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).