Lunchtime Recon

Good Afternoon,

                       A heavy macro week got off to a rather aggressive start this morning.  Consumer Spending hit the tape at much better than expected levels.  Core PCE, and Personal Income both met consensus view.  The Case-Shiller HPI was a positive, yet Consumer Confidence, like Consumer Sentiment last week… missed expectations for May despite that beefed up spending for April.  Hmmmmm.  As far as trading volume goes, I thought we might run into a quiet session when my e-mailed morning note was responded to by a plethora of vacation messages, and to this point… that is exactly what we have seen.
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1)  The S&P 500 trading level here is a very even 2100.  After finding initial support here, the index has now found resistance in that very spot after a mid-morning sell-off.  There is a traffic jam of nearby support levels should the market show weakness later in the day.  The 2092, and 2086 levels both show up on my charts.  To the upside, I see nothing between 2100, and 2111.
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2) Small Caps and the Transports are your early leaders, while Consumer Staples lag the pack.  WTI Crude is re-approaching the $50 mark, and that has Energy names on the plus side.  The leadership of the Financial, and Technology sectors seems to be taking a breather.
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3) As for perceived safety plays, the VIX is very strong today (out of proportion to it’s peers, and also to the red arrows that we do see), but it does stand alone at this time.  Gold, US Treasuries, and the Utility sector are all sort of flattish.
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4) Is it time to cash in on the Tech trade ?  I’ll tell you this… I’m not sure, but the trade has certainly worked like a charm,  If you’re just in this for a trade, then you’re already out there at your targets.
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5) Health food for lunch again.  You can do this.

Market Recon Tuesday

Good Morning,
                        Don’t know if anyone noticed….. but, Matt Harvey was actually Matt Harvey last night.  Hope we see this guy again.  You smell that??… Nothing else in the world smells like that.   That smell, that gasoline smell ….. “Jobs Week”.  Already ??  Seems like we just did this, no ??  Sure does kids, and there’s a lot of macro to look at this week, not just jobs data, so let’s tape on the foil, and button down the back of your jersey..  You’re going to have to skate through this shortened week with your head up.  One immediate positive… less Fed speakers lurking in the shadows this week, at least until Thursday, and we’ll be watching the ECB by then anyway.
                       In order to foam the runway for this morning’s landing, you are going to need to know that Chinese stocks roared.  The reason for this was a report released by Goldman that portrayed, in their opinion, the increased likelihood that Chinese A-shares will be included in MSCI’s June rebalancing.  I though this was pretty much a foregone conclusion, but apparently such expectations were not exactly priced in just yet.
                      You also need to know that a lot of macro hit the tape in Europe this morning, and there was some good, but largely, it was outweighed by the negative.  For one, German Retail Sales for April missed very badly… for the third month in a row.  Secondly, Italian Unemployment unexpectedly mover the wrong way, and last… but certainly not least…. consumer level inflation for the Euro-Zone remained stuck in neutral.
                     There’s something special about your first day back at work after a vacation.  Almost as exciting as your first day on vacation.  Almost.  Two fists, gang.  You only have four days to earn five days keep.  Let’s go.
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Bunch O’ Macro
 
08:30 ET
 
PCE Price Index (April):  Here, you have what is probably the single most influential macro-economic data-point that we have, from an FOMC perspective.  We’ll look at all of the data here, but the single most important item will be the Core year over year print.  For March that one hit the tape at 1.6%, in comparison to the CPI’s Core 2.1%.  Moving closer to 2% in this space could cement market perception that the Fed will move by July.  When measured month over month, we look for 0.3% at the Headline today, and 0.2% at the Core.  Both of those would be moves higher from identical 0.1% increases in March.
Personal Income (April):  With the exception of the anemic growth seen in February, this item has maintained an average increase of close to 0.4% for nearly a year.  Doesn’t feel like it, but that’s what the numbers say.  That’s also what we are looking for in the April data.  The very lowest prediction I see is for 0.3% m/m growth, so a failure to show an increase for this print could be taken very poorly by the futures market.
Consumer Spending (April):  Who isn’t rooting for the US consumer, buyer of all things both necessary, and simply desired ?? Well, the consumer has been dragging their feet for a number of months.  I root for people to bring in more than they spend.  It’s better for families in the long run, and it breeds discipline.  However, that said… the consumer appears ready to pop.  Consensus view for this space this morning is for a dramatic 0.6% m/m print.  The range runs from a still strong 0.4% to a very robust 0.9%.  To put this in perspective, 0.6% would be the strongest upward move for one month since last June, and 0.9% would be the strongest since the cows came home (March 2014).
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09:00 ET
 
