Market Recon Friday

Good Morning,
                       Global equities are higher this morning, as the conga line follows Wall Street’s lead.  EMU consumer level inflation came in at awful levels, but at least it was expected.  More stimulus?  We’ll see.  Funny thing…after I bashed the Wall Street Journal, and the FOMC in yesterday’s morning note, and then that note ended up catching a lot more attention in the media, and from high-profile industry types than I am used to….. and voila…somehow my Journal was not in my driveway when I left for work this morning.  Hmmm.  Fortunately, the FOMC also failed to appear in my driveway this morning.
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MACRO
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                      We’ve still got a nice batch of macro to look at today….not the blitz that we battered our way through yesterday, but a nice batch nonetheless.  The fun gets started a little late this morning, with the release of September Industrial Production, and Capacity Utilization at 09:15 ET.  Industrial Production has been in retreat in America, printing in contraction in six of the last nine months.  Today, we are expecting another negative,  likely something close to -0.2% m/m.  Capacity Utilization has also been going the wrong way for most of the year., and further retreat is expected today for that space.  Consensus is 77.4% today.
                       The University of Michigan’s Consumer Sentiment has become one of the most closely watched data-points throughout this “recovery” (so, that’s what you call it).  A surprise here will move the markets around.  We’re thinking that for the preliminary October release, that there will be some improvement from the September final.  Most economists are looking for a number above 89 today.  Interesting to note that the low end of the range for this one (87.5) is above last month’s 87.2.
                       There are also two items that you need not spend any intellectual capital on.  The least focused upon jobs-related data-point ever, also known as the JOLTS (Job Openings) will print at 10am, under cover of the Consumer Sentiment print.  Then there’s the TIC number.  That one will hit the tape at 4pm ET.  It does matter, as it measures cross border investment, which is like…..mega important these days…, but it’s the closing bell….on a Friday, so  C ya.
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EARNINGS
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                        Last night, AMD lost more money per share than expected, on consensus revenue that was down 25% y/y.  Party time.  SLB beat by a penny, but missed on revs.  Their revenue was 33% lower year over year.  The year over year revenue print is quickly becoming my favorite part of every earnings release.  Intellectually interesting stuff for your inner nerd.  This morning we’ll hear from the likes of GE (.26), HON (1.55), and KSU(1.22).  I do have a derivative position in GE.
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BASEBALL
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                         As most of you now know, my Amazins’ pulled out game 5 against LA last night.  Oddly, MLB is now in the position where they will be forced to crown a perennial loser as champion.  In the NLCS, you’ll have the Mets, who have finished in last place more often than not over the years, going against the Chicago Cubs, who have not won the pennant since before baseball’s color barrier was broken…and have not won it all since before the fall of the Ottoman Empire.  The ALCS pits Canada’s team, the Toronto Blue Jays, who are coming off of a 20 year cold streak versus the KC Royals, who had a hot streak back in the 1980’s, and just started winning again last year.  This will be very interesting.  Just hoping somebody tries to bring a goat into Wrigley.
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TRADING
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                         No matter what happens today, remember that we have huge Chinese data (GDP, Retail Sales, Industrial Production, Fixed Asset Investment) on the docket for Sunday night our time.  You may want to go into this weekend semi-flat, or at least comfortable in your designed protection.  Have a good weekend everyone.  God bless.
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Sarge’s TRADING LEVELS
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SPX: 2043, 2035, 2028, 2022, 2013, 2006
RUT: 1178, 1173, 1167, 1160, 1155, 1146

