Market Recon Monday

Good Morning,

Miss me? ….awww, that’s sweet, and I…you. Hey, gang… did you ever wonder what would happen if somebody big threw a party, and nobody showed up… in fact, they didn’t even care. That seems to be what happened to the PBOC (China’s central bank) while you were sleeping. China’s still trying to work the yuan lower versus the greenback (actually versus everything), and now the much waited for reduction in the Triple R’s (Reserve Ratio Requirement), reducing the amount of dough that China’s lenders must keep in the firebox. Crude’s sort of flat. Other commodities, at least early seem to be taking a powder. Equity Index Futures? Survey says….BZZZZZZ . It’s as if central planning (Said with obviously arrogant disgust) has become some song that because of it’s popularity is played on the radio way too often…and as soon as you hear it begin…you hit the button.

Speaking of worthless central planners….. The Euro-Zone just missed badly on CPI, Core CPI, and German Import Prices. Otherwise inflation projections in the old country remain on course. LOL. Nice job, Sparky.

Now that I’m on inflation… you must understand that I’ve had little access to news or fun stuff like electricity or heat for several days now. My fingers barely work well enough to type. That said, I am in a severe state of “Catching up” today. Some of last week’s numbers actually look like we may be in an improving state of economic welfare. That’s all well, and good. Of particular note though (here it comes)…. I noticed that Core PCE is confirming what we’ve seen in Core CPI. Inflation has found a foothold. Year over year Core PCE is approaching the Fed’s target, while y/y Core CPI has long since exceeded it. This is one genie that you don’t want out of the bottle. Keep in mind that I do have a bias here. I am a child of the sixties, and seventies…and I am the guy who publicly increased his precious metals allocation over a month ago…. but, and this is a big but…..and it goes out to all of these guys who told us that we were foolish, and that there wasn’t even a whiff of inflation in the air. Be right. Be freaking right. Because if this genie gets away from you…. I will torture you. I will not stop. You hurt my people, and I will torture you forever, because you knew better. I am however rooting for you. Good luck.

Macro

09:45 ET

Chicago PMI (February): The Chicago PMI has been watched much closer of late than it had been in quite some time, if only because of it’s incredible recent bout of volatility, either missing expectations badly, or surging well past those very same expectations with seemingly little concern for what economists were looking for. You could probably come closer to predicting these prints than the experts simply by picking numbers out of a hat. Give it a try today…. congrats !! You’re an expert. Today, we look for something in the neighborhood of 52.6, off of January’s raucous 55.6 pace, but still in expansion. Odds are they’ll be a little closer today. Even the Sixers won a few games this year.

10:00 ET

Pending Home Sales (January): This housing data-point is less focused on than it should be, in my opinion. I mean what better measuring stick is there for current, and future demand? Today, we look for a third consecutive print showing off month over month growth, which would be quite welcome after last week’s misses for Home Prices, and New Home Sales. The largest slice of the pie, Existing Home Sales, which this print most directly predicts have been strong.

10:30 ET

Dallas Fed Manufacturing Index (February): This item is the epicenter for our nation’s outright depression in Manufacturing, thanks to the collapse in energy prices. The other four Fed Manufacturing prints all also displayed contraction in February with Richmond falling back into the abyss. Dallas printed at an absurdly terrible -34.6 in January, and February’s number should approach January’s level of awfulness. Huzzah.