Case-Shiller HPI (March):  Some folks were disappointed in February’s 5.4% y/y increase for home prices.  They’ll be even more unhappy then when they see March’s expected 5.1% growth, if economists in general are correct.  Hey…. I wouldn’t get too worked up about this number (…and I’m a home owner), it’s still 5% plus print, which would be the eighth in a row, after bouncing around in the high fours until last Autumn (indicating a “pace of growth” bottom, that could be retested).  On top of that, the skew for this print today is to the high side, and anybody following April housing data, I think… would have to be encouraged regardless of what this March number says.
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09:45 ET
 
Chicago PMI (May):  To be honest with you…. you might as well pick red or black, your favorite number, and spin the wheel when it comes to the Chicago PMI.  Consensus opinion for this item is rarely even close to what actually prints, so I’ll just give you the range, which is 48.5 to 52.5.  Hard to miss with that range ?? Yeah, right.
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10:00 ET
 
Consumer Confidence (May):  Oh, that rascally US consumer.  This item missed in April with a still very confident (imho) 94.2.  In fact, the Conference Board’s number has not come in below 90 since September 2014.  We’re looking for the same 96.3 that we were looking for last month when we missed.  This one can impact market trajectory upon it’s release.  Reminder… the University of Michigan number disappointed mildly on Friday.
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10:30 ET
 
Dallas Fed Manufacturing Survey (May):  Those that follow the regional Fed district manufacturing reports know that Dallas has been paid a special long-term visit by the “Ugly Stick”.  Dallas has printed in continual contraction for every month since December of 2014.  Dallas has also put up the weakest print of the five majors (Empire State, Philly, Richmond, Kansas City) in 13 of the last 16 months.  Most economists that I see are looking for something close to -14 for Dallas in May.  That would complete the sweep, with all five of these prints in contraction for the month, ending a two month streak where that dubious feat had been avoided.  The big disappointment had to be the severe miss for Richmond, which suffered from an unforeseen drop-off in shipments, and capacity utilization in last week’s release.
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Tuesday’s Earning’s Highlights
Before the Open: MDT (1.26)
After the Close: TIVO (.09)