Market Recon Thursday

Good Morning,
                        There’s green on the screen across Europe, and Asia today, you freaks.  So, let’s get fired up.  Actually, my wonderful friends, there are two things sticking in my craw today…. let’s tape on the foil.  When he drops the puck, you know what to do.
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Thing Number One…. Wall Street Journal….front page headline  “Fed Doubts Grow on 2015 Rate Hike”.
Thing Number Two…. Wall Street Journal    next page headline  “The Fed’s Catch-22: Rates and Recession Risk”
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Yeah, thanks for coming in today.
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                        To the Wall Street Journal:  If I want to read something that we’ve all known for quite some time already, I do not need to spend three bucks. For the money, I can buy one of New York’s lesser newspapers,and have a cup of coffee.
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                        To the FOMC:  I have had it up to here with you. (right hand at eye level)  If you are really this worthless and weak….and it looks like you are,  my phone number and e-mail are on the bottom of this note.  I’m here to help.  For the love of my country, I will do your job for you…. but I’m picking my own people.  Honestly, I know you won’t resign like you should, but can you all please just shut your collective traps until you have a more concentrated plan amongst you.  Is there any leadership present????  Hellooooo !!!  FYI, unlike most of you, my resume actually has jobs on it.
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                        Now, there is more on your plate today than usual, my trader pals.  It’s going to be too much to take on all at once, so let’s separate the macro, the earnings, and those pesky little Fed speakers, so that we may slow them down, and take them on one at a time.
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Lions, Tigers, and Bears…..Oh My !!
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…..and you thought Dorothy had something to be afraid of.  The cowardly lion wouldn’t even show up for work today in this environment.
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Macro, Earnings, and Fed Speakers……Oh My !!
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08:30 ET
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CPI (Sept): This item, like yesterday’s Retail Sales numbers is a very high focus data-point.  The PCE might be Janet Yellen’s preferred measure of consumer level inflation, but I’m sure she’s watching this print as well.  In fact, if you told her that you have your own model showing inflationary pressure…she would probably favor your index.  We expect a second consecutive month of headline contraction here.  At the Core (less food and energy if you are new to this), consensus is for a very modest increase of 0.1% m/m, which would be the third consecutive month for such growth.
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Initial Jobless Claims (Weekly):  This formerly volatile data-point has become very predictable this year at these low levels.  Expectations today are for 269K, up from last week’s 263K.  Just one thought…the very consistency of this report has made it vulnerable to a surprise print, so one of these days…this one is going to kick us in the pants.  Just probably not today
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Empire State Manufacturing Survey (Oct):  This is the month’s first look at manufacturing, and everything that had anything to do with the manufacturing business had an awful month in September.  In fact, this item has been downright ugly for two months running.  We expect that the Empire State will get hit with the ugly stick for a third straight month…. just maybe a little less ugly, something in the area of -7.2.
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09:30 ET
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Fed Speaker:  St. Louis Fed Pres. James Bullard is scheduled to speak on policy from St. Louis.  Bullard has been speaking like a hawk in recent appearances.  He is not a voting member of the FOMC this year.
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10:00 ET
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Philly Fed Manufacturing Index (Oct):  It doesn’t take long for us to take our second look at the manufacturing sector for the month.  Of all of the regional Federal Reserve district manufacturing reports, Philadelphia has hung in there the best.  This item only went into contraction last month.  We expect another month of contraction for October, but it’s going to be close.  Philly may pull out of it, and btw, Philly is the most significant of these regional reports.
10:30 ET
Fed Speaker:  New York Fed Pres. “Wild Man” Bill Dudley speaks from Washington, DC.  His topic will be the crossroads that the Fed seems to be at, so this one could leave a mark.  Dudley is a voting member of the FOMC, and is going to take questions from his audience.
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Natural Gas Inventories (Weekly):  An interesting number to trade for those who like to chum the water before they dive in.
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11:00 ET
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Oil Inventories (Weekly):  Due to the holiday on Monday, this report is being released today instead of it’s usual spot on Wednesday.  This item will move the price of Crude.  It will move the S&P Energy sector index, and lastly… the market in general.  So, pay attention at 11am.  Projections are for a third straight week of increased supply following those back to back weeks of decreases that seem a while back now.
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15:30 ET
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Federal Budget Balance (Sept):  This item was originally scheduled for Tuesday, and was delayed by the Treasury Department.  Your day as a trader will not be impacted by whatever they report.  For trading purposes, don’t waste intellectual capital on it.
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16:30 ET
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Fed Speaker:  Cleveland Fed Pres. Loretta Mester will be in New York City to let us in on her take on the economy.  Go Loretta.
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Some Earnings Highlights for Today (with EPS expectations):
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Before the Opening Bell……………………..……..After the Close
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BX         (.70)…………………….………………………………AMD    (-.12)
SCHW   (.27)…………………………………………………..SLB     (.77)
C           (1.29)
GS         (3.22)
KEY       (.27)
PM        (1.11)
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Sarge’s TRADING LEVELS
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SPX: 2020, 2012, 2005, 1997, 1989, 1977, 1971
RUT: 1167, 1160, 1155, 1147, 1136, 1131, 1127

