Market Recon Friday

Good Morning,

                     European equities are mixed this morning, while sovereign debt out of that region is showing weakness.  This comes after Eurostat released a hotter than expected Flash Core CPI number for July the Euro-zone, and worse than expected macro numbers out of Italy, and France.  In Asia, Indian stocks are roaring after surprisingly strong production numbers were reported from a number of industrial sectors, and there is weakness in Shanghai ahead of tonight’s PMI data.  What does this all mean to us?  I’ll let you know when the ref blows the whistle, but our focus should remain on the Fed, the underlying macro that influences the Fed, China (the economy, not the stock market), and the welfare of municipal debt.
                      Let’s do the macro dance.  At 08:30 ET, the BLS will print it’s Employment Cost Index for the second quarter.  This is a danger zone for the economy, as it measures not just wages, but benefits plus all of the hidden costs that go into employing an individual.  Danger?  Yes, because this item has been running higher over the last year nad a half than it had for several years before that.  Today, we look for another pop, +0.6% q/q, on top of Q1’s 0.7% q/q increase.  The Chicago PMI will print at 09:45 ET.  That one has less of a market impact than it used to, so don’t get too worked up over it.  What will impact your morning will be the University of Michigan’s final July Consumer Sentiment number that comes out at 10am.  This item sported a 93.3 tag two weeks ago, and comes into focus today, particularly after the weak Consumer Confidence release that we saw from the Conference Board on Tuesday.  The U of M number is projected to easily hold that 93.3 line, and possibly push up into the 94’s.
                      I do not see any Fed speakers hiding in the weeds today, but earnings releases are a different story.  Fridays are usually a light day as far as the earnings calendar is concerned, but today brings us a few big fish, with the focus on energy names.  Before tofday’s opening bell rings at 11 Wall Street, you will hear from CVX, XOM, PSX, NWL, TYC, and WY, among others.  Have a good day, gang……and may many victories be yours.  Two bells…..then we rest.
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Sarge’s Trading Levels
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SPX: 2128, 2120, 2110, 2100, 2093, 2082
RUT; 1242, 1237, 1233, 1227, 1221, 1215

Market Wrap Thursday

Good Evening,

Macro:
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 Q2 GDP mildly disappointed, but with a strong revision to Q1.  Jobless Claims printed at Consensus.
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1) Major equity indices closed nearly unchanged, with the NASDAQ Composite in the lead.  Volume was above 2015 norms, but below what we’ve seen in the immediately recent past.
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 2) The Energy sector was the day’s weakest performer on lousy earnings, and soft oil prices.
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 3) Utilities were your top performers as a direct result of strength in the Treasury market.

Trading Levels, Thursday 30 July 15

Mornin’

I have not been back long enough to research an intelligent Market Recon note for today, but chart-work is a lot quicker to put together.  I see no reason not to publish my Trading Levels for today.  Have a good day, gang.

SPX:  2128, 2120, 2110, 2099, 2092, 2081

RUT: 1242, 1237, 1233, 1226, 1221, 1215

Market Recon Thursday

Good Morning,

                     Jobs Day !!  Oh, yeah, get some.  Does it matter?  Now?  Even with nations, states, commonwealths, and the guy across your street drowning in debt?  Yes, Virginia…it does.  Jobs, and the quality of demand for labor are still the most important things relevant to our economy, our lives, and the velocity of money.  There may be developments out of Greece today, but all indications are that we will not have significant breaking news on that front until after the referendum on Sunday.  Puerto Rico seems to be, for now at least, meeting obligations on a day by day basis, and Chicago is….well….Chicago.
                     About those jobs..  At 08:30 ET, we’ll get our weekly Initial Jobless Claims print that we always get on a Thursday, as well as the “once a month” Employment Situation release from the BLS that usually comes on a Friday.  The Jobless Claims number came in at 271K last week, and economists generally expect this week’s print to be in line with  that one.  There is virtually no range for this print, meaning that we are either reasonably sure of the number, or everybody is copying each other’s work.  Now, for some meat and potatoes.  June Non-Farm Payrolls are expected to tail off from May’s 280K to something near 230K.  There is almost no skew that I see, but if there is one, I think it may be to the low side.  The Unemployment Rate is not a serious number.  We all know that.  Traders don’t respect it.  Sentient beings who read newspapers,and try to understand the news don’t respect it.  The guy down your block, who used to make 85K, and now works for $9 bucks an hour doesn’t respect it.  Nonetheless the charade must go on, and the expectation is for a drop to 5.4%.  Average Hourly Earnings are projected to have increased by 0.2% m/m, off of the 0.3% pace seen in May.
                     Two important items that are part of the Employment Situation release that most economists do not generally make a prediction for, are the Participation Rate, which currently stands at 62.9%, and the U-6 Unemployment Rate.  The U-6, while not a true Unemployment Rate is the closest thing to an honest measure of the Labor Situation that we have in this country.  That number has been improving throughout the recovery, and stands at a seasonally adjusted 10.8% coming into this morning’s print.  Funny, how they try to bury this rate, being it’s twice as high as the one that they’re trying to sell you.  Factory Orders are due at 10am ET, and the Natural Gas number is due at 10:30 ET.
                      I do not see any Fed speakers out there today, and “earnings season” won’t start til next week, so enjoy your families this weekend, and most of all…..be safe. Have a very happy 4th of July !!
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Note to Readers:  This will be the last Market Recon note for a while.  As most of you know, every once in a while I have to disappear for a little bit, and that time is upon me again.  I will be at my spot on the NYSE trading floor on Monday, and Tuesday, and then I likely won’t see you for most of  the rest of the month.  May you have a wonderful July, and may God bless you.
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Sarge’s TRADING LEVELS
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SPX: 2099, 2090, 2081, 2075, 2068, 2057
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RUT: 1272, 1264, 1258, 1252, 1248, 1243

