friday’s Earnings Highlights
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Before the Open: AON (2.10), EL (1.10), MCO (1.04), TSN (.89), USG (.32), WY (.24)
After the Close:  Dreaming about my next disgusting plate of nachos.  Oh, so close.
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Super Bowl Prediction:  Let’s go Mets.

Mid-Day Thoughts

Allrighty Then,

1) US Dollar remains weak, putting a bid under dollar denominated commodities, and successively the Materials, Energy, and Industrial sectors. Oh, and by the way, the transports are screaming.

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2) Lack of hard news on some kind of coordinated production cut acts as a counterweight on Crude.
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3) Weakness in defensive plays across the board, at least as far as stocks are concerned, namely the Utilities, Staples, and Health Care sectors.  Non-equity defensive plays such as government bonds, and gold are doing fine.
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4) MACRO, MACRO, MACRO… honestly…How bad can the macro get?  Actually, the Productivity vs. Labor Costs equation is just about the most important data that we do see, and it will impact future decisions made by hiring managers.  It has become clear to me that the the FOMC can not raise interest rates anytime soon, unless forced to by a burst in consumer level inflation.  A couple of head fakes, sure…but an eventual cut is far more likely.  That will be embarrassing for them, so they will drag their feet..
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5)  Don’t get me wrong… I am rooting for the economy.  Would much rather be wrong about this than right.
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6)  Jobs Day tomorrow, after the absolutely ridiculous seasonal adjustment last month…. does it mean anything?
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7) LNKD earnings tonight.  From 11 to 12 dollars worth of implied volatility baked in.
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8) Okay, back to work you maggots.

Market Recon Thursday

Good Morning,
                        The US Dollar is weaker again at this time, with the DXY rolling off of a table earlier this morning.  That has been good news for equities, globally, as dollar denominated commodities found some relief.  This will also be our driver…at least for now.  I don’t tell you what to do, you know that, but financial stocks, though they came back quite nicely yesterday, are scaring the heck out of me.  Something is wrong…don’t know what just yet, but they are trading as if there is unbroken news out there somewhere.  There are enough choices in our galaxy for traders, who might have limited risk tolerance to avoid taking shots that might look very ignorant in hindsight.
                       Obviously nothing that is true remains true for very long, and agility will remain a trader’s best friend in these times.  If you marry your positions, they must be protected, and if you are not married to said positions, then you must understand technicals, or at least a set of technicals that you believe work for you.  I have three, one of which is my own, and highly classified.  I am not saying that there is no place for fundamentals.  Those are for your core positions.  What I am saying is that the robots that you’re up against are being programmed by guys who, for the most part, all study the same stuff.  They were not raised in the auction market, and have never developed instinct.  In times of high volatility, when parts are moving faster than human brains can make cognitive decisions, in order to beat the chart monkeys, you must yourself become a chart monkey.  They are faster than you.  They can impact the market in size. You may not be able to do those things…. but….  they do not know what you are going to do.  Understand them better than they understand you.  You can have that edge on them.  Got work ethic?  I bet you do,  no…… I know you do.
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Da Macro
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08:30 ET
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Initial Jobless Claims (Weekly):  Last week, we backed off of our recent high of 294K that printed two weeks ago with at tag of 278K.  Before you go all warm and fuzzy on me though, continuing claims hit a five month high last week, so the big ugly is still out there.  Expectations for today are for an in-line 279K, but just a warning.. the skew is to the upside.
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Non-Farm Production, and Unit Labor Costs (Q4):  I could do these two separately, but let’s face it… these two aren’t just cute together, they’re like peanut butter and jelly.  I mean what is more closely tangled than Worker Productivity, and Labor Costs.  Take it from a guy who’s had his teeth kicked in, you want to be more productive than you cost, at least in the private sector.  Workers rejoiced in the third quarter when Productivity surged 2.2%, while Costs only increased by 1.8%.  (These numbers are measured q/q in SAAR fashion.)  Well…kiddies….expectations for the fourth quarter, like just about everything else we’ve seen for a bit, are just awful.  Projections for Productivity are in the area of -1.6%, while Costs are expected to have risen 3.9% or so.  Some economists are as high as 5.4% on this one.  If these expectations are accurate…then it stands to reason, that more than a few lay-offs are on the way.  The Big Ugly lurks.
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10:00 ET
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Factory Orders (December):  Yeah, we’ve got another winner here.  Looks like this one is headed for month over month contraction of -2.8%, after shrinking just -0.2% in November.  If that number is accurate, this will be the nastiest release in this space in eleven months.
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10:30 ET
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Natural Gas Inventories (Weekly):  The reductions in supply just keep growing in this space.  We expect another sizable reduction today, probably something close to the tune of 175 billion cubic feet.
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From the Fed
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Way Early
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Boston Fed Pres. Eric Rosengren spoke this morning on the subject of “Too Big to Fail” in Cape Town, South Africa.  Rosengren is somewhat dovish, and is a voting member of the FOMC.  He apparently thinks that threats from “Too big to fail” organizations have abated.  That’s good.  He, as far as I could tell, did not really go into policy all that much.
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08:30 ET
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Dallas Fed Pres. Robert Kaplan is set to speak from Dallas on the global economy.  Kaplan is not a voting member of the FOMC this year.
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17:00 ET
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Cleveland Fed Pres. Loretta Mester will speak at an MNI sponsored event in New York City.  Mester is a voting member of the FOMC this year, and will open herself up to questions after the speech.  You know I appreciate that.
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Thursday’s Earnings Highlights
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Before the Open: CI (1.79), CLX (1.05), COP (-.64), MMC (.71), PM (.81), RL (2.11)
After the Close: DV (.66), LNKD (.78)