Market Recon Tuesday

Good Morning,
                       As that pretty little head of yours leaves the warmth, and perceived safety of that wonderful sanctuary that you call a pillow, you’ll likely notice (at some point) that global equities are lower this morning.  Not a full scale rout, mind you, but the screen is painted a mild shade of pinkish red.  So, what’s the deal for today?  We did see a business climate survey release results that were below expectations in Germany, and the DAX is kinda, sorta leading Europe lower.  China did peg the yuan lower against the dollar.  Didn’t see that one coming, right?  Some commodities, including oil are a bit weaker this morning, after yesterday’s pop.  maybe it’s all of these things.  Maybe it’s none of them.
                     Today could be very interesting indeed.  In fact, why just today??  The whole darned global marketplace is so intellectually riveting.  Who doesn’t like a hard to solve puzzle?  Markets do not, or at least should not go parabolic….ever.   Elliot Wave theorists aside, if they do….something, somewhere is severely broken.  The kind of digestion that we saw last Thursday, and Friday were extremely healthy for the marketplace.  I wouldn’t mind one of those kind of days on the heels of yesterday’s move.  Sideways to mildly lower days that occur during a market spike represent, at least to me….. some profit taking, and some hedging… but certainly are not representative of a risk-off mood……. and I think it’s safe to call what we’ve seen since the S&P 500 hit 1810 a week and a half ago “a market spike”.
                     As always, keep your eyes on the four horsemen of “The Safety Dance”.  Gold, Treasuries, the Utility sector, and the VIX.  If these leaders of gloom and doom are not ripping to the upside together, then you don’t have to panic (I think/hope) just yet either.  FYI, yesterday, the VIX was trading in the 19’s for most of the day.  One or more of these known reapers can move for a number of reasons, but when they move together…well, that’ll most likely be the day that you need your helmet, flak jacket, and gas mask.
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Macro
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08:55 ET
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Redbook (Weekly):  Usually looked at in year over year fashion, this one finally turned around what had been five consecutive weeks of lower y/y improvements, posting a 0.9% y/y gain.  Look for some traction in the number today.
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09:00 ET
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Case-Shiller HPI (December):  They’ll slice and dice this one six ways to Sunday. The one print that traders will notice will be the 20 city, year over year, non-seasonally adjusted number.  That one turned the corner back late in the Spring, and has been steadily improving ever since (See, you give me an honest reason for happy feet, and I’ll run with it).  The November release showed price growth of 5.8%, and that is the consensus view for this print.  The skew, however is heavily weighted toward the upside, so a positive surprise would not surprise me.
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10:00 ET
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Consumer Confidence (February): This item, which is released by the Conference Board, not the University of Michigan, has been wildly volatile over the last year and change…or about as fickle as the American consumer.  Still, in my opinion, anything 90 plus is still pretty good, and this little guy hasn’t printed below 90 since October of 2014.  Most economists are looking for something in the mid 97’s today, coming off of January’s 98.1.  Nobody on the Street is below 95 on this item today.
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Existing Home Sales (January): In December, we saw this item surge back to the levels it had been running at prior to a disastrous number for November.  That whole zig, and zag turned out to be an administrative quirk regarding new rules, that won’t happen again ( at least not soon).  Look for a print today in the neighborhood of 5.34 million units (SAAR), which is smack dab in the middle of the range, and if true would keep this data-point in line with where it’s been printing for about three quarters of a year now.
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Richmond Fed Manufacturing Index (February): Over here !!!  Yo !!!  Here it is, a slice of the manufacturing pie sporting numbers that place it in a state of expansion, for not one, but two consecutive months…and the expectation for today, is for a repeat of last month’s 2 print.  Btw, New Orders (what really counts) have been a strength.
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20:30
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Fed Speaker:  Federal Reserve Vice Chair Stanley Fisher will be in Houston, Texas to speak on monetary policy.  We really haven’t heard much from Fisher for about three weeks.  At that time, he seemed uncertain on what path the Fed should be taking going forward, which if anything…is at least honest.  He will take questions after the speech, and is obviously a voting member of the FOMC.
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Tuesday’s Earnings Highlights
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Before the Open: CTB (.73), HD (1.10), M (1.87), TOL (.40)
After the Close: FSLR (.77), PZZA (.58), SF (.67)
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Note:  I’ll see you kids on Monday.  There will be no Market Recon until then.  God bless.  For clients, the phones, and my spot on the trading floor will be manned by your friend, and mine, Paulie Lawless.  I know you like that guy.

Mid-Day Thoughts

‘Afternoon,

1)  Broad based rally continues today, after two day sideways (non) sell-off.  All ten S&P sectors comfortably in the green.  Eight sectors up a percent or more.  The 1942 level acting more like a magnet than support or resistance.  Levels to the Up/Down would be 1948/1935.
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2) Oil roars (production freeze?, rig count?, short squeeze?) to the tune of more than 5% helping the Energy sector, and the Transports to lead the pack.  Materials & Discretionary also very strong.
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3) What happened to the “Safety Dance” ??  Dollar strength (Pound/Euro weakness for obvious reasons) taking a bite out of Gold (and maybe some profit taking).  Treasuries slightly off, Staples & Utilities up….. but lagging, and the VIX approaches zero.
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4) Earnings tonight:  DDS pricing in about $5 worth of volatility (note: this one only trades monthlies, nor weeklies.), FIT, and THC both pricing in a rough $1.50.
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5) Catch your old buddy on CNBC Closing Bell at 3pm with Kelly Evans, and Bill Griffeth.

