Market Recon Tuesday

Good Morning,
                        The good news is that despite most Asian equity markets being lower (Shanghai is sort of flat), WTI Crude has rallied from well below 30 1/2 up into the 31 1/4 to 31 1/2 range.  This has European equities (after their four day beat-down), and US stocks futures markets moving higher in the wee hours.  Just remember, that if we do rally today, or someday….. do not call it a “dead cat bounce”.  That’s trader code for “I don’t have a freakin’ clue”, and we all know it.  Everything has a reason.
                        Just a side note…. Both British Industrial & Manufacturing Production for November unexpectedly fell off of a cliff in data released by the UK’s Office of National Statistics today.  The Bank of England steps to the plate on Thursday morning.  Remember that those guys wanted to raise rates for a while too, but held off to see what the Fed did.
                        College football has a new champion, or an old one.  Just in time for Spring Semester.  LOL.  OK, gang, there’s a lot on our plates today.  Much of it is nonsense, so let’s slice it up, and see what will matter to you decision makers out there.  Until next time, God bless & Carry on.
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The Ant Hill Mob
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              Penelope Pitstop ??  Not exactly. As far as domestic macro goes, we won’t be dishing out the hard stuff until Wednesday’s Beige Book, as well as the Friday releases for Retail Sales, Industrial Production, and a whole bunch more.  Other than that, the rest of the week is absolutely crawling with Fed Presidents.  Ever kick over an ant hill ??  Yeah, kind of like that.
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05:30 ET
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Fed Speaker:  Fed Vice Chair Stanley Fisher spoke from Paris this morning on Monetary Policy, and Financial Stability.  I have not seen any headlines from this one yet.  Maybe he didn’t say anything newsworthy, or maybe he’s still going.  Not for nothing… but, this is the same guy who thinks he’s still going to get four rate hikes in this year.  I hope he’s right… for the right reason.  I also hope to live in a castle someday, and have a pet dragon named Sparky.
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06:00 ET
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NFIB Small Business Optimism Index (December): This item came in at 95.2, which was right on consensus.  Small Business owners were apparently slightly more optimistic in December than they were in November, though they were not nearly as optimistic as they were way back in September, and October.  Is this positive? Yes.  Will it move stocks? No.  Make of that what you will.
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08:55 ET
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Redbook (Weekly):  The good news is that year over year comparisons in this space did improve sharply throughout the holiday season despite rumors to the contrary.  In fact, the weeks of Black Friday (+3.9% y/y), and the annual post-Christmas returns/shop for yourself event (+2.9% y/y) really did outperform as advertised.  Now, let’s find out if shoppers had a hangover.
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10:00 ET
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JOLTS (November):  This item may not be the most useless piece of macro out there as far as traders are concerned.  I think that title would have to go to the Conference Board’s Leading Indicators (or the BLS’s Unemployment Rate, LOL… no really…fellow commuters are looking at me).  Regardless….  The Street will not notice, and hence…will not react to whatever the BLS throws at us today.
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15:15 ET
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Fed Speaker:  Richmond Fed Pres. Jeffrey Lacker will speak on the economy from Columbia, South Carolina.  Richmond does not have voting rights at the FOMC again until 2018.  Lacker can sometimes be unpredictable.  That said, this one could screw up your close if you’re not paying attention.
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21:00 ET
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State of the Union Address:  Last time for this President.  Thought I was going to write something political, didn’t you?
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Today’s Earnings Highlight
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CSX will release after the closing bell today.  Consensus expectations are for .46, with whispers just a tad higher.  Last quarter CSX beat EPS expectations by two cents, but missed revenue projections..

Market Recon Monday

Good Morning,
                        As we drag our sorry tails out of bed this morning, it’s plain to see that the Shanghai Composite has yet again been taken out to the woodshed.  Not only that, but WTI Crude is lower as well.  These, the key ingredients in last week’s market melt-down do not appear to be setting up a Monday morning bounce.  Bright spots ??  Sure, we’ve got some of those.  Apparently November Retail Sales crushed expectations in Indonesia…and not a bad word was said about Spanish Industrial Production.  Maybe about Spanish unity, but not Industrial Production.  In response, European equity markets that had been higher are now close to unchanged, while US futures markets have been hanging around the fair value mark.
                      This morning’s note would be the first time that I have written to you all since New Year’s Eve, and wow…. last week was certainly a horse of a different color.  When I wrote last about maintaining high allocations for cash, and bonds, along with a lower split for equities & options, I was writing about the first half of the year.  I didn’t expect the first week to be quite as ugly as it was, and to put it plainly, I did beef up a couple of equity positions, as well as grabbing some long dated calls late last week.  Clearly though, as in sports, it will be defense that wins championships.
                      There is still a way to sneak in some offense however.  If you think about how to take advantage of situations like the one squarely presented….. I think Steve Sears of Barron’s hit it right on the head this weekend.   If you already like one, or several stocks, and are prepared to own them as a core position, but don’t know where to enter…..Why not sell puts with lower strike prices.  If it gets there, and beyond…well, you own the stock.  If it does not, you keep the lunch money.  Leave it to Sears to think clearly while Rome burns.  If you don’t read him regularly, you probably should.  Even if you don’t use his ideas…. at least he has them.
                      Macro ?? …. We’ll have none of that today, unless you count the Fed’s Labor Market Conditions Index ( I do not).  What we do have though, are the unofficial kick-off of earnings season (what could possibly go wrong?), when AA releases their quarterly numbers after today’s closing bell, and a couple of Fed speakers.  Atlanta Fed Pres. Dennis Lockhart will speak from the home of the Braves at 12:40, while you’re trying to choke down your lunch.  Lockhart is not a voting member of the FOMC this year.  Atlanta does not vote aging until 2018.  Well after the close tonight, new Dallas Fed Pres. Rob Kaplan speaks from Dallas on the economy.  Kaplan is not scheduled to cast his first FOMC vote until next year.
                     Okay, you wonderful people….. you know it’s dangerous out there, and you probably (hopefully) know how to defend yourself.   Just remember, it’s not life or death.  The stakes, simply are not quite THAT high.  Keep your head, and make them beat you, don’t beat yourself.  The best traders in the world are wrong six or seven times in ten.  It’s how quickly you recognize a losing trade, and what you do about it that makes a trader….. also known as discipline.  Have it.  Good luck today, gang.