Market Recon Wednesday

Good Morning,

                        I found yesterday rather encouraging, not because equities rallied on the back of oil.  Equity index movement based on the underlying movement in the price of Crude has become all too commonplace in 2016.  What was encouraging was that…. yes the Energy sector was supported by the that movement in the commodity, but the rest of the marketplace found support in some well received earnings releases.  Morning quarterly numbers printed by the likes of MMM, FCX, PG, JNJ, and COH gave a helpful shove to the Industrial, Material, and the Consumer related sectors.  Ahhhh, but that my friends, can be, and often is a double edged sword.
                       Yesterday, we heard talk that some oil producing nations were getting closer to cutting production levels… think Saudi Arabia, Kuwait, the UAE from OPEC, and Russia, as well as Canada from other circles.  As you  might have expected, without hard news following such talk, that Crude is moving in the other direction this morning….. Not to mention the growing open interest in the March 25 puts (that expire on 17 Feb).  Jeekies.  Now, on top of that we have disappointing quarterly numbers & guidance from AAPL (That printed last night) working against us as well.  We never did promise you a rose garden, now did we?
                      On top of all of this, we have the FOMC (LOL) policy decision hurtling toward us this afternoon.  What fun !!  We’ll dig into that in about a minute.
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Macro
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10:00 ET
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New Home Sales (December): The good news is that last week, we saw December Existing Home Sales surprise to the upside after badly missing in November.  The bad news is that New Home Sales also disappointed in November….and October……and September.  The hope….I mean expectation for December is that this item prints just above 500K units when measured in SAAR (Seasonally Adjusted, Annualized Rate) fashion, after stumbling around in the 400k’s for those three months.  The range for September spans from 480K to 520K, so really are just trying to play it safe here.  Remember, most of the country had a fairly warm December, so …. no excuses.
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10:30 ET
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Oil Inventories (Weekly):  We sort of kind of had this puppy moving in the right direction.  Two of the last five weeks printed with draws of over 5 million barrels for supply.  Then last week, we saw a surprise increase of 4 million barrels.  Today, the little oil birdie that speaks is looking for another increase of close to that size, maybe just a tad less.  Fear the birdie.
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14:00 ET….FOMC Policy Announcement
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                   Gang, we have a brand new cast of characters all lined up for 2016.  I think, however, that you will probably see the same extreme caution going forward.. that we have already seen in the past…. in making moves of any kind.
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The Cast
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Having held a press conference at the December meeting where the Fed Funds Rate actually experienced it’s initial lift-off, we’ll have to gather our info today from the Statement itself, and not from the already spoken about cast of lion tamers, and alligator wrestlers.  They will have to acknowledge the grotesque Q4 data that we will get numbers on this Friday.  They will have to acknowledge considerably tighter monetary conditions, and all of the external risks that they had acknowledged when they took a pass back in September, and then forgot about.  They may acknowledge that they seem to be diverging from other global central banks.  Then again, they may try to distance themselves from .  December…. to seemingly leave all doors open….. to soothe.

                  To keep things upbeat…… they will likely tell you that growth, despite Q4 remains on trend.  They will tell you that Core inflation remains below their 2.0% goal, despite the Core CPI currently standing at 2.1%.  They may even tell you about that strong December Employment Report that was really only a net gain of 11K jobs, but was seasonally adjusted to 292K….Ok, ok… they may not go into too much detail on that one.
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                   Basically, the Fed will take a powder today.  They will look out of their window from high up on their tower at the castle, and blow you a kiss.  They will promise to buy you an ice cream if you are a good little boy or girl, and then hope that you are a good little boy or girl.  Good luck on seeing any ice cream.  Sarge out.
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Wednesday’s Earning’s Highlights
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Before the Open: BA (1.26), GD (2.38), HES (-1.45), NSC (1.27)
After the Close:  DFS (1.30), EBAY (.50), FB (.68), MCK (3.14)