Market Recon Monday

Good Morning,
                        Oil is up this morning…along with almost all of your favorite Asian, and European equity market indices.  That correlation is done, right?  Another day….another story.  There are competing forces pushing Crude prices around as WTI edges it’s way past 30 and a half in the early hours.  Going back to last week…. rig counts continued to fall, inventories continued to set records, and then, this morning… China.  This morning the GAC (The Chinese agency that tracks this stuff) reported that January imports of Crude dropped 4.6% y/y.  Guess, as awful as that number is a as a reflection of Chinese demand, the news was both expected, and simply trumped by the idea of US producers taking a powder, while OPEC, and non-OPEC producers continue to act like they may give credence to plan coordinating a freeze at January levels.  If somebody unexpected even pretends to go along here, we’ll likely see a test of $33 for the WTI.  If not…well, you know.
                      This will be a very busy week for the macro-nerd inside.  You’ll have all kinds of fun tracking home prices, Durable Goods, PCE inflation, GDP, Spending, and Income.  Yes…. tons of fun, just not today.  All you’ll get a peak at today is the Markit Flash for Manufacturing PMI.  Markit’s numbers in this space have consistently run a bit hotter than the ISM’s numbers, which is what most Americans watch.  Expectations for today are for a 52.5-ish print, and I don’t think that market participants will even notice this release if it comers in anywhere from slightly below the expectation to well above.  The only way it catches attention will be with a severe miss.  BTW, the EMU is general, and Germany in specific both suffered severe misses in this space earlier today.  Germany barely printed in expansion.
                      Retailers will remain the earnings focus for the week.  Interesting pattern started developing last week.  We’ll see if it continues, being the sample was just the two higher profile releases. It appears that at least in spots, if you’re unhedged, and a lot of home-gamers are not, that the shares have been ripe for selling ahead of the print, and if you still believe the story that buying them back after the next open has been working.  Obviously, this is not advice, because I never give any, but seeing if it continues to work, is acutely interesting.
                      Just a heads up, I’ll remind you tomorrow.  Market Recon will not be published this Wednesday thru Friday.
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Monday’s Earnings Highlights
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Before the Open: AGN (3.32), DF (.34)
After the Close: DDS (2.48), FIT (.25), THC (.34).

Mid-Day Thoughts

Greetings from 11 Wall,

1)  You will almost certainly pass someone on the way home tonight, who is either hungry, cold, or in some kind of obvious distress.  Try, without putting yourself in a dangerous position, to be compassionate when the opportunity arises.  We’re all people.
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2)  The S&P 500 level to watch remains 1915, as it was yesterday, when it survived three severe tests.  Today, the level acted as early resistance, and has evolved into an old-fashioned pivot point as traders keep some powder dry for the high volume options expiration close that we’ll see today.
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2a) Should there be a break away from that level, you’ll have 1908, and 1901 to the down, and 1925 to the up.
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3)  So far,today’s winners are Gold, the Tech sector (witness the out-performance of the NASDAQ Composite), and some Financials.  Your losers are Crude, Energy, and the Materials sector.
4)  Some quiet flattening of the yield curve going on.  Mild selling being seen in the 2 year, and the 5 year, while the 30 year goes green.  10 year flat.
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5)  Did you read my note this morning?…and then see Core CPI show up at 2.2% y/y ??  This is not rampant inflation, but it is supportive of eventual tightening of monetary policy.
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Sarge out.