Market Wrap Wednesday

Good Evening,
                        I know that I rarely write an evening note anymore, but today’s action was so wild, and so invigorating  ….. that it was either run a couple of miles, or write a note.  I will probably still run a couple of miles, but at least I’m on a moving train this way.
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The Story
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                       What was the big story today???  The 8% rip in Crude?  The serious beat-down handed to the US dollar?  The game of Chutes and Ladders played by the equity market?  You know, the S&P 500 level coming in this morning was 1873, and the index bottomed at 1872 and change.  Incredible…just how technical this has all become.  Everybody looking at the same charts.  So many traders talking to each other trying to get a handle on just what we should all be looking at.  Moving parts? Yeah, no kidding.  Is it Friday yet ??
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Sold to You,….. I think
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                        First came the weakness… in the dollar, and equities.  It appears that the Bank of Japan put a cap on the scope of their leap into darkness last week that took more than a few folks by surprise.  I guess they need to take baby steps, because you and I both know that these guys will never, never, ever tighten monetary policy.  That hung an anchor on the greenback, as well as put a bid under WTI, that even a massive increase in supply couldn’t put anything more than a temporary dent in.  I think it’s fairly safe to say that both of these items saw squeezes of one type or another after that.  Then, the whole smoke and mirrors story about an emergency meeting of non-OPEC, and maybe even OPEC types that may, or many not be true.  What the ???…….  Take ’em.
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Moe, Larry, and William
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                       We saw gyrations in the Treasury market.  We saw NY Fed Pres. William Dudley sound anything but sure of himself, just one day after KC Honcho Esther George sounded like she hadn’t even taken a look at any US macro in something like three or four months.  I mean…. C’mon man !!!!!!  If you need help….ASK  !!!
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Final Score
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                      The winners??? The Energy Sector ran 4%.  Telecom, Utilities, Industrials, the Transports, and Gold all had nice days.  The losers?? After all that… US Treasuries.  Even the Financials after having their collective faces ripped off earlier in the day closed, as a sector… close to unchanged.
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Tomorrow is Thursday.  Just bring it.