The Wednesday Wrap

The Wednesday Wrap

Macro:
ADP Employment beat, Markit Mfg PMI beat, ISM Mfg beat, Construction Spending beat, Total Vehicle Saleson consensus, Oil Inventories rose.
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1) All of the major Equity indices were up on the day, with the DJIA on the high end (+.8%), and the Russell 2000on the low end (+0.2%).  Volume remained above average.  Hopes for a post-last minute deal for Greece supported stocks, while lack of progress throughout the day pressured them.
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2) The Financials, and Consumer Staples were your most victorious sectors for the session.  Energy shares were severely beaten, as Crude was absolutely crushed.
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3) The Transports closed in the green today, despite the drag on the index that was the sell-off for the airlines after the DOJ confirmed a probe into possible collusion in that industry.
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4) Treasuries finished lower on the day, after trading in fairly tight range over the duration.

Market Recon Wednesday

Good Morning,

                     Where do want to start?  China (Ugleeeeee !!!!), or Greece, where I’m not sure ugly is the appropriate word.  Actually, I’m not sure what an appropriate word might be.  Let’s start in China.  Last night (NY time), HSBC, and the government released their twin Manufacturing PMI numbers for China, and you guessed it….they both missed consensus.  That may have been the catalyst, or maybe it’s just that the whole deleveraging process still has a few miles to run, but Chinese stocks gave up their gains from that oddball session on Tuesday, closing down 5%.  Folks, I wouldn’t trade Chinese equities with your money right now.  Losing my shirt scares me more than making a fortune delights me.
                     Greece, now in default, has apparently made overtures toward their lenders this morning.  That’s why European equity markets are in party mode as I type out this note.  You have probably noticed the pop in US futures markets.  I don’t know how much faith you can put in anything right now.  Is this sincere?  Will there be a referendum at all?  Will the people of Greece throw a group tantrum?  Instead of judging, put yourself in their shoes.  Your life has drastically changed for the worse over the last few years.  It’s still changing for the worse.  You have money in the bank, but you are not allowed to access it.  You feel betrayed by your leaders.  You feel betrayed by your creditors.  Never mind whether or not these statement are backed by fact or not.  The recipe is there for both chaos, and a humanitarian disaster.  Those things will cost Europe more in the end, than allowing Tsipras to somehow save face.  I do not know how this plays out, and neither do “the experts”.

                      Macro ??  Gang, I hate to distract you form all of the headline making that we see around our planet this morning, but we have a fairly large batch of macro on our plates today…and then there’s “Jobs Day” tomorrow.  First lets’ get rid of today’s items that in the end, won’t impact your trading session.  The Challenger Job Cut Report will not sway the markets, and will not sway you, unless you’re an unfortunate target.  Motor Vehicle Sales do matter, but the numbers are released sporadically, and will push or pull specific stocks.  There will not be a “Whoa Baby” moment there.  What will immediately impact the futures market will be the June ADP Employment Report.  That number will be released at 08:15 ET and will be forgotten 24 hours and 15 minutes later.  The consensus for today is for 218K, up fro  last month’s 201K.  The range is broad, basically 200K to 250K.
                       You’ll get hit with a double dose of manufacturing data next.  At 09:45 ET Markit will print their PMI number……and nobody will notice (except me), and at 10am ET, we’ll see the ISM print.  That one counts.  The expectation (hope) for this June number is for a 53.2 tag, up from May’s 52.8.  The 10am hour will also bring us May Construction Spending.  Lastly, but certainly not least importantly, we’ll get our weekly Oil Inventories report at 10:30 ET.  we are going for our ninth consecutive contraction in Oil supply this week.
                       No doubt, we’ve got a ton of moving parts impacting what we do right now.  No harm stepping back when you need to, in order to gather your thoughts.  Slow things down when you need to, and play small ball.  Singles hitters still make the all-star team.
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Sarge’s TRADING LEVELS
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SPX: 2107, 2099, 2090, 2080, 2074, 2068, 2057, 2052

RUT: 1283, 1278, 1272, 1265, 1259, 1253, 1248, 1243