Market Recon Friday

Good Morning,
                       Where to go from here?  I ask myself this question every day, as I am sure many of you do.  Today, though, I think everyone is asking that question… with a couple of extra question marks at the end of the sentence.  Last night, the S&P 500 closed at 1917(Passchendaelle?), after peaking at 1930.  The index began it’s glorious march to victory last Thursday afternoon, just after kissing 1810.  Basically, you saw a 120 point move, and then all they took back was those 13 points.  Common sense, and more than a few chart monkeys would say that there’s more selling ahead…. but  you know something different happened yesterday.
                      No doubt…we saw a flight to safety yesterday.  Gold roared, the Utilities danced, and Treasuries pounded their mighty chests, but then again…we just discussed that the money did not largely come from equity sales, now did it?  So…..  if they inflow into the commonly used vehicles of safety came from sidelined cash, and not from sales, then many of our friends are not rotating out of their longs, but hedging them.   Food for thought.  The puzzle is so darned intellectually interesting… it’s almost a shame that we have weekends, right guys ?? ….. Guys??
                      Truth is almost anything could happen, and we will find a way in retrospect to explain it.  Defense should always be part of your game, as it is part of mine.  Now if you’ll excuse me, I’ve got some Fed bashing to do.  Care to join me?
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For My Next Trick, I’ll Make Inflation Disappear
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08:00 ET
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Fed Speaker: 
                      Cleveland Fed Pres. Loretta Mester will be in Sarasota. Florida to chat up the economy.  Last I heard from Mester, she was still waving the “What me worry?” banner.  She seems to almost understand that the economy, and markets can get in the way, but comes off (to me, at least) almost as a Private who’s not sure that she can speak her mind in front of her squad leader.  Today, Mester will have great potential to push the S&P futures around, and let’s not forget…… that she is a voting member of the FOMC this year.
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08:30 ET
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CPI (January): 
                       No sign of inflation.  At least that’s what they keep telling us.  Maybe they should stop now.  You….my people…yes MY people (You know I love you all) have been lied to.  All of planet Earth measures consumer level inflation through their CPIs, yet the Fed watches the PCE.  Why ??  Oh, there is a good reason !!!  Because….. if their target has not yet been reached, then they still have flexibility in regards to forward looking monetary policy decisions without losing even more credibility.  Get this through that adorable head of yours…..  They do not love you, they never have, and they are NOT here for you.  Core CPI printed at 2.1% y/y for December, and that’s also what we are expecting for January’s number.  Wait Sarge… Isn’t that above???….
                       Yes, my young student, Consumer level inflation at the Core met the Fed’s stated target in November, and bested it in December.  I will illustrate.
                        Year over year Core CPI printed at 1.7% way back in May, then spent three months at 1.8%, two months at 1.9%, one month at 2.0%, and then we hit December’s 2.1%.  It’s not the Weimar Republic, thank goodness, but it is steadily rising inflation.  So, my friends you are not crazy, you are spending more for the goods and services you need and/or want.  This inflation is simply being masked by what happened in the energy space.  Many of you are indeed benefitting from falling energy prices, but the pace of that increasing benefit is in a spot where it has to flatten.  The month over month print for the Core is expected to sport growth of 0.2% up from last month’s 0.1%.  You will  obviously see contraction in the headline print.  Don’t lie to me, and don’t lie to my people.
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13:00 ET
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Baker Hughes Rig Count (Weekly):
                                                           Last week, we saw the US count drop 30 to 541, and the North American count, in similar fashion lose a total of 50 rigs to 763.  These decreases in functioning oil rigs are starting to mount, and sooner or later should impact supply.  Yesterday the increase in supply was smaller than consensus, but still larger than I was looing for.  This number is going to matter, right when you start thinking about getting stupid on Friday night.  Don’t lose focus.
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Friday Earnings Highlights:
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Before the Open: DE (.70), VFC (1.01)
After the Close: Filet O’ Fish (Irish Catholic)

Mid-Day Thoughts

Citizens of Earth,

1) Valiant technical stand made by the algos at S&P 500 level 1922.  The level finally cracked in somewhat violent fashion, at 11am, but has clawed it’s way back in a mid-day scramble.  If held, there is another bump in the road at 1929.  If not held, we did get a bounce at 1915, and there should be support at 1908.
Note: Not held does not mean…”Use your head” anymore.
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2) Crude prices have been running hot and cold all day, with Saudi Arabia, Iraq, and Iran all posturing themselves without committing to anything.  Headline risk in this space remains at ridiculously heightened levels.
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3) Some traders are singing “The Safety Dance” again today.  Treasuries are firmer, Gold is strong today, and Utilities have resumed market leadership.
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4) Real disappointment in Walmart.  Perhaps even with what should be a world-class distribution network, the fight with Amazon would be a better fight if Amazon knew that they were in one.
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5) JWN earnings tonight.  The retail sector take another swing.  The options market is pricing about three and a half clams worth of volatility.
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6)  Out of chewing tobacco again.  Anyone near a PX?