Market Recon Wednesday

Good Morning,
                        Global equities are a sea of red this morning.  Not the “hold you up with one hand, and repeatedly punch you in the face with the other hand” kind of beat down that we all love, but broad-based selling nonetheless.  The catalyst today seems to be China.  Again.  Never would have guessed it.  On top of that lousy trade data that was released on Monday night, China’s National Bureau of Statistics printed their September inflation numbers last night.  The Chinese CPI (1.6% y/y) rolled off of a table since August, and badly missed expectations, while their PPI (-5.9% y/y)…(not a typo) contracted for what I just read was the 43rd month in a row.  At least they’re consistent.
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Macro Party USA
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                        Let the macro begin.  You’ve waited all week for the macro, and now the macro’s gonna run wild on you….literally…for the rest of the week.  When the clock in New York strikes 08:30, we’ll all see September data for PPI, and Retail Sales.  The PPI number will print close to zero, with the headline lower than the core.  The PPI will also be overlooked, especially since the more highly focused upon CPI is due tomorrow.  Consumer level inflation is so much sexier, don’t you think?  The Retail Sales figures today, however, will be uber-important, to you the trader, and to the Fed, as a shock in this space could conceivably sway opinion at the FOMC more than most other data-points might have the power to do.  The headline Retail Sales print is likely to have shown another 0.2% m/m increase.  However, when you omit auto sales (not just VW, LOL), it’s very possible that this item will fall into contraction.  That’ll be ugly…..unless bad is good…then it’ll be good.  You dig ??  After these releases, the Census Bureau will hit us with August Business Inventories at 10am ET…..and not a soul on Wall Street will notice.
                        What Wall Street will notice will be the Beige Book.  It will interesting to see just how much evidence there is present here regarding lost momentum for our economy in general over recent weeks/months.  Of course quarterly earnings releases will also be in high focus today.  Before the opening bell, we’ll hear from giants such as BAC, DAL, BLK, and WFC.  The big play for day traders, however will be NFLX after the close.  You also may want to be cognizant that WMT, and NKE are holding their corporate pow-wows for investors today, so news could come from those quarters as well.
                         Take a minute for yourself today, gang.  I’m not kidding. Take twenty minutes.  Be artistic, be spiritual, be anything… just be yourself.  You will never accomplish any of your goals if you are simply slave to the grind.  Trust me.  Been there, done that.  Not going back.  Sarge out.
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Sarge’s TRADING LEVELS
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SPX: 2028, 2020, 2008, 1997, 1988, 1977
RUT: 1162, 1156, 1150, 1144, 1136, 1131

