Market Recon Wednesday

Good Morning,
                        In “celebration” of the easing of monetary policy by the PBOC yesterday, Chinese traders merely sold Chinese stocks today, instead of obliterating them.  In fact, today, the Shanghai Composite spent part of the day in the green, or as they say in that neck of the world “in the red” before selling off into their close.  A drop of 1.3% must have been a relief for those trading within an index that has lost about a quarter of it’s value since Friday’s open.
                       US futures markets are trading well above fair value right now.  What does that mean?  I think we’re all a little more skeptical of the markets than we were way back on Sunday night.  I’m reading articles this morning describing how the US equity markets are being driven by the Chinese equity markets, and I think this simplifies things way too much.  Our markets are being driven to some degree by China, but not by their equity markets.  That’s off the mark.  Our markets are being driven largely by two factors, and one certainly is Chinese.  Global demand is clearly a problem for US international corporations.  China has been the engine behind global demand, and the ability for China to continue to do so is a great uncertainty.  Stocks (and commodities) just love uncertainty.  So, now we have to re-price an entire marketplace that is unable to quantify a major component.
                         Wait…Sarge…you said there were two !!  ….and another thing, why are domestic corporations being slapped around as if they too, had all of this exposure?  Great question, glad you asked.  You might think that smaller caps, with less international exposure would be safer places to hide, and to a degree, you’re not too far off.  But….and this is a big but, the American public, also known as the American Consumer has just suffered a blow to his, or her perceived level of wealth.  The common man, or woman with no connection to this industry will be waking up to this fact over a couple of weeks, depending on how closely they follow financial news.  When folks have smaller balances in their trading accounts, in their retirement accounts, and when older folks earn even less on their CD’s, they spend less.  Yes, all of them will spend less, regardless of what surveys like Consumer Confidence tell you.  So, for domestic corporations, future activity by consumers will likely have to be re-priced as well.  Ugh.
                        Now for today’s domestic macro.  The Census Bureau will release July Durable Goods Orders at 08:30 ET.  We’re expecting contraction at the headline to the tune of -0.4% m/m, but the Core print looks a little better.  Once you strip transportation out of the number, it turns into m/m growth of 0.3%, or at least that’s what the consensus says.  You will also see the weekly Oil Inventories number at 10:30 ET.  You know how impactful this one can be to the price of Crude these days, and as they say….. “the ankle bone connected to the shin bone”, and so on.
                        The highest profile corporation that I see on a very light earnings calendar is WSM.  They will report after today’s closing bell.  I have no interest in that name.  We do have one Fed speaker lurking about on the eve of the Kansas City Fed’s “Yellenless” Jackson Hole shindig.  That speaker would be the New York Fed’s “Wild Bill” Dudley who will be holding a press conference from NY at 10am ET.
                         I’ve hit you over the head with a lot of food for thought today.  Take a few minutes, go to the bathroom, get a drink of water.  Then come back ready to work your tail off.  Good luck today, gang.  Helmets, and Flak Jackets on.  Gas mask on the hip.
SPX: 1945, 1926, 1915, 1902, 1877, 1867, 1850

RUT: 1148, 1140, 1132, 1121, 1110, 1104, 1100