Market Recon Friday

Good Morning,
                        The Fed has come, the Fed has gone.  They were sort of, kind of dovish, with no promises.  Data dependent ?  Check.  Eye on the planet? check.  Not a clue beyond anyone else who pays attention?  Check.  Pretty much what any semi-reasonable Fed watcher might have expected.  We could, you know,,,, get on with the practice of trading technical, and earnings.  That doesn’t sound too bad to me.  Let’s hope that the correlation between Crude prices, and equity prices that clearly broke yesterday, after sending signals that it would crack for days, stays broken, at least outside of the Energy sector….. and of course excluding days that crude trades higher, right?
                       Chinese officials are rapidly moving pieces around trying to prevent capital outflows.  That does not seem to be helping Chinese equities that were beaten with the wooden spoon again this  morning.  The Shanghai Composite has given up 3% on the day, 25% YTD, and 48% from the heady days of June.  European stocks, though not to the same degree were also seeing red this morning.  Everyone is acting a little rattled that the Fed did not take a March increase for the Fed Funds Rate off of the table, although futures that price such an event are now trading at a lower level than they were yesterday at this time.  I do not see this as cause for alarm, but in these markets, swimming against the tide can get you pulverized.
                       US futures markets have been choppy this morning at best, but watch those FANGs today gang.  Most of you probably saw the FB earnings last night, and if you did not….. they beat EPS by 11 cents, they beat revs $470M, and y/y rev was up 51.7%.  Not too shabby.  They guided the right way, and put out a lot of groovy info.  The stock is rockin’.  There may be feet of snow on the ground, but you and I both know that pitchers and catchers are less than three weeks away.  That’s a good thing.  Be nice to someone you don’t think you get along with today.  That would be a good thing too, but don’t fake it.  It gets easy once you roll with it.  Now, roll.
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Macro
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08:30 ET
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Durable Goods Orders (December):  2015, though less volatile than 2014, was still a rather wild year for Durable Goods.  At the headline level, we’ve seen five monthly prints of m/m growth, we’ve seen five months of contraction, and last month the print came in flat from the month before, so we’re 5-5-1.  December is the tie breaker, and consensus is for a slight negative, but this is one shaky consensus.  The range spans all the way from -3.0% to +1.5% m/m.  Gang, that means that the guys who study this stuff…. don’t know, so anything is possible.  The Core number, which excludes Transportation purchases also, remarkably came in flat in November, but is at least far less volatile.  Here too, the planet looks for a slight negative, but with  a very tight range, so anything more than half of a percent in either direction will be taken by the market as a surprise.
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Initial Jobless Claims (Weekly):  This item is one that most folks are starting to notice again after a long slumber.  Very covertly, over the final quarter of 2016, this data-point has worked it’s way from the 250Ks up into the 290Ks.  Not much media attention on this one, but if we, at some point get a print with a 3 handle, it will leave a mark.  The expectations for today are for 284K, with nobody I see above 290K.  Just so you know, this weekly has printed above consensus for four consecutive weeks, with the average miss over that time being 10,500.  Just sayin’.
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10:00 ET
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Pending Home Sales (December):  Like all housing numbers, this one took a knuckle sandwich to the teeth in November.  With the exception of Housing Starts, the rest of the housing universe is seeing a wave of nicely improving December data, and even in the case of those Housing Starts, Permits did beat.  Pending Home Sales are coming off of a -0.9% m/m print, but today however, we are looking for something more like +0.9%…. and Pending Sales turn into Existing Sales…. so go team.
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10:30 ET
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Natural Gas Inventories (Weekly):  More dangerous than eating shellfish at the corner diner, the cubic feet are just melting away by the billions in this space.  Today, we go for our ninth consecutive reduction in supply, with expectations for that reduction to be in the area of -210B cf, which would be the largest draw that we’ve seen over those nine weeks.  Natural Gas is not oil.  Birdie?
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11:00 ET
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Kansas City Fed Manufacturing Index (January):  KC printed at -8 in December, which put that district in contraction for 9 of the 12 months in 2015.  We did see Richmond sport a +2 in January, which was their second straight month in expansion.  That makes them kind of special, as Philly threw up a negative number…. the Empire State was brutalized, and what happened in Dallas was almost indescribable.
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Thursday’s Earnings Highlights
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              Hold on to your pajamas kiddies, we’ve got a boatload to look at today.  There are many high profile names reporting across a wide swath of industries today.  I’ll just throw some quick numbers at you concerning implied volatility based on where options expiring this weekend were trading yesterday at closing time.  In the morning, the expectation is for BABA to move a rough $2.50, and for CAT to move something close to $1.75.  Now for the fun.  After tonight’s close, implied volatility for AMZN is about 27 clams.  Yowza.
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Before the Open:  ABT (.61), BABA (.89), MO (.68), BHI (-.10), BLL (.74), BMY (.28), CAT (.69), LLY (.78), F (.51), HOG (.21), HSY (1.05), NOC (2.04), SHW (1.87), SWK (1.77), VLO (1.39)
After the Close: AMZN (1.61), EA (1.81), FIT (.25), MSFT (.70), WDC (1.55)
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Note:  There will be no Market Recon tomorrow, so good luck with the GDP print.  For clients, Paul Lawless will be at my spot on the trading floor.  Same bat time, same bat channel..