Market Recon Friday

Good Morning,
                        Global equities, with the exception of the Sensex (India) appear to be at least somewhat higher this morning, as do US equity index futures.  Crude has stabilized about $48.  Technically speaking, you could see the  bump in the road at $SPX 2041 even before we got there last night.  As the final seconds ticked off, and the index approached that line, myself, and several other very sentient fellows who work near my spot on the NYSE trading floor had a series of very brief conversations.
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“Will we open higher tomorrow ??”
“I think so”.
“You sure ??”
“No.  I really wanna see the SPX take and hold 2041…..  Then I’ll feel better.”
“2035 really didn’t show”
“I know” 
“You’ve got my order ??”  “Yes.” 
“I’m gonna get done, right ??”
“Yes”. 
“You’re sure?” 
“Anything comin’ out in China tonight ?” 
“No.”
“What did Arthur say ??
“It’s to buy” 
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                      Well, kids… the index hit that wall twice.  It failed to take and hold the spot, but it closed right on the doorstep.  Photo finish.  Just after the bell…..
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“You feel good about this ??”
“I think so.”
“We’ve been wrong a couple of times before on this”
” …. good thing it’s only money.”
“I don’t think we’re wrong”
“That’s what I told my guy”
“Tomorrow’s Friday”
“Promise ??”
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                     All of these quotes are something I either said, or heard within seconds of the final bell.  Greatest place on Earth at 4pm on a weekday.  Wonderful people to work with.  The Yankees have their stadium, and we have ours.
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Macro
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09:00 ET
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Fed Speaker: Federal Reserve Gov. Daniel Tarullo will speak about Insurance Company regulation in Washington, DC.  Tarullo is a voting member of the FOMC, but his expertise, and most of his public speaking is regulation based.  He is excellent at staying beneath the radar, and I would not expect him to stray too far from his prepared material.  As a trader, I would consider this a low risk event.
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10:00 ET
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Existing Home Sales (April): This item bounced fairly significantly from February to March (5.1% m/m), and the consensus view is for continued momentum in this space.  Everyone I look at seems to be expecting something close to 5.4 million units (SAAR), up from the previous print of 5.33M.  In fact, the low end of the range for this one is 5.35M, except for one guy, who’s down at 5.3M.  Wonder what he sees that nobody else does.  As far as April housing data goes, we did see a nice number for Housing Starts.  Both New, and Pending Home Sales are due next week.
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13:00 ET
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Baker Hughes Rig Count (Weekly):  The US Rig Count has been in steady decline for quite some time now, operating at maybe 25% od where it once was.  You probably won’t see it this week, but I wonder with WTI Crude trading around the $48 level, how long it will take for this trend to change.  My bet is…. not too long at all.  Then again, it’s not like I’ve amassed a fortune predicting the fundamentals of oil pricing.  We’re coming off of a US Count of 406, of which 318 were devoted to the production of oil.
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Friday’s Earnings Highlights
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Before the Open: BKE (.57), CPB (.64), DE (1.48), FL (1.39)
After the Close:  This guy is on vacation.  Could get stupid.
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Note: Market Recon will not publish next week as your old pal will be studying old forts, and battlefields..

Mid-Day Recon

Good Afternoon,

                       Well, kids… the risk is apparently still coming off of the table.  Technically speaking, I had hoped to see support for the S&P 500 at 2029, and it did show up, but has since been pierced.  Our panic point, or rally point depending on whether we go into a full scale retreat or find a way to re-group will be at 2022.  Should our sails catch a breeze, there are squalls bunched together at 2035, and 2041.  The Egyptian plane crash is not helping matters.
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1)  Further strength in the DXY after Richmond Fed Pres. Jeffrey Lacker downplayed the external threat that the Brexit may cause to the US economy.  This came despite a moderately dovish statement from Federal Reserve Vice Chair Stanley Fisher earlier today.
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2) The sharp rally for the banking stocks yesterday is not shielding them today.  Perhaps the 3.8% rally for that sub-sector was overdone given that the possibility of an increase in the Fed Funds Rate is still more than a month away, and we’re only talking about a small increase at that.
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3) The Utility, and Consumer Staples sectors are actually swimming upstream today, after the sever encounter that those sectors had over the last few days with the dreaded “Ugly Stick”.
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4) Treasuries have stabilized since yesterday as well, but Gold has not.  The precious metal is now trading in a pivotal spot.  I think if this asset approaches 1210 that you want to bail on a portion of your position.  That said, I am personally considering buying some here, because, technically… I like this price.
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5) If you recall…. I had been telling you for weeks tha WTI Crude would have a hard time taking and holding the $48 level.  So far so good on that call.