Market Recon Tuesday

Good Morning,
                        The green planet has turned a shade of red in the early going on Tuesday morning.  US futures markets have followed Asian, and European equities to the dark side.  Why ??, you ask.  Well, a couple of obvious catalysts hit you smack in the mush as you begin to explore the reasons why.
                        We begin our journey last night, in where else, but China.  At first glance, China’s September Trade Imbalance looks OK, beating estimates, and coming in line with August’s data.  That’s where the fun stops.  Once you peer into the data, you realize that Chinese exports dropped more than three percent on a year over year basis (in dollar terms), while imports simply rolled off of the table.  So much for a consumer based economy.  Those imports crashed an approximate 20% y/y, again in dollar terms.  Converted to yuan, the y/y contractions for exports, and imports come to 1.1%, and 17.7% respectively.  This collapse in imports, though expected to some degree, came in at the deep end of the pool, so to speak.
                        Topping off those Chinese numbers, we have the German ZEW Indicator of Economic Sentiment.  This item is very closely watched, and turned in a fairly horrible miss for October this morning.  The weight of the Volkswagen scandal seems to be the focus here, the only obvious bright spot being the better performance of this survey for this October than last.  One, two.  Wax on, wax off.
                        Those of us who focus on domestic macro data-points have very little to go off of today.  All we have this morning is the September print for the NFIB Small Business Optimism Index, which is expected to contract slightly when it prints at 08:30 ET, from where it stood in August.  Nobody trades off of it anyway.  Later, this afternoon (14:00 ET)…we’ll see the Treasury Dept.’s budget balance for September.  That print will likely not impact you as a trader, but it is interesting to note that we are expecting a positive number this month.
                       Without any high focus type data-points stealing our attention, all of today’s interest will land squarely upon two things…. one Fed speech, and several quarterly earnings releases.  St. Louis Fed Pres. James Bullard speaks at 8am ET on monetary policy from Washington, DC today.  Bullard has been a bit hawkish of late, but is not a voting member of the FOMC.  As for earnings, the big fish of the day, JPM has moved that release to after today’s closing bell.  The whispers that I have heard are close to the consensus expectation.  Before the open, you will still hear from JNJ.  Joining JPM after the close will be CSX, and INTC.  I have a derivative position in INTC.
                        My Mets won.  Thankfully the offense showed up when the Dark Knight really didn’t have his stuff.  Brother Dave’s, & Old John’s Cubs won as well.  Would be nice to see two perennial losers square off in the NLCS.  I would mention the American League playoffs, but I’m morally opposed to the DH Rule.  It’s Tuesday, gang.  Play hard, play fair, and be excellent to each other.  That last one’s an order.
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Sarge’s TRADING LEVELS
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SPX: 2028, 2020, 2010, 1997, 1988, 1977
RUT: 1173, 1167, 1162, 1157, 1150, 1144

Market Recon Monday

Good Morning,
                        I actually forgot that today was a holiday.  Then I got to my train station, and ended up in one of the first spots behind the handicapped spots.  That’s better than Christmas Eve, or even the Friday after Thanksgiving.  So, to all of you school kids, government employees, and bond traders out there….have a nice day.  Hard to believe that over 500 years later we still celebrate a guy who “discovered” an island that people already lived on.  Volume will obviously be lighter than usual, but sometimes that brings opportunity.  Be patient.
                        While it is true that I told you last week that this week will be filled with enough macro to satisfy even the most demanding nerds amongst us, it is also true that the first two days of the week are little more than a barren wasteland when it come to that kind of data.  As we’ve already discussed, today is a bank holiday, so aside from us, who else will be out, and about on a quiet Monday?  Think hard.  Got it, yet ??  If your guess was “a bunch of Fed speakers”, the answer would be “but, of course”.  In fact, we’ve got three of them creeping around today, so let’s take a look at what we’re in for..shall we?
                        First off, all three of our speakers for today are voting members of the FOMC this year.  Dennis (the Spider) Lockhart of the Atlanta Fed will be spewing his outlook on the US economy from Orlando, Florida at 08:10 ET.  It will be interesting to see if he can bend the futures at that time, particularly in what we know will be a thin market.  Batting in the two hole, will be Chicago Fed Pres. Charles Evans.  He is scheduled to speak on monetary policy from Chicago at 10:30 ET.  While I rarely agree with Mr. Evans on matters of policy, I will credit him with one thing.  He, more so than his colleagues, does open himself up to questions from the audience/press when he speaks, even when he sounds like a kook.  Today will be no different, (uhhh…I mean the Q&A thing.  I won’t yet assume that he will sound like a kook.).  Federal Reserve Gov. Lael Brainard will make her remarks after todays close.  She is expected to speak on both the economy, and monetary policy from Washington, DC.  The Earnings front does  not get juicy until tomorrow.
                        So, Major League Baseball suspended Chase Utley for games 3 and 4 of the Dodgers’ playoff series against the Mets.  Being those are the two games that are to be played in New York, this really was a no brainer for Joe Torre.  Do I think the penalty is harsh enough?  You all know that I’m a Mets fan, so my view is biased, but I have always felt that in any sport…if one player does something outside of the rules, and injures another player, then that player should miss the same amount of time (without pay)  as the injured player.  Problem solved.  Missing paychecks will change player behavior more so than anything else.
                        Happy Thanksgiving to my Canadian pals.
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Sarge’s TRADING LEVELS
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SPX: 2035, 2028, 2020, 2015, 2008, 1997, 1988

