Market Recon Wednesday

Good Morning,
                        There’s no doubt that all of the hoopla over this Brexit vote has subdued trading volumes.  You have been seeing, and will continue to see some folks closing out their positions, but you don’t see a lot of new position being put in play right now, at least I’m not.  I would expect more of the same even tomorrow.  That is of course, unless the constant polling in the UK starts to show that one side is really starting to persuade those who are undecided.
                        I do hope you all understand that here in the US, we don’t really have a right to have an opinion on this, unless asked.  If reversed, I would not appreciate external opinion.  The modern day 24 hour news cycle has made this a global “front and center” story.  It matters, there is no doubt, but 40 years ago…heck ..even 15 years ago, Janet Yellen’s testimony would have mattered more (much more).  That said, we are stuck with what is, not what used to be.  there are plenty of opinions, and some of them might simply be talking up their own interests.  Even if so, high level opinion may very well perpetuate reality.
                       I think your boy, Cramer put it well last night on his show….  (Paraphrasing)…’You looking to get long something you already like…. you wait until Friday to see if you get an artificial low”.  I am on a moving train with a lousy internet connection.  Those aren’t Jim’s exact words, but that’s how I took what he said.  Referring to the trading volume commentary in the first paragraph, it’s what a few traders are on to.
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Macro
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09:00 ET
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FHFA HPI (April):  The good news is that this Home/House Price Index, which is measure m/m has not shown same signs of slowing growth since 2014 that has the Case-Shiller number that is followed more closely on y/y basis.  The bad news is that this item has  a narrow scope (only single homes, only mortgages involving either Freddie or Fannie).  Thus, nobody follows it.  That said, we’ve been skinny on the macro this week, so…today, we look for a m/m increase of 0.6%, just off of the 0.7% pace of March.
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09:25 ET
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Fed Speaker:  Federal Reserve Vice Chair Stanley Fischer will speak from the Riksbank in Stockholm.  Likely, it is that this speech is overlooked by what comes after it, today.  Fischer, however is a sentient being, and if he strays from the current Yellen narrative, markets will notice.
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10:00 ET
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Existing Home Sales (May):  We look for the third consecutive monthly gain in this space today.  In fact, if we see the SAAR pace of 5.55 million units that consensus view calls for, it will be the best print for this series since October of last year.  May New Home Sales will hit the tape tomorrow, so we’re going to start to get an idea on how the housing market developed for the month in a hurry.
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Fed Speaker:  Federal Reserve Chair Janet Yellen will testify on monetary policy before the House Financial Services Committee, as she did yesterday before the Senate Banking Committee.  The song and dance routine will be the same, but the questions could be a little sharper, the House being a little rougher around the edges.  Let’s hope the cast and crew come a little better prepared to do their job than was Sen. Bob Corker yesterday.  I find it alarming that he sits on the Banking Committee yet was unaware that the Fed’s reinvesting of maturing proceeds was current policy.  QE 4 ??  I mean…C’mon man !!
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10:30 ET
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Oil Inventories (Weekly):  Last week, this item printed with a minus sign in front of it for the fourth consecutive week, and for the fifth week in six.  expectations for today are that we’ll add a week to this run.  Oil pros are looking for a draw of -1.6 million barrels, while the API number last night came in at a shocking -5.2 million barrels, which is why WTI Crude has gapped up above $50.  See you at 10:30.
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Wednesday’s Earnings Highlights
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Before the Open: WGO (.45)
After the Close: BBBY (.86), BKS (-.24)

Lunchtime Recon

Good Afternoon,

                       Fed Chair Janet Yellen has spoken, and continues to be questioned by the Senate Banking Committee.  It seemed to me to be almost a very sad Janet Yellen that took the mike in DC.  I think I heard concern, if not frustration in her voice (though, this is hard to quantify) over sluggish productivity growth, that in turn has hampered wage growth.  She did, in fact… try to talk up Q2 GDP, and recent wage increases.  At least to me, she sounded like she doesn’t trust any momentum that she does see in that space.  Although, the Chair did go through the motions…..  a pickup in growth, or inflation will result in gradual rate increases, and not so much growth or inflation will result in lower for longer, she sounded to me like she believes that we’re lower for longer.
                     The good doctor also made sure that we understand that the US economy is still subject to external forces.  Maybe that’s what’s got her spooked.  She named the UK, and China outright as immediate risks.  My take…. we didn’t learn anything today…except maybe the Fed Chair is somewhat less optimistic than we have seen in the past.
What gives so far ??
1) The US Dollar is stronger, while the Euro, and the Pound have weakened.  Gold, and WTI Crude have softened a bit in response.  Oddly, not only are equities not trading with Oil, the Energy sector is not trading with Oil.
2) Along with Energy, Tech is also a leading sector today.  Small Caps are under-performing by a wide margin.
3) Very little movement in Treasuries today.  Some buying on the long end.
4) Copper moving toward monthly highs.  Some short covering seen in FCX.
4) More than your usual number of earnings releases are scheduled for tonight (for a non-earnings season Tuesday night.)  Some highlight are:  ADBE (.68), FDX (3.26), KBH (.16), LZB (.48)