Market Recon Thursday

Good Morning,
                       If you are yet to watch the news today, an airliner bound for Cairo from Paris disappeared while you were sleeping.  Uncertainty over the plane’s fate has put some added pressure on global equities, as well as US equity index futures.  Silent prayer for those involved, and their families, and then we move out.
                       It matters not whether you think the Fed mismanaged communication with the marketplace over the last few months.  They have repeatedly beaten us over the head over the last two weeks with the very message that the April Minutes seemed to convey.  Point is that they recognized that there was a misunderstanding, and unloosed a cage full of hawks to address it.  Did you get your tail kicked ??  A little, or a lot ??  Who cares….  feel sorry for yourself, and blame the Fed, or deal with what is.  Overcoming and adapting is what being an adult is all about.  So adapt.
                       What I thought was interesting yesterday was how fast foreign investors gave up on the US long end yesterday.  We’ve seen the recent daily beatings on the short end of the curve, and on the Utility sector, so even if you don’t trust Fed speak, the tea leaves (if not the Fed Fund Rate futures) were there that June was (though, obviously not a given) at least a realistic possibility.  These headwinds will likely allow you to invest more cheaply in whatever you already thought might be a good investment.  Your decisions don’t change.  Your point of entry might.  Enjoy the challenge.  It’s hard to hear for some folks, but it is only money.  You only need clean water, and a source of heat.   When the game becomes more difficult, that’s when you find out if you really love this sport.
                        Almost as noticeable as the weakness in the Utility sector was the strength in the Financial sector  The sector index rose more than 1.8% yesterday, while it’s subcomponent for the banks soared 3.7%.  No way, dude.  Yes, way…..dude.  See, now why macro-economic justification is important to them.  They’re not owned by the Utilities you know….. and we all know that they’re going to step to plate for savers & old people.
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Macro & More Talk
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08:30 ET
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Initial Jobless Claims (Weekly):  Here’s one that could spell trouble.  With the trending macro actually starting to look just a smidge better in recent weeks…this is the one item that looked pretty good all along, and is now weakening.  Last week, we were jolted with our second straight print that landed well above the high end of expectations.  In fact, that 294K print was the worst one in a year.  Projections are for a rebound to something in the mid-270k’s today, with a range spanning 260K to 285K.  A surprise in this space will be noticed in the futures market.
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Philly Fed (May):  The Philly Fed surprised everyone in April with a negative number.  April had it’s bright spots in other regions, so this being the nation’s most important region….. well, it was disappointing to say the least.  New Orders, Shipments, and Employment all rolled off of the table together.  Our fortune tellers are expecting a return to expansion here for May, in fact the low end of the range is zero.  Keep in mind that the very same fortune tellers missed badly with the Empire State print on Monday.  The marketplace will react to this item.  So, 8:30 is a big deal, kids.
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09:15 ET
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Fed Speaker:  Federal Reserve Vice Chair Stanley Fischer will speak from the New York Fed.  Fischer obviously votes, but has been notably quiet on monetary policy for quite some time.  Last heard from, he seemed concerned over rising inflation, but also about a lack of growth.  His spoken words may have more impact in the marketplace today than anything else available to you.  If the FOMC has marching orders, the line will be towed right here.
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10:00 ET
Leading Indicators (April):  Isn’t this little guy adorable?  Nobody cares. Next.
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10:30 ET
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Fed Speaker: New York Fed Pres. William Dudley will also speak from New York.  Dudley, as the honcho in NY, has a permanent vote, and if Fischer doesn’t move the market, this guy surely can.  His topic is intended to be micro-economic trends, but he is making himself available for Q&A afterward, and I imagine that there may be a few questions.  It has been about ten days since we’ve heard from Dudley.  At that time, he sounded uncharacteristically hawkish… pushing forth the idea of two interest rate hikes by year’s end.  This is the most impactful one-two punch that the Fed has shoved down our throats in a while.  How they present will push the DXY around, and then…. everything else.
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Natural Gas Inventories (Weekly): …..and the trend goes on.  Supplies of natural gas have been growing moderately, by between 50B cf, and 75 B cf for three straight weeks.  We look for more of the same today, probably toward the higher end of that range.  This one used to be the playground of Evel Knievel wannabees.  I think that label will apply to the Forex crowd for now.
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Thursday’s Earnings Highlights
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Before the Open:  AAP (2.62), DKS (.49), TTC (1.80), WMT (.88)
After the Close:  AMAT (.32), GPS (.32)

