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.