Market Recon Tuesday

Good Morning,
                        Three more “Brexit” polls overnight.  Two of those three actually kept the “Bremain” camp in the lead.  Oh….take the British Pound.  Take it to seven week highs against the UD Dollar.  That “Bremain” camp has two new supporters this morning.  George Soros warns of a “Black Friday” event shall the people of the UK vote against the EU.  Soros has a very long history with the BOE, and the Pound, and he makes some well thought out points, some of which are debatable.  David Beckham, on the other hand, thinks that Manchester United won a lot back in his hey day, because they were multi-national. (Not because Man U could simply afford the best players on the planet at the time.)  Wonder if the guys they beat were multi-national.
                      There are a few things to keep in mind, before running around like a chicken without a head.  First, and foremost, this is a non-binding referendum.  Non-binding.  There is no defined process for moving forward.  All this means is that the Parliament will be aware of how the people feel on this topic.  (Sort of like a kid telling his or her parents to stay out his or her room… non-binding.)  It’s then up to said Parliament to do something about it.  We’re talking about a 30 month series of ongoing negotiation, which means quite simply that, if the people vote themselves off of the continent, that financial markets will find something be nervous about within this space repeatedly…. for years.
                      Secondly, it’s currency thing.  Of course, debt markets, and equity markets will react (they already are), but it’s the exchange rate of that British pound that has everyone nervous.  I’ve heard smart people place it’s possible devaluation at anywhere from 4% to 15%.  Wait right there !!!!!  Haven’t all the central bankers on the planet been tripping over themselves trying to devalue their currencies because everyone is in over their heads in debt, and can’t create enough consumer level inflation ????  Hmmmmm.  …..and isn’t the Euro going to drop along with the Pound ???  Hmmmmm….and isn’t the continent likely to remain Britain’s largest trading partner ??  Yes, yes, and yes !!  Again….hmmmmm.
                       Thirdly, this referendum appears to this non-British guy to be just about 50/50, errrr, I mean 45/45 with about 10% undecided.  Really, still anybody’s ball game.  The UK still has the world’s 5th largest economy, and has been a significant country on it’s own in a global sense since the cows came home (or since wars were fought with axes, and longbows).  This will come down to how that 10% feel about sovereign control over border security.  For equities, there will be a newsworthy reaction on Friday, and it will be led one way or the other… by the Financial sector.  Lastly, you won’t be bored.
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                         Easy to forget, but Fed Chair Janet Yellen takes the Hill today, literally.  She’ll testify on monetary policy before the Senate Banking Committee.  We heard from the good doctor just last week, and with this “Brexit” overhang, this may be least “focused upon” public appearance of her reign atop the central bank.  Still, she says anything that sound odd, or one of these lawmakers zaps her with a question that makes her seem unprepared, and that all changes in a heartbeat.
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                        I usually like to beat you guys over the head with a lot of macro.  Wasn’t too sure though, how much you wanted to hear about the weekly Redbook.  Crank it up, gang.  Let’s do ….. Tuesday.