FOMC Minutes Recon

Good Afternoon,

                       Did we learn anything today upon the release of the latest FOMC Minutes ??
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1)  We learned that they were thinking June in April, although there was only one dissent, and no mention made in the April statement that June was this seriously on the table.  (Sentient people already knew that though)
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2)  There is a clear lack of concern over global economic, and financial conditions.  Are they worried about China, Japan, Europe, or the Brexit ??  Beats me.
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3)  With the recently, at least somewhat better April economic data (Retail Sales, Consumer Sentiment, Housing Starts, Industrial Production, and Capacity Utilization) including the Atlanta Fed GDPNow forecast for Q2, the FOMC feels as though to maintain credibility they will have to hike well ahead of the election, and this may be the time that they can justify it best.
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4)  Before we go holding hands and taking long walks in the rain together, this can still get messed up.  (You guys know I’m rooting for the savers, and the old ones, even if it hurts me right?)

Market Recon Wednesday

Good Morning,

                        The brain is all over the place this morning.  You may have to hang on to something.  No Fed Speakers today !!!  Hooray.  Just the FOMC Minutes.  Not much on the macro side either.  The Fed did some harm yesterday, though.  Felt like I slipped back in time.  Maybe sixth grade, or seventh……
                        Do you guys remember pro wrestling back in the 1970’s??  First, the ref gets knocked out.  Then George “the Animal” Steele would scare some wrestler that you never heard of into the corner, where maybe Ivan Putski would knock him down, and then finally, Jimmy “Superfly” Snuka would fly off of the top rope, and finish the poor victim.  Well, yesterday’s victim was our equity market, and the two set-up men were San Francisco Fed Pres. John Williams & Atlanta Fed Pres. Dennis Lockhart.  The finisher coming down off of that top rope with an atomic elbow smash was played by Dallas Fed Pres. Robert Kaplan.  The markets never had a chance.  Need to find a bright spot ??  That S&P 500 2041 level, a technical spot stood against the onslaught, and held firm….. twice.  Clearly, at least for yesterday, buyers had priced in their discount, BUT they were still there.
                        Anyone still in doubt that June is on the table, simply has to take a look at the beating that the Utility sector (for the new kids, dividends compete directly against interest rates) has taken, or how rapidly the spread between the yields for the US 2 year, and the US 10 year are collapsing (Again, new kids… selling the short end means that they’re scared of the Fed).  Even if there is still no certainty regarding a June hike, uncertainty has a cost, and that is what you are seeing right now.  In an environment where expectations for monetary policy have perverted asset prices throughout the galaxy, the negative impact of uncertainty feels almost like a fundamental force.  Sort of like a pair of old slippers….. uhh.. not exactly.
                       Wanna laugh ??  The Japanese economy grew in the first quarter !!!  Yay !!!!  Much of it had to with a large downward revision to the fourth quarter, and because they simply forgot to account for leap year.  What ?!?! Can’t make this stuff up.  No word yet on whether this impacts the big monetary policy beachside bonfire that Dr. Kuroda has been putting together.  Sales tax, shmales tax.  In other fun news, Euro-Zone inflation contracted in April.  That’s okay, it was expected to contract.
                       Do it Wednesday style.
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The Goods
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10:30 ET
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Oil Inventories (Weekly):  Last week, you may recall… Inventories showed a draw of 3.4M barrels, when a flat print to a slight build had been expected.  Today, those very same fortune tellers are looking for a decrease in supplies of another 3 million or so.  Last night’s API number came in at a draw of 1.1 million barrels.
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14:00 ET
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FOMC Minutes:  What will we see here ??  Just yesterday, we heard from three rather hawkish sounding (non-voting) regional Fed Presidents.  In fact, we’ve heard form nobody but hawks for days upon days now.  Six speakers in about a week by my count.  Where were the doves ?  Well, the DXY was below the “play nice in the sand box” level.  So much talk in the wake of a meeting where only one had the courage to dissent.  Should make good reading.  Oh, and any fellow nerds out there notice that the Fed’s April statement omitted any concerns over global economic developments.  I think it would show some situational awareness if they at least talked about the Brexit vote at the last meeting.  Then again…. I know situational awareness may be a lot to ask for from this crew.
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Wednesday’s Earnings Highlights
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Before the Open: ADI (.62), HRL (.39), LOW (.84), SPLS (.16), TGT (1.20)
After the Close: AEO (.18), CSCO (.55)