Market Recon Thursday

Good Morning,
                       Remember when I told you that I did not think that the S&P 500 could hold that trend line yesterday…..the one that actually began on Thursday afternoon just after the highly touted 1812 level had been punctured ??  Well, on a Wednesday that started out with us talking about WTI Crude testing $30 resistance, the S&P 500 not only held the trend line, the index spent most of the day nearer to the top of the channel than it did bouncing around….oh, and btw… WTI Crude is trading closer to 32 than it is to 31 while I bang out this note.  Four and a half day parabolic move higher ??  Anything can happen here on planet Earth.  I’ll let you know at 4pm.
                       We do have some nice macro to look at today, and obviously, pricing movements for Crude will be key, but WMT reports this morning.  WMT, a firm well established in the old economy, while trying to evolve as a competitor in the new.  This one is paramount in my opinion.  As you most likely know, the retailers report late in the season, and we’ll be hit with a plethora of them over the next week and a half.  Now, (brain power activate) remember, when January Core Retail Sales beat last Friday, the Census Bureau (That’s right, the Census Bureau) revised December Core numbers from -0.1% to +0.1%.  May not seem like much, but it paints the holiday season in a much different light.  I do not have a position in this space, so I’m not trying to sell you anything.  That said, I do believe that the retailers, at least in the short term will likely take some leadership in US equity market direction starting today with that release.
                       So, although the correlation does seem to take days off as seen on Tuesday, Crude matters. Technical analysis (Newton !!) has been important, that’s plain to see.  Do fundamentals still matter ??  Yes.  A thousand times yes.  The short covering witnessed yesterday was a fundamental force.  These retail numbers that we have seen, and are about to see more of, certainly have fundamental impact…. and the profit taking that we inevitably have to see at some point, perhaps today…. will be a fundamental shift in the demand/supply equation that in a healthy market results in price discovery.  Ahhh, price discovery….. now that’s an argument for a different day.
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Bumps in Your Road
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08:30 ET
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Initial Jobless Claims (Weekly): Last week, we witnessed a pleasant drop in the numbers of those filing for Unemployment benefits.  This item had been knocking on 300K’s door, but backed off nicely to 269K.  Expectations for today are that the number drifts slightly higher to something close to 275K, which would still improve the four week moving average (currently a smidge above 281K) going forward.
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Philly Fed Manufacturing Index (February):  This item is just about the most highly focused upon of all of the regional Fed manufacturing prints.  It had also been the most consistently expansionary until the last half year or so, when this item started to falter, just like all of it’s siblings.  Consensus opinion for today is for a -2.7ish release.  If so, this will be the fifth month in six that Philly hits the tape in a state of contraction.  To this point, Philly has avoided an outright cataclysmic number in a any one month, like what we’ve seen in New York, and Dallas.
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10:00 ET
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Leading Indicators (January):  Pass.  Nobody looks at this one.  Nobody ever has.  As a trader, you can save your intellectual capital for something else.
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10:30 ET
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Natural Gas Inventories (Weekly):  Nat Gas is coming off of last week’s draw of 70 billion cubic feet, which was the eleventh consecutive weekly contraction in this space.  Expect to see the draw double or so this week, and get back to what we had been seeing two weeks ago.
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11:00 ET
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Oil Inventories (Weekly):  Crude inventories dropped to the tune of -800K barrels last week.  That was a surprise as most of the Street was looking for something more like an increase of 4 million barrels or so.  Today, again…the Street looks for a sizable increase.  Expectations are for 3.6 to 4 million barrels again.  The Rig Count has been dropping rapidly.  My gut tells me that today’s print will be smaller than expected.  We’ll see.
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15:30 ET
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Fed Speaker:  San Francisco Fed Pres. John Williams (No relation to Fightin’ Dave, the precious metals expert) is set to speak on our economic outlook from Los Angeles, California.  Williams was hinting on the Fed slowing it’s pace on interest rate hikes way back in January (like, way before it was cool), and has been out of the news ever since.  He is not a voting member of the FOMC this year.
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Thursday’s Earnings Highlights
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Before the Open: BCC (.23), DUK (.90), ETR (1.45), WMT (1.42), WM (.68)
After the Close: ED(.54), MRVL (.10), JWN (1.25)
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PS: Life is scary.  That said…..United We Stand.  Never leave someone who hasn’t given up behind.  Never.