RUT: 1185, 1178, 1173, 1168, 1163, 1157, 1150

Market Recon Friday

Good Morning,
                        So, the Minutes showed a Fed mired in indecision, erring on the side of dovishness…..surprised ??  Really??  The papers this morning are “letting us know” that the Fed held off on an interest rate hike in September due to “worries” over low inflation, and recent international economic developments.  (Anybody worried about low inflation probably isn’t paying for their own health insurance.)  Well, then, anyone still clinging onto some kind of hope for an increase in the Fed Funds Rate this year…will really be focused on the macro next week.  Next week will make the week that we’re wrapping up today look like child’s play when we see Retail Sales, PPI, CPI, Industrial Production, and a nice batch of manufacturing numbers as well.  On top of that, we also have the Beige Book, and a nice batch of Fed speak on tap.  Quarterly financial sector earnings releases anyone ?? Dry powder.
                       We will however, get a look at some inflation data this morning.  At 08:30 ET, the Bureau of Labor Statistics will print their September  numbers for Import and Export prices.  If you’re selling abroad, Export prices are important to be sure, but if you happen to be a policy maker, who is tracking domestic inflation….well, then Import prices are going to be your focus here.  Both of these numbers showed us huge month over month contraction in August, and both are expected to have contracted again for this release, although to a far lesser degree.  Today’s consensus seems to be for -0.2% m/m for Exports, and -0.5% m/m for Imports.  My one oddball observation here, is that I don’t see anyone above the flat-line for Exports, but there are some economists calling for a positive print on Imports today.  We’ll know soon enough, now won’t we.
                      There will also be an August Wholesale Inventories number released at 10am, but there is likely to be little interest among traders for this one, given the lag in it’s release, and the tightness of it’s expected range (Nobody is too far from flat).  What will interest traders today, will be the two Fed speakers that we’ve found hiding in the bushes.  You’ll hear from the Spider, Atlanta Fed Pres. Dennis Lockhart at 09:10 ET when he speaks in NYC from NYU.  You’ll also hear from Chicago Fed Pres. Charles Evans at 13:30 ET, when he speaks from Milwaukee, Wisconsin.  Both of these dudes are expected to address monetary policy, and both are voting members of the FOMC.  Sooooo, there could be some fish to fry today, especially this afternoon, as Evans opens himself up to a question and answer session.
                       Oh, and the IMF begins their three day pow-wow in Lima, Peru.  I think we sufficiently covered the IMF in Wednesday morning’s Recon note.  Odds are heavy that at some point this weekend, Christine Lagarde will tell you that you could have told her at least two months ago.
                        A little over half a century ago, a boy was born into a NY National League family, and raised in the shadow of Shea Stadium.  He grew up with a then new ball club, that lost a whole lot of games, and was almost always overshadowed by the older, more successful team in town.  These guys took their lumps, but never seemed to give up.  The kid kind of thought of himself that way too.  Well gang, for the kid from Queens, it’s still baseball season.  Let’s go Mets  !!!!  Beat LA.
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Sarge’s TRADING LEVELS
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SPX: 2028, 2021, 2015, 2009, 1997, 1988