Thinking About Gold

Thinking About Gold
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                       Used to be… that when I spoke about Gold, the folks that did listen… would look at me as if I were speaking in some ancient foreign language that nobody could understand.  Lately… as I stand at my spot on trading floor of the New York Stock Exchange, willing to talk the financial markets or baseball with anyone who’s also willing…. more and more am I asked about Gold.  Several times a week in fact.
                       In case you’ve missed it, when the World Gold Council released their Q1 data, total demand for Gold was up 21% y/y, largely due to demand for investment purposes.  There were y/y declines in demand from Q1 2015, to Q1 2016 for jewelry, technology purposes, and even purchases made by central banks.  Demand for investment purposes though, was up 122% y/y.  That says something.  It says that I am not alone in my thoughts.  If the central banks (huge buyers in recent years) get started again.  Woooo doggie!!
                       So, what is it about this barbarous relic that it refuses to just go away quietly?  Is it money?  Is it a commodity? Quite frankly, I think it is both.  There certainly are characteristics that even the most impure of monetarists can not deny.  Store of wealth, divisibility, and even at times of crisis… a medium of exchange.   As you all know, if you do follow my notes, my current allocation toward Gold is 7.5%.  We took it to that level from 5% in late December.  We have flirted with taking it even higher in recent weeks, though we have dragged our feet.  My thought is that if the physical (Which is the best way to own) were to make another run at $1300 an ounce that you may want to be at 10% for the long haul.  Conversely, if the yellow metal were to run the other way, I think you lighten up at $1210 before throwing away your profits from Q1.
                     A very difficult asset to value in terms of fiat currency, one’s short term view on Gold really depends on global monetary policies.  Should the FOMC tighten in the near future, while the rest of the planet is still easing, there will likely be a pullback in price, at least in dollar terms.  However, should there be no attempt to tighten, or maybe even if there is a failed attempt…. this could cut the beast loose.  We’ve all seen what this beast can do when it gets loose.  Crazier things can, and have happened.
                     Long term ??  I bet you saw how the IMF is pressuring the Euro-Zone to allow Greece to put off paying any interest or even principal on their bail-out loans until 2040.  Does anyone among us truly believe that the global debt super-cycle will never come to an endpoint ??  Not tomorrow.  Not next year.  There will be a do-over at some point.  There is a likelihood that Gold will play a role in the next monetary system.  I look at this as insurance… a way to preserve a slice of your portfolio, should the bad guys ever hit that re-set button.
                     Am I wrong ?? I sure hope so.

