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)