Market Recon Monday

Good Morning,
                       There are a few arrows headed in different directions this morning.  Let’s try to make sense of some of this.  Chinese Industrial Profits sported almost a 9% y/y plunge from August 2014 through August 2015.  This has global equities, and US futures markets trading lower this morning…just about everybody, that is…except Shanghai.  Makes sense?  No, but I would point out that today’s volume in Shanghai is notably low, and other Chinese markets are closed for a holiday.  BTW, the really important Chinese macro is due this Wednesday evening.  The yield spread between US Treasuries, and similar duration Corporate debt is growing.  That’s a bad sign.  The Hulbert Investor Sentiment Index is currently at the lowest level since it’s creation in 2000.  That’s probably eventually good, if you’re a contrarian, which I sometimes can be.  I do think, however that we’ve got some wrinkles to get though in our immediate front, most visibly avoiding a US government shut-down, and what’s going to be a pretty rough third quarter for corporate earnings.
                       It is Monday, gang.  Sometimes Monday sort of catches you by surprise.  I mean, you do know it’s coming, but somehow….. just getting going is so darn hard…. and kid, it ain’t just you.  Volumes ten to be lower on Mondays, and particularly lower early on Mondays.  Today though, easing into the work week, is simply not a viable option.  Unlike other “Jobs Weeks”, the macro gets started right away this morning, and on top of that, the Fed has decided to inundate us with speakers today.  You do not need to be told, that the spoken word can be as sharp a weapon as any macro-economic data-point when it comes to moving markets.  That said, let’s get after it.
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05:15 ET
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Fed Speaker:  Fed Governor Daniel Tarullo spoke this morning on Regulation from Paris, France.  I don’t see any earth shattering news out this item.  Noteworthy, if for nothing else, because this was the first of at least four speaking appearances today by voting members of the FOMC.
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07:45 ET
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Fed Speaker: New York Fed Pres. William Dudley is scheduled to be interviewed by the Wall Street Journal’s Jon Hilsenrath at this time.  Read that last sentence again.  Wonder if any headlines will come out of this?  The topic?  Oh just interest rates, and inflation expectations.
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08:30 ET
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August Personal Income: This data-point has become very consistent.  Expectations for today are for a print of 0.4% m/m growth.  If this happens, and July is left unrevised, then this would be the fourth consecutive month of 0.4% growth.  The entire range for this one spans only from 0.3% to 0.5%, so nobody is thinking surprise in this space today.
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August Consumer Spending: Almost a similar story here.  We’re looking for month over month growth of 0.3% for the third consecutive month…. and again the range is tight.  You can see from the recent trend that income is finally putting a small winning streak together versus spending, which has to be taken as a positive.  I know you’ll hear others pushing for spending, but this trend is allowing some folks to simply catch up a bit.  When they’re comfortable they’ll spend.  They’ve proven that.
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August PCE Price Index:  There are two prints that trader types will look at here.  The headline print, and the Core print.  Simply put, Core PCE is now the most heavily focused on of all measures of consumer level inflation.  Change that.  This is probably the most heavily focused on macro-economic data-point that we have at this time.  There…said it….during “Jobs week”.  Look for prints of 0.1% m/m at the Core, and 0.0% m/m at the headline.  The ranges are tight, and I do not see a skew.
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10:00 ET
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August Pending Home Sales: Two months ago, this item hit a wall, but seems to have gotten back on track in July.  Today, expect growth of 0.4% to keep this item on track.  The range for this one is wide, so you could see anything here from a severe miss to a fairly strong beat.  Fortunately this is not one of the more closely watched pieces of the housing pie.
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10:30 ET
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September Dallas Fed Manufacturing Survey:  What is there to say? Not only has Dallas been in a constant state of manufacturing contraction since 2014, but New York, Philadelphia, Richmond, and Kansas City all printed in contraction for September.  Soooooo…….good luck in this space today.   We’re looking for something around -9, which would be slowing of the decay seen in August (-15).
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13:30 ET
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Fed Speaker: Chicago Fed Pres. Charles Evans will speak on monetary policy from Milwaukee, Wisconsin.  Evans is seen as very dovish by most Fed watchers.  In fact, probably only Narayana Kocherlakota of Minneapolis has a more dovish reputation than does Evans.
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17:00 ET
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Fed Speaker: San Francisco Fed Pres. John Williams will speak from San Francisco.  Williams also has been seen as a dove in the past, and even though he was part of those nine a week, and a half ago… he has been making a little more sense of late.
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                        Good luck today, gang, and good luck this week.  It may get a little rough out there, but you’ve done “rough” before, and you do “rough” well.  Now, get in there, and be who you need to be.
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Sarge’s TRADING LEVELS
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SPX: 1950, 1939, 1929, 1921, 1915, 1909, 1900, 1895

RUT: 1135, 1130, 1125, 1119, 1110, 1104, 1099, 1094