Market Recon Wednesday

Good Morning,
                        Just how bad was yesterday’s sell-off in US Equity markets?  It did feel pretty bad.  Tactically, there was some damage.  The sell-off was broad-based, with Energy, Financial, Transport, and Small Cap types suffering the most.  I was kind of hoping that Transports, and Small Caps had started to turn a corner.  The Energy sector is going to correlate to Oil, that’s obvious, and the unknown, or maybe in some cases well known strings that tie Energy to some banks is also going to push Financial toward the correlation.
                        The Transports have already suffered mightily, and while moving commodities is what many of them do, reduced fuel costs will improve dynamics for some, and Small Caps…what can you say there?  In a strong dollar environment, they have to be winners, no?  So, we are not healthy.  We already know that.  Back to the charts.  Though, suffering that tactical drawback, the strategic damage really was not as severe as it felt.  That doesn’t mean that I think we are okay.  All of our risks are still there, and the mindless Fed that would have us import the very deflation that they wish to fight, is still, even with collapsing global demand, and crude being crude, our top market risk.  As to the strategic, I think that we can go as low as SPX 1865, or maybe even 1860 before we know for sure that whatever you are doing might need to be adjusted.
                         Today is global Service Sector PMI day.  Overall, the Euro-Zone hit consensus with Spain actually topping forecasts.  Unfortunately Italy, France, and Germany all missed the mark.  Even European Retail Sales, while printing at their best level since Autumn fell short of expectations.  European markets are painted blood red again, but this is not a complete romp, and US Equity Index futures markets are, at least so far, hanging onto small gains.  The American Service Sector gets it number today at 10am.
                        If you have not already decided to make today great, do it now.  You have nothing to lose by doing your best.  So, do it.  If they (whomever) don’t like your best, don’t hold back… lead by example.  At least one of them (whomever) will follow.
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So, You Think We’re All Morons
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          I have said it since I was a young economics student…. Why not just get rid of seasonal adjustments???  They serve no purpose other than to streamline the data for comparison’s sake.  Well, if economics is the study of human behavior in relation to a set of conditions, and resources…..and if we are not a bunch of utter and complete morons….then we know things like seasonal change, and occasionally unexpected forces do impact human behavior.  That said, save us your load of bologna, and just for Pete’s sake release the pure data, exactly the way it is….without the nonsense.  If 11 thousand people found a job, do not tell the masses that 292 thousand people found a job.  I know that it all works out in the end, or at least is supposed to, but, and this my friends, is a big but…. I value honesty.  Any self respecting numbers nerd does.  Any man or woman should.  The guy across your street that you just waved at, who lost his job 14 months ago, still needs to find a new one.  Sarge out.
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Today’s Macro
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08:15 ET
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ADP Employment Report (January):  This item, which is meant to be a predictor for Friday’s Private Payrolls portion of the Non-Farm Payroll report, is often ridiculed for being inaccurate.  Well, in December, this one came in at a very healthy 257K, and we all know that the NFP print then came in at not only very healthy, but an extremely seasonally adjusted 292K.  Today, we expect that this item may have slipped back below 200K, probably to something in the 190’s.  There are economists out there as low as 160K, and as high as 220K.
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09:45 ET
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Markit Services PMI (January):  This item flashed mid-month at 53.7, and that is our expectation for today.  That said, the market will wait 15 minutes for the ISM print, before reacting in this space.
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10:00 ET
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ISM Non-Manufacturing Index (January):  With most parts of the economy crumbling down around the kingdom, and with the manufacturing biz in an outright depression (worse than recession)….  (although New Orders did seem to budge in the right direction on Monday), many folks who normally let this one pass will be watching closely.  The December print showed up at 55.3, which is healthy, and still comfortably in expansionary territory.  The problem here is that we need the Service Sector to remain our engine, and this item is very steadily trending in the wrong direction.  That 55.3 was the weakest print in this space since April of 2014, and the projection for today is for a slightly weaker 55.2.  On top of that, the skew for this one is to the downside, with the low end of the range at 53.0.
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10:30 ET
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Oil Inventories (Weekly):  Last week, we were looking for an increase in supply of over 3 million barrels, and the print came in at an increase of over 8 million.  If you don’t follow this item closely, I’m not joking.  These are the numbers.  That was the largest increase for any one week, in about nine months.  Today, expectations are that we tack on another 4.2 million barrels.  What could possibly go wrong?
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Wednesday’s Earnings Highlights
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Before the Open:  GM (1.20), IP (.82), MAN (1.52), MRK (.91), SO (.42)
After the Close:  BWLD (1.48), GPRO (.03), GMCR (.68), MET (1.36), YUM (.66).