Market Recon Wednesday

Good Morning,

                        Absolutely love when equities do not trade in lock-step with Crude.  That’s undeniably positive, especially when said break includes sectors extremely reliant upon said commodity.  Another positive yesterday was the performance of the Russell 2000.  The small caps outperformed the general marketplace on a dollar-strong day…. like they are supposed to.  For many, many months, this has simply not been the case.  When small caps, who by nature are not multi-national, and therefore not susceptible to currency fluctuations…underperform in a dollar-strong environment…you then know that the economy has a virus.  So, you kids ready for a third positive take?
                      Check out a three of five minute chart of the S&P 500…make sure it’s at least three or four days long.  Now place a dot right at two-thirty pm on Thursday when rumors of an “Oil Producer Street Jam multi-national dance party” broke, and draw that line right through yesterday’s close.  Almost parabolic, right?  That SPX 1895 close is what we needed to keep that line I tact, although 1890 support was tested right before the close, yet the index nailed the level, and did so without standard MACD, nor standard RSI indicators flashing sell signals.  Am I foolish enough to think that we hold this line again all day today?? No, I’m not, but technically, we’re in a different range.  Technically, the game is far different than it was two and a half sessions ago.  Take a drink of water, breathe in and out, and re-evaluate what it is that you need to accomplish.  There has been a stay of execution.
                      Now, very calmly….say a prayer of thanks.  Recommit yourself to those you have sworn to protect.  Then……if you are a hunter…hunt, and if you are a gatherer…gather.  Now, go.
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Boatload O’ Macro
                 Gang, pay attention to the numbers today.  This is a big day as far as high profile data, and morsels of controlled information coming from the Federal Reserve Bank are concerned.  Arthur says it all the time, and he’s right.  Today, you probably need to “be nimble”.
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08:30 ET
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Housing Starts & Permits (January):  Housing Starts contracted small in December, but have largely held this approximate level, with a few zigs, and zags since May.  The expectation for January is for an increase to 1.17 million seasonally adjusted, annualized units from that 1.15 million unit print.  The skew in the range is to the upside, although there is concern over January Construction Spending that has me approaching with caution.  As for January Permits, look for a print around 1.21 million units (SAAR), which would be down from December’s 1.23 million.
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PPI (January):  Thanks to the falling price of Crude, it’s fairly safe to say the headline print in this space will show contraction for the third month in four, duplicating December’s -0.2% m/m performance.  When you toss food , and energy, it looks like the Core print will sport month over month growth of 0.1%, also repeating December’s pace.
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08:55 ET
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Redbook (Weekly):  Our weekly measure of chain store sales showed y/y growth of 0.6% last week, and has been in a constantly ebbing state of growth all year.  The key today will be to see  this item hold that level, and form a bottom before hitting the flat line.  With last week’s positive revisions to the monthly Retail Sales numbers, and a barrage of Retail sector earnings numbers beginning their assault later this week, this could be a real morale boost here.
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09:15 ET
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Industrial Production (January):  Housing Starts are important.  So is this one.  Industrial Production in this country has withered over time, contracting in each of the last five months consecutively, and in ten of the last 13.  Most economists think that the ball finally stopped rolling downhill in January.  Consensus calls for growth 0f 0.4% m/m, but the skew is sharply lower, so…. fingers crossed.
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Capacity Utilization (January):  Talk about a bloodbath.  Capacity Utilization has dwindled down to the December print of 76.5%, and it’s been a steady drumbeat, with 12 of the last 13 months utilizing less of our capacity than the month prior.  Here also, we have hope.  The group thought here is that we see a small increase, maybe to 76.7%.  I think the market would receive a twin increase for these last two extremely well.
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Plate Spinners and Alligator Wrestlers
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14:00 ET
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FOMC Minutes: Will we learn much here, after not really learning all that much from Janet Yellen’s twin testimonies last week?  I doubt it.  You won’t learn the path of future monetary policy, but you will hear more about tightening global economic conditions, moderately improved labor conditions, and market volatility.  Bottom line…. have your ducks in a row by 2pm, because the marketplace will latch onto something in this release, and react.
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18:00 ET
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Fed Speaker:  St. Louis Fed Pres. James Bullard will speak on monetary policy from St. Louis, Missouri.  Bullard is a voting member of the FOMC.  If you’ll recall, Bullard is the guy who couldn’t understand the phrase “The Committee would be concerned if inflation were running persistently above or below this objective (2%)”, so he dissented.  Doesn’t seem too tough to “get” this one to me, how about you? I tell these guys all the time…if you need help…ask.  I do mean it, but I don’t think they’ll ever accept help from someone who actually had to figure it all out in real time.
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Wednesday’s Earnings Highlights
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Before the Open:  DPS (.98), GCI (.54), PCLN (11.81)
After the Close:  GDDY (.25), WMB (.18)
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Earnings Note:  As you can see, PCLN reports this morning.  As of yesterday afternoon, the options market was pricing in approximately $41 worth of volatility.