RUT: 1178, 1173, 1167, 1163, 1157, 1150

Market Recon Wednesday

Good Morning,
                         Dear IMF, yeah…..we all know that global growth seems to be slowing.  If you think of anything that we haven’t thought of well ahead of you….let us know.  Otherwise, shut your trap, and let us work.  Christine Lagarde’s five year term is almost up.  I would celebrate, except I find it likely that they do not have the economic version of Babe Ruth in the on-deck circle.
                         Global markets and US futures are in the green this morning, at least here in the early going.  We expected something of a sell-off yesterday, but I’ve got to admit, that was really mild.  The markets digested that Friday/Monday run extremely well.  Health Care has been the shakiest performer of late.  Partly due to Hillary’s comments, but also partially due to a simple rotation out of the year’s safest play, and into a broader spectrum of assets, now that some managers are spreading their wings a little more going into year’s end.  There are going to be days that the new norm that is volatility will hurt you, but you will never find yourself intellectually bored.
                        The domestic macro is light today, and I don’t see any Fed sneakers, umm, I mean speakers creeping about until tomorrow.  There are two items that we do have to be cognizant of for today.  First up will be the weekly Oil Inventory print at 10:30 ET.  Crude led the Energy sector to victory yesterday, and is leading the futures markets higher in the pre-opening today.  We saw an increase in supply of 4 million barrels last week, and the expectation for today is for another increase, though probably only half the size of last week’s.  Anything could happen though, as this is an especially difficult number to nail.  The second item will be the 1pm ET auction of ten year paper ( I still call it that) by the US Treasury.
                       The third item of the day will hit you late, and may catch you off guard.  The August print for Consumer Credit is expected at 3pm ET.  This data-point is released as a headline number, but that number is less focused upon than is the print for it’s “Revolving Credit” or the “credit card” subcomponent.  That item is somewhat controversial in just what it reveals.  Conventional wisdom has it that a confident consumer is willing to take on more credit card debt, and that this is good for the economy.  Academics will tell you that.  I am not an academic.  This “credit card” debt has shown what you (not me) might call improvement over the last five months.  Now, coming from a different angle, what has stagnated at recovery highs over the last five months is the Consumer Debt to Income ratio.  Is that good?  In an era of zero, or almost zero wage growth, this smells like a consumer that is merely trying to cling to his or her family’s standard of living, and having to borrow to do it.  Not good.
                      It’s Wednesday, gang.  Stay sharp, Stay disciplined.  Fight the fight, and remember…..There’s always time to do something nice for someone.
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Sarge’s TRADING LEVELS
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SPX: 2005, 1994, 1989, 1979, 1971, 1962

RUT: 1150, 1144, 1136, 1131, 1127, 1119

Market Recon Tuesday

Good Morning,
                         It would appear that we’ve seen at least something of a directional change in trend.  No denying that there has been a lot of technical construction for our major indices, over the last few days.  Why? The Fed is stuck.  Everybody seems to know it.  Three month auctions are going off at zero percent, with bid to cover ratios not seen all Summer.  Guess I’ll take that 40% cash allotment of mine down to 35%.  According to the Fed Funds Rate Futures, the chances of an October rate hike are down to the mid-single digits, and the chances of a December hike are down to less than one third.  They could still hike, but now the timing is clearly wrong.  Should the members of the FOMC resign?, or be replaced?  Those are not silly questions.  The economy has undeniably hit a rough patch.  Weak, or weaker data for Employment, Manufacturing, Services, and forward looking GDP expectations are all there for folks to see….unless they choose not to see it.
                       The Fed did have their chances to be prepared.  The Fed Funds Rate should have been lifted off of zero in 2014, when the economy was improving at a better pace than it is now.  They could have been ready to respond if this rough patch gets worse than it is now, and they chose not to be. ….and it’s not like we, the sentient beings of America, didn’t warn them.  Football coaches who lose most of their games, do get fired.  CEOs who lead their corporations into a ton of trouble, do get fired.  These guys are not special.  Why should they be any different?  Unless their actual job is to sustain the debt super-cycle at he behest of the political elite.  Well, that’s a horse of a different color, and I guess that in that case, they have been quite successful.
                       The macro is thin today, kiddies.  We have the August Trade Balance data out at 08:30 ET.  We’re looking for something in the neighborhood of $-45 billion clams.  For you as trader, the number is neither here, nor there.  High, or low, it will not impact your day.  For those following the retail sector, the weekly Rebook is due at 08:55 ET, and that is about that.
                       We do have two Fed speakers lurking about.  Kansas City Fed Pres. Esther George speaks from Chicago at 09:15 ET, and San Francisco Fed Pres. John Williams will speak at 15:30 ET from that very city.  George is thought of as hawkish, but is not a voting member of the FOMC at this time.  The Williams interview could get interesting though.  He voted with the nine in September, yet spoke like a hawk just a few days later so his true position is somewhat unclear.  Not only that, but he is a voting member of the FOMC, and he is opening himself up to a Q and A session today.
                       We all love a rally, but I don’t think a little profit taking this morning would surprise anyone.  OK, gang.  Let’s get after it.  Let’s do Tuesday.  I’ll smile when I see you…. I promise.
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Sarge’s TRADING LEVELS
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SPX: 2005, 1994, 1988, 1979, 1971, 1962, 1956