Market Recon Tuesday

Good Morning,
                        Stock ownership, according to Gallup, is now down to 52% among Americans… it’s lowest level in a couple of decades.  Every day, we seem to hear about money coming out of funds for weeks on end, or big name investors, save for Mr. Buffett cashing out of big name stocks.  I’m not going to tell you to go crazy, but when there’s a consensus on market direction, that doesn’t always mean that “they” are correct.  In my experience, if something you already thought you liked, goes on sale… well… that may be when to get your feet wet.  If you’ve been eyeing some expensive gadget, or home appliance, or whatever, and then you see it somewhere for what you perceive to be a cheap price, you jump, right ?  Why is it different for equity ?
                        Yes, expectations for monetary policy have perverted the marketplace, not just for stocks, but for bonds, commodities, and currency valuations as well.  There is a but coming.  But, one must attempt to excel in the environment provided.  Were the big oil names cheap when they went on sale a few months back ?  Obviously.  Were the big tech names cheap when they went on sale ?  The jury is still out there, but you haven’t lost money yet.  Are the retailers cheap now that they’ve gone on sale ?  That’s the question that I myself am wrestling with.  Without a doubt, somebody has been undervalued in this space.  Bottom fishing is good sport.  Stay within your tolerance for pain, do the homework (without making the homework part of the passion, you will fail), and trust your instinct.  There is almost nothing more rewarding than being right when you think for yourself.  Oh, when you’re wrong there’s some anguish, but that’s why you play by rules.
                         Water, change of socks, wet weather gear.  Ok, gang… let’s do Tuesday.
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Macro & Friends
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08:30 ET
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CPI (April):  Depending on who you follow, the headline print for April CPI is expected to come in at m/m growth of either 0.3%, or 0.4%.  Thanks to the rebound in Crude prices, this will be the hottest headline print since last July.  The more heavily focused upon Core (less food & energy) print is projected for a m/m increase of 0.2%.  That would be in line with what we’ve seen for at least a year now.  The year over year Core print, which is the one that has everyone talking, is expected to remain flat at 2.2%.  This will be the sixth consecutive month that Core CPI has been at, or above the Fed’s stated 2% target.  Now you know why they focus on the PCE.  More flexibility.  One side note….  Apparel has been an inflation weakling for a while, but if you want to peruse last Friday’s April Retail Sales release, you’ll see that there was a turnaround for apparel.  I would love to see if it translates in terms of price here.
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Housing Starts & Permits (April):  Existing Housing Starts took one in the gut in March, missing consensus after a fairly even four month run.  We do think that likely there will be some kind of rebound for April.  Let’s look for numbers like 1.128M (SAAR) for Starts, and an even 1.13M (SAAR) for Permits.  The range for both runs with a slight skew to the upside of expectations.  Between these two, and this Friday’s Existing Home Sales number, we should get an idea of where things stand at this time as far as the housing market is concerned.  For newcomers, SAAR = Seasonally Adjusted Annualized Rate.
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08:55 ET
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Redbook (Weekly):  Redbook chains store sales ran hot last week.  I’m seeing differing numbers as to what exactly they were, but even the lowest among them was for a strong year over year number.  Keep this one above 0.5% when measured in this way, and it remains out of sight, and under the radar.
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09:15 ET
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Industrial Production (April):  Just so you understand what we’re looking at here, US Industrial Production has actually contracted in 12 of the last 16 months.  Consensus view for today, is for growth of 0.3% m/m, which would be a big deal.  If this figure holds, this would be the third best month since this awful stretch began.  As the manufacturing sector had a less awful April than what we have seen for a bit, for this item to print below the flat-line would be a huge disappointment.  Huge.
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Capacity Utilization (April):  For March, this item printed at an incredibly poor 74.8%, which was it’s worst level since 2010.  So obviously closely tied to production, the hope here is that with a small bounce in the one…. comes a small bounce in the other.  The pros are looking for something like 75.0% for April in this space.  These are high profile data-points, but still I find it likely that they’ll be overshadowed by the inflation, and housing data.
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12:25 ET
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Fed Speakers:  San Francisco Fed Pres. John Williams, and Atlanta Fed Pres. Dennis “the Spider” Lockhart are both scheduled to participate in the same clambake today.  That happens to be the Politico event in Washington, DC.  Both of these speakers have been out there in recent weeks leaning hawkish, or in the case of Williams, just plain hawkish… for now.  Neither one of these guys votes this year.
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13:15 ET
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Fed Speaker:  Dallas Fed Pres. Robert Kaplan will speak from Midland, Texas.  Kaplan is not a voting member of the FOMC this year.  He, as every other speaker who has been out there fro a couple of weeks now, has been supportive of an interest rate increase in the near future.  There will be Q&A today, after the speech.
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Tuesday’s Earnings Highlights
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Before the Open: HD (1.34), TJX (.71)
After the Close: Nothing spectacular