Market Recon Tuesday

Good Morning,
                        Sit down, it won’t be boring…..make yourself cozy.  There’s more than a little to wrap your head around today, so get yourself fired up…and let’s take a run at this thing.  Our story begins with the re-opening of business in China following the celebratory start to the Year of the Monkey.  Monkeys are cool.  I’m not Chinese, but I am pretty sure that I can do the Year of the Monkey.  Ever tell you about those crazy….??  Ahh, never mind.
                       Many of us, myself included… actually feared what we might see yesterday when Shanghai re-opened.  That fear was unnecessary.  The PBOC propped up the yuan , burning through some reserves on Monday, stabilizing oil, and sending stocks sideways on Monday, and higher today.  Slide on over to Europe, and we see that the ZEW Survey of Economic Sentiment rolled off of a table for both the EMU in general, and Germany in specific.  Yeah, rolled off of a table, and still beat expectations  Guess getting beaten up by two guys is still better than getting beaten up by four.  European stocks are sideways to lower at this hour.  As exciting as China, and Germany are, the big story this morning will be…what else ??…oil.
                        So, let’s talk Oil, the driver of late for markets related, and even non-related.  You may have noticed that in the last couple of hours, WTI Crude has traded as high as 31 1/2, and as low as 29 1/2, dragging US equity index futures around with it.  As I type, those futures are still trading well above fair value, but nowhere near the highs we saw yesterday.  What gives ??  It seems that the Oil Ministers (remember that rumor?) from Saudi Arabia, Qatar, Venezuela, and Russia met in Qatar, and decided to freeze production at their January levels.  Yay, take oil, run this puppy up.   Wait….there’s a but (there always seems to be a but)…but, only if other major oil producing nations go along with the plan.  Super….cuz yaknow…these guys are all trustworthy, and play nice with each other.  Sold to you.  Keep expecting every headline in this space to impact your day, week, month, year.
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Numbers and Nerds
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08:30 ET
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Empire State Manufacturing Index (February): Among the weakest (excluding Dallas) macro-economic data-points throughout this whole era of “depression” as far as the manufacturing sector is concerned, has been this item.  The Empire State has printed in contraction for six consecutive months, in fact January’s -19.4 was the worst singly monthly print since 2009.  This month, we expect to see a seventh consecutive decline, but perhaps the pace of decay will abate.  Maybe something like -10.4.  Expansion seems very unlikely with the top end of the range at -7.  Again, getting beaten up by two guys is better than getting beaten up by four.
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09:00 ET
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Fed Speaker: Philadelphia Fed Pres. Patrick Harker is set to speak on economic forecasting in Newark, Delaware.  Harker is thought of as a policy hawk, however, Phiadelphia does not vote this year.
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10:00 ET
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NAHB Housing Market Index (February): This one, also called the “Homebuilder Optimism Index” is well off of it’s November peak, but still printed at a what I consider to be a very healthy 60 in January.  Expectations are for this item to at least hold the line at that level this month.
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10:30 ET
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Fed Speaker: The new Minneapolis Fed Pres. Neel Kashkari will speak about the financial crisis from the Brookings Institute in the nation’s capitol.  Kashkari is not a voting member of the FOMC this year.
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16:00 ET
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TIC (December):  Often forgotten, printing at 4pm and released with a two month lag, this one easily flies under the radar.  That said, I think being that it measures net foreign demand for long-term US securities, we probably need follow it a bit more closely here.  In November, demand totaled a net of +$31.4B, despite a significant reduction in foreign equity holdings.  As for US Treasuries, China and Japan both remained firmly entrenched in the top two spots, with China’s lead actually increasing slightly.
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19:30 ET
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Fed Speaker:  Fed Pres. Eric Rosengren will be up in Waterville, Maine to speak about the US economy.  Rosengren has a dove’s reputation but has been avoiding commenting on Fed policy of late.  He is a voting member of the committee this year.
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Tuesday’s Earnings Highlights
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Before the Open: GPC (1.01), HRL (.37)
After the Close: BYD (.13), FE (.57)
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PS: God bless you, gang.  Now, light ’em up.