RUT: 1158, 1150, 1144, 1139, 1134, 1130, 1125

Market Recon Friday

Good Morning,
                       It’s Friday, gang.  I know you’re tired, but you can do this.  You always have…..just get through this one, and there’s a nice, sloppy plate of nachos, and a frosty, cold beverage waiting for you on the other side.  They are going to come at you from two directions today, kids.  First, we’ll be up against the Employment Situation data released by the Bureau of Labor Statistics at 08:30 ET.  Then, just when you think it’s safe, screaming hordes of Fed speakers are going to move on us.  Unlike other days, where they sneak up on us solo, or in small groups, today….it will be wave after relentless wave, mostly from the Boston Fed’s conference on monetary policy.  If you stop by Deep Value’s booth on the NYSE Trading Floor this morning, we’ll likely hold our own conference on monetary policy.  Bet the phrase “debt super-cycle” doesn’t come up in Boston.
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September Employment Situation
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                      September Jobs Day.  Kinda, sorta gets the blood going for the financial community.  The big ticket item here, as always….will be the Non-Farm Payrolls print.  This is the single most focused upon item within the entire employment report that the BLS will release.  Consensus today is for something around 202K, but more than one smart person that I follow has put out a number closer to 180K this week, which is right at the bottom of the range.  One positive that you might look for would be an upward revision to the poor number (173K) that we saw for August.  The month of August is notoriously revised higher, year after year.  The Unemployment Rate is expected to remain steady at 5.1%, which makes sense because Gallup’s Unemployment Rate, though much higher (6.3%) held steady from August.
                      We expect the pace of growth in Average Hourly Earnings to cool to 0.2% m/m, and the Average Workweek to hold steady at 34.6 hours.  The two other big ticket items, due to the large amount of “discouraged”, and involuntary part time workers in our economy, are the U-6 Underemployment Rate, and the Participation Rate.  I do not have a consensus for U-6, but that number came in at 10.3% in August.  The Gallup version of “U-6” improved from 14.5% in August to 14.1% in September, so it stands to reason that the BLS number will improve as well.  The Participation Rate is expected to drop from 62.6% to 62.55% today.  Not sure about that one.  We have seen a few folks come off of the sidelines this month.
                      It will not matter much after all of this, but at 10am ET, amid all of those Fed speakers, August factory Orders are expected to be just awful.
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                      Never, ever, ever give up.  They’ll never beat us, gang.  They have no idea what they’re up against.
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Fed Speakers
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08:30 ET: Boston Fed Pres. Eric Rosengren
08:45 ET: Philadelphia Fed Pres. Patrick Harker
09:00 ET: Minneapolis Fed Pres. Narayana Kocherlakota
11:00 ET: Cleveland Fed Pres. Loretta Mester
12:00 ET: Federal Reserve Vice Chair Stanley Fischer  (FOMC voting member)
13:00 ET: St. Louis Fed Pres. James Bullard
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Sarge’s TRADING LEVELS
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SPX: 1956, 1950, 1939, 1929, 1921, 1916, 1910, 1901

RUT: 1119, 1110, 1104, 1099, 1094, 1089, 1084, 1075

Note:  Wider than usual range for trading levels today is intentional.

