Market Recon Wednesday

Good Morning,
                       What do you think would happen should …. say … China sell off a bit, and nobody went with them ????  Well, you may just find out today.  The Shanghai Composite took a left turn late in the day, after most Asian markets, having been buoyed earlier by a steadier Yuan, had already turned into their driveways, and shut off the ignition.  Is the sub-3000 Shanghai close very significant ???  It is the first of it’s kind since the Summer scramble.  It certainly concerns me.  Stay tuned until tomorrow on that one.  In the meantime….
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Enter the Dragon
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                        Now, the Chinese export data for December, that was released last night is telling a supportive story for European equities, and US futures markets this morning.  You see, exports dropped 1.4% y/y in dollar terms (actually exports did grow in Yuan terms), but that was up against a November that saw -6.8% y/y results, and expectations for this print that were in the neighborhood of -8.0% y/y.  Not only that, but doubts about Chinese demand for Crude were put to rest, at least for the time being.  December saw a 9.3% y/y increase in Chinese Crude imports, up from the 2015 average.  In totality, China’s demand for Crude grew 8.8% in 2015 from 2015.  Hence, early morning strength in Crude & Equity futures contracts.  I know it’s a lot for this early in the morning, but I think this sheds the fluff, and simplifies things.  We’ve got  a few logs in the fire of our own today, gang, and it all may not be so pretty.
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The Good, The Bad, & The oh, so Very Ugly
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08:00 ET
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Fed Speaker:  Boston Fed Pres. Eric Rosengren speaks on the economy from Boston.  Rosengren is a voting member of the FOMC this year, and has been known in the past to be a dove.  That said, he had sounded just a touch more hawkish at times as we approached last year’s initial Fed Funds rate hike.  It will be interesting to see if, and how his views have evolved since December.  I’m not casting stones yet.
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10:30 ET
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Oil Inventories (Weekly):  Last week, we saw a surprise contraction of 5.1 million barrels in this space.  That gave a boost to the dollar denominated price of Crude, right?  No ??  Guess not.  Hey, we’ll try again this week.  Surveys say that we’re looking for an increase in supply this week of about 2 million barrels.  Surveys are inaccurate.  Often.
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13:00 ET
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10 Year Note Auction:  These monthly auctions, particularly for ten year paper are so darn intellectually interesting.  At least I find them so.  On 9 December 15, the US Treasury auctioned off 21 billion clams worth of these puppies at a yield of 2.233% with a bid to cover of 2.64.  That, at the time, was considered a strong auction.  Today, Treasury will let another $21B worth of this stuff fly of the shelves.  Last sale for the ten year that I see at this time is at a yield of 2.135%.
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Fed Speaker:  Chicago Fed Pres. Charles Evans will speaks from Cedar Rapids, Iowa.  Evans was known as one of the more dovish members of the FOMC, was probably a force behind the Fed’s failure to better time it’s initial interest rate lift-off.  Chicago will not vote in 2016, but it’s probably a safe bet that Chaz will feel comfortable making his policy leanings known.
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14:00 ET
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Beige Book:  You know what this means ??  The FOMC is just two weeks away, gang !!!  Hence, the national canvassing being done by the regional Presidents.  Ahhhh…. don’t worry.  I mean… How bad,…uhm…how ugly can the anecdotal evidence of economic conditions from the 12 Fed districts possibly be, huh ??  Doh !!!
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Federal Budget Balance (December):  This one will not factor into your trading session today, but it is economically important, and as a nation, we are really bad at it.  Consensus today is for $-2.7B, which is a really tiny deficit as far as this item goes, and consensus for this item is usually pretty close.  November’s deficit was $-64.6B.
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Today’s Earnings Highlight
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SVU will release today before the opening bell.  Consensus expectations are for 16 cents a share.  I have not seen any whisper numbers.  In October, SVU missed EPS expectations by a penny, while revenue missed small.  The stock was sawed in half in 2015, but has shown y/y revenue growth and is in the news regarding possibly spinning off it’s Save-A-Lot locations.
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OK, when I say move, you will proceed with the day’s operations, now…. Move..