Market Recon Monday

Good Morning,
                        You know who snuck out of the closet on Friday, right ??  Hate that guy.  Never know that your about to get hit with that darned “Ugly Stick”.  Always know when you have just been hit, though.  Better April Retail Sales, and a more sentimentally upbeat consumer should have let markets put a positive spin on the tail end of a lousy week…. you would have thought.  If the game truly were that easy, instead of thinking about markets full-time, I’d be driving an RV around the country, or something like that.  So, really… What gives ??
                       On Friday night, China went 0-3 with 3 strikeouts, missing April expectations for Industrial Production, Retail Sales, and Fixed Asset Investment.  That was after our close in New York, though, and not likely to have caused the afternoon sell-off that we did go through.  Sure there. was uncertainty over that data, but the real uncertainty, I think are the prospects for the June meeting of the FOMC.  Now, I’m not saying rate hike in June.  What I am saying is that the committee truly wants to get in another hike, and soon.  They need justification, which is an obstacle.  The Brexit, just eight days after the next meeting is surely another obstacle to increasing the Fed Funds Rate, but after that …. it gets real close to the election.  I guess they could go in July, but there is no press conference scheduled for that meeting.
                       Bottom line, the markets did not just price in a rate hike.  The markets may have just priced in, or attempted to price in ‘Uncertainty”.  Oh, that intangible, that scrapes the P/L, like shaving with no water.  Hard to value.  Uncertainty, to me, is like running half way to next base on a fly ball.  The fielder catches the fly, and now you have no chance to tag up, but you still go half way…… Just in case he drops it.  We still have  a lot of April, and then May data to look at, and so does the FOMC.  There is no way you can determine anything beyond your best guess at this time, so play your game.  Just get on base.
                      With the April Retail Sales looking good in spots, and traditional retailers reporting the most awful numbers for the first quarter, I’m thinking there could be opportunity.  Are brick & mortar retailers undervalued ??  Not necessarily.  What I will watch will be Walmart, and Target this week.  They are the ones with the scale, national distribution, and consumer friendly reputations to make a run at Amazon’s dominance if they ever get their e-tail business correctly integrated with their traditional business.  Nobody dominates forever.  Nobody.  A competitor will rise.
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Macro
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08:30 ET
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Empire State Manufacturing Index (May):  The New York region has become a leader as certain parts of the country seem to be “maybe, sort of” climbing out from that complete collapse in the manufacturing sector that we, as a nation have gone through.  Expectations are that this data-point will print close to 7.1, which would put it in expansion for the third consecutive month.  In addition to printing in expansion, the Empire State has decisively beaten consensus in each of those two months.  The strength has been in New Orders, and Shipments, which is precisely where you would want to see it.
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10:00 ET
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NAHB Housing Market Index (May):  This item is also know as the “The Homebuilder Optimism Index”  What it is…. is a diffusion index based on a survey, and though anything above 50 is considered favorable, this print has come in at 58 for three consecutive months, after spending eight months in the 60’s.  Projections are for a small bump up to 59 today for this one.  The general market will not react, but the homebuilders themselves certainly will.
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16:00 ET
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TIC (March):  Unfortunately, this data-point is dated, and released at 4pm, so there will not be any kind of meaningful market reaction, but trust me…. bond traders, and currency traders are watching this.  Besides, cross-border in investment is pretty darned interesting if you ask me.  For February, net foreign demand for US long-term securities popped to a much higher level ($72B) than had been expected.  I’m sure you can recall how rough February was on equities, and the underlying evidence her backed that up.  However, both Chinese, and Japanese accounts greatly increased their Treasury holdings at that time.
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19:00 ET
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Fed Speaker: Minneapolis Fed Pres. Neel Kashkari, not currently a voting member of the FOMC will speak from that city tonight.  He will host a town hall type meeting to discuss the “Too Big to Fail” project that he has taken on.  Kashkari is not expected to touch on monetary policy at this time.
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Monday’s Earnings Highlights
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Before the Open: Nothing to write home about.
After the Close: A (.39), DAVE (-.08).