Market Recon Friday

Good Morning,

                     There’s blood on the saddle.  The good news is that things were much worse overnight than they are now.  Stress Tests ??  Yeah, right.  Brexit.  That’ll leave a mark. Who’s next…. Italeave, Czech out, Finnish, Departugal, or maybe Oustria.  Time will tell, and rumors along these lines will move asset prices.
                     The Financial sector will be the hardest hit today, as drastically changed currency exchange rates, and compressed bond yields are taking their toll.  By the way, your penny no longer buys one yen.  Central bank intervention ?? We’ve already seen it from the SNB.  Don’t be surprised to see it as well from the BOJ.  The DXY is back below 96, which is what we want to see. Anyway, now you understand why I practically begged the Fed to normalize three years ago when they probably could have pulled it off.  Hope is not a very good policy.
                    Adding to our mix today, will be the Russell Re-balance, which standing alone without a global financial markets crisis, would cause today to be the busiest day of the year at the NYSE in terms of trading volume.  Now, with that volume, you’ll have extreme volatility.
                    What can you, the trader do ??  Well, if you did buy those July FBP 140 puts that we talked about yesterday, then you’ve already played some pretty nice defense.  Maybe buying some long dated calls for the same underlying ETF isn’t such a bad idea today.  Just don’t pay more for the premium that what you lock in on the put side.
                   Question.  Why is the Prime Minister of the UK hanging around til October ??  Thanks for your service, now get out of the way… and let the next guy or gal invoke article 50 as soon as possible.  Who needs the increased uncertainty ??  There is already too much of that.
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Macro (if you’re still interested)
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08:30 ET
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Durable Goods Orders (May):  The headline print for April showed a robust month over month increase of 3.4%, That was the second month of positive growth in a row, also the third month in four.  This was, however largely due to defense, and aircraft purchases.  When measured ex-transportation, the m/m growth came in at a mere 0.4%.  For today, consensus headline growth is expected to print close to -0.6%, but to be honest… there is no consensus.  The range that I’ve seen spans from -2.5% to +5.0%, which means quite simply that there is no real expectation.  This one can at times be a headline event, just not today.
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10:00 ET
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U of M Consumer Sentiment (June-final):  Two weeks ago, the preliminary June number came in at 94.3 for this data-point.  Projections are for a minor slide to maybe… 94.1.  If that’s what happens, the print will, in my opinion, be close enough to fly under the radar.  However, if this prints with a 93 handle, a perceived less confident consumer could rattle the marketplace on a different day.
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13:00 ET
Baker Hughes Rig Count (weekly):  We’ve seen a couple of weeks in a row now of increases in not only Rig Count growth, but in Rigs devoted to the production of Crude.  One week ago, such rigs “popped” from 328 to 337.  With WTI Crude hanging around in the high $40’s all week after bouncing off of $45 support, I don’t think that we’ll see a dramatic change in this number.  If the number were to print up another five to ten rigs, there could be some further damage in the commodity on top the damage already done by the stronger dollar.