Market Recon Friday

Good Morning,

                     It’s Friday, gang.  Of that I am sure.  I am also sure that you’re ready for a weekend, I know that traders in China probably are.  The Shanghai Composite gave up almost 6.5% today, bringing it’s slide to over 13% for the week.  That index is now up a “mere” 120% for the year, so it’s all in the angle of the prism that you’re looking through.  Today, we’ve got nothing coming our way from Planet Macro….absolutely nada.  That does not mean that you’ve got nothing on your plate.  Far from it.  Today brings us a triple…errrr, make that a quadruple witching.  Everything expires today, everything that is…except your marriage licence.  You can expect heavy volume across the board in futures, options, and equity markets, and you can expect much of that increase in volume to be concentrated on the two bells.
                    On top of that, we’ve got a couple of Fed speakers on the docket, which is a pleasant change.  San Francisco Fed Pres. John Williams speaks at 11:40 ET on monetary policy from San Fran.  Cleveland Fed Pres. Loretta Mester will give it a go from Pittsburgh at 12:15 ET.  So, you may have to stay at 50% alert, while you enjoy your lunch, kids.  Williams is a voting member of the FOMC this year; Mester is not.
Sarge’s Gripe 
                   I keep seeing in various media circles this week, that the market has rallied over the last couple of days since Janet Yellen’s press conference, because she was perceived as being dovish. Really?  That’s sticking in my craw a little bit.  Did they ask any practitioners?  Did they pay attention to the press conference?  Janet Yellen basically told you that she’s still intent on raising the Fed Funds rate this year, with residual hikes to come. She told you this despite understanding what the first quarter did to GDP.  The economy in her opinion, is still improving.  That’s slightly hawkish, gang, not dovish.  We’ve had a ZIRP policy in place now for many years.  Saying that you are still on tract to change that policy this year is NOT dovish.  We all thought that September was going to be the month for a slight increase.  Nothing has changed there.  Most traders expect that the equity market can continue to go higher despite small, gradual interest rate hikes, because there still is not a lot of competition for you investment dollar.
                  The reduction in GDP expectations, and that tiny Core CPI  number yesterday were more dovish factors than the Fed Chair was in what she said.   What traders liked from her, was they correctly read the playbook.  They’re on the same page as the Fed Chair.  We understand that the FOMC has to go slow.  To some degree, at least for now, the uncertainty from that corner is somewhat reduced…..and we like that.  C’mon, if you’re going to report on this stuff, you have to get in tune.  If you don’t know…..just ask….and don’t ask some guy who has never risked his own money.
SPX: 2147, 2135, 2127, 2119, 2112, 2106, 2098
RUT: 1304, 1300, 1296, 1288, 1283, 1278, 1272