Market Recon Thursday

Good Morning,
                       The Chinese PMI’s both showed contraction for September last night.  The CLFP (governmental) number beat expectations by a smidge.  The Caixin print did not, but the government’s word is enough for us.  Risk on !!  The planet is green again this morning, despite Chinese markets being closed into next week, thanks to “Golden Week”.  If you’re wondering what “Golden Week” is, it’s a seven day festival celebrated in China twice a year (February & October), in which most folk get three paid days off from their jobs.  The whole idea is to improve the domestic economy by having people visit relatives.  There used to be a third such week in May, but that one was cancelled a few years back, because apparently….you can have too much of a good thing.
                       Lotsa news.  December 11 ??  We’re saved.  Two months of missing e-mails ??? Does it really matter ???  Seems legit…..if I’m a moron, or blinded by party loyalty.  Word to the wise….. buy the sump pump now.  They’ll be out of them this weekend.  IMF Chief Christine Lagarde says that worldwide growth will likely slow this year from last.  Thanks for coming in Christine, and playing our game, there’s a door prize for you on the way out.  Couldn’t have possibly figured this one out on our own.
                       No joke, gang.  We’ve got a lot on our plate today, folks.  There’s no exciting way to do this, unfortunately, so I’ll do my very best to keep this note from boring the snot out of you.  Locked and loaded ? Let’s go.
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Throughout the Day
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September Total Vehicle Sales:  Vehicle sales likely remained brisk in September.  Expectations are for a seasonally adjusted, annualized rate of 17.5 million units, which would be the fifth consecutive month at a pace above 17 million.  Seems to me that questionably loose lending standards are working out just fine for this group.
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08:30 ET
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Weekly Initial Jobless Claims: This extremely consistent item is expected to remain so.  Consensus is for a small increase from last week’s 267K to something around 273K, with a very tight range.
September Gallup Payroll to Population Rate:  This one really sticks in my craw, gang.  That’s because somebody out there is lying to us, I’m not brave enough to say who, but somebody is misleading you.  In August, the P to P rate dropped to 45.3%.  That’s the headline.  Beneath the headline, Gallup releases Unemployment, and Underemployment Rates for the US that are far worse than what the BLS will force feed you tomorrow.  For comparison’s sake, in August, Gallup told you that the US Unemployment Rate was 6.3%, the BLS told you that it was 5.1%.  In August, Gallup told you that the Underemployment Rate was 14.5%….the BLS told you that it was 10.3%.  I know the methodology is different, and they are not supposed to be comparable…blah, blah, blah.  Blow it out your ear.  Somebody’s feeding you a line of crap, America.  Wake up.
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09:45 ET
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September Markit Manufacturing PMI: This number will likely be overlooked by traders waiting for the ISM’s number 15 minutes later.  For those who do follow this item, the PMI flashed at 53.0 this month, and that is the expectation for today.  There is a slight skew to the low side for this one.
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10:00 ET
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September ISM Manufacturing Index:  Simply put, this is one of the most closely followed macro-economic data-points that we have in our little universe.  This one has been drifting lower all year, and …… frankly, after the disappointing numbers put up by each and every Fed district that published manufacturing data this month topped off by that horrible Chicago PMI yesterday…we’ll be lucky to show any expansion at all.  Somehow consensus is still for 50.6 in this space, down from the 51.1 that we saw in August.
August Construction Spending:  This item may not get much air time today, being that there are bigger fish in the sea at this time, and that this item is released with such a time lag.  That said, we’re looking for month over month growth of 0.6%, slightly off of the 0.7% pace seen in July.
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10:30 ET
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Weekly Natural Gas Inventories:  I’m pretty sure I’ve conveyed to you just how dangerous I think trading Natural Gas on Thursday mornings can be.  Hey, there are daredevils amongst us.
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14:30 ET
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Fed Speaker:  San Francisco Fed Pres. John Williams is the only member of the FOMC sneaking around today, as far as I can tell.  He will talk about our economic outlook from Salt Lake City, Utah.  Williams is a voting member of the FOMC.
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                       All of this on your plate, and “Jobs Day” is not until tomorrow.  Take it slow, kids.  If something doesn’t look right, or if you think that you’re not “getting it”…. take a pass.  Far better to not make money, than to lose some dough due to negligence or emotion.  Most importantly, keep your honor clean, gang.  Your honor, is YOUR honor.  Nobody has the power to take it away from you, but it’s oh so easy for you, or me to give it away.  Do not.
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Sarge’s TRADING LEVELS
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SPX: 1950, 1939, 1929, 1921, 1915, 1908, 1902

RUT: 1125, 1119, 1110, 1104, 1098, 1094, 1089