Market Recon Monday

Good Morning,

                       Oh, happy day.  First day of the week, first day of Summer.  Oh joy.  Could have sworn that when I was a kid, the first day of Summer came a couple of days later than this, but Facebook says Happy Summer !!  Who am I to argue ??  I have better things to worry about, and so do you.
                       It seemed to me, that global markets, including our markets here in the US took somewhat lightly the potential exit by the UK from the EU until very recently.  That’s why the pricing in of the uncertainty (because, the whole thing once voted for is one big ball of uncertainty) was felt last week across the entire financial landscape, and that pricing in, had an edgy feel to it.  Now, we wake up (you knew last night if you’re a highly motivated, truly dedicated, fire-eating hard charger) to find that the wind is blowing in a different direction.
                       With campaigning ramping back up in the UK, the “Bremain” cause appears to be in much better shape in the polls than they were just a few days ago.  Buy the Pound, take the banks, in fact take everything… all ten sectors are higher in Europe today.  Take sovereign debt ??  Ahhh, not so much.  US equity index futures are behaving similarly to what we are seeing abroad.  If these polls show some volatility this week (likely), then so shall the marketplace.
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“But the stroke of the pendulum already pressed upon my bosom. It had divided the serge of the robe. It had cut through the linen beneath. Twice again it swung, and a sharp sense of pain shot through every nerve.”
                                                                 – The Pit and the Pendulum
                                                                                   by Edgar Allen Poe
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                        Published in 1850, it’s unlikely that Poe was following the developing Brexit polls.  Perhaps he was just in touch with his inner James Bullard.  Whoa…. now that we’re speaking of the Fed, this week won’t bring us much in the way of earnings, nor will it bring us much in the way of macro.  What the early part of this week will force upon us will be the return of the Fed speakers.  Kashkari today, Powell tomorrow,….. but most importantly the Sith Lord will deliver her semi-annual monetary policy report before the Senate, and the House on Tuesday, and Wednesday, respectively.
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Have a great day.
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Sarge out.

The Problem in St. Louis

Good Afternoon,

                       Several years back, Ron Paul wrote a book by the title “End the Fed”.  People called him crazy.  I did not.  I still see the proper price of credit (or anything else for that matter), as the very point where the most aggressive buyer, and the most aggressive seller meet in agreement at specific place in time.  I know that ending the Fed is too much to ask for.  Just like living in a castle, and playing center-field in the major leagues… it’s not going to happen.
                      How about a compromise ??  You all saw the comments made this morning by the ever more ridiculous President of the St. Louis Fed… James Bullard.  This is one of the most outspoken members of the FOMC.  He likes to get out, and make his opinions known.  He’s also extremely irresponsible about changing his mind publicly, and on a whim at that.  We all saw the low end of the range for FOMC Fed Fund Rate projections into 2019 drop dramatically from 2.1% to 0.6% on Wednesday.
                      Now, we know that this incredible turn of opinion in such a short time was made by Bullard, who is also the Fed’;s most aggressive hawkish speaker over the last few months.  Wait… does not that make Bullard the most hawkish, and most dovish voting member of the committee, within several weeks time ??  Didn’t he move markets on many days with his words on interest rate direction ??  Didn’t real people make real money and lose real money based on comments that were made with what could only be assumed to have had no conviction behind them ??
                      How does one with such a poor track record stay employed ??  Doesn’t happen.  Not in the private sector.  Only in the “Land of Make Believe”, also know as academia would this kind of sub-par job performance ever be tolerated.  Time to apologize, Mr. Bullard … for drawing a salary… for wasting our time, and in many cases …other people’s money.  Time for a new district President in St. Louis.
                     Let’s be clear on this.  I am not being critical of a dovish stance by the Fed at this time.  I actually see the need for it.  I am being critical of a job poorly done.  A lot of folks out there could do a lot better.

Market Recon Friday

Good Morning,
                       The unfortunate murder of the British (pro-remain) politician, Jo Cox has caused an obvious suspension of the campaigning around the Brexit vote in the UK.  This event also appears to have caused investors, globally…. to take a powder, and stop all of the fear mongering.  Markets tend to over-anticipate, and in this was a clear example.  The shift in market sentiment started yesterday, shortly after the shocking news broke.
                      That’s when some folks came out from their caves, and saw the Sun for the first time in days.  Gold is well off of yesterday’s highs.  US, and UK ten year debt are trading at higher yields.  Even the German ten year is trading with a positive yield attached this morning.  As for currencies, the US Dollar has softened a bit against the DXY basket, while the British Pound is back near the middle of it’s five day range versus that greenback.  The Yen, however, while off of yesterday’s extreme highs, is still uncomfortably strong.  There are other forces involved there (Japan) unrelated to Brexit news.  Markets aside, gang… we need some headline news that doesn’t make you cringe when you hear it.
                       Trading volumes have been very poor this week, this month, this year, this decade… pick one.  Well, today is one of those days where this should not be a problem.  If you’re a commission related producer, this is one of those days that you do not take off.  Nobody’s at the beach.  On top of this being a Quadruple Witch Friday (everything expires today except the milk in your fridge… that’s already expired), There is also a name specific S&P re-balancing at the close today.  Next Friday presents an even grander opportunity, but we’ll talk about that when we get there.  OK.  Get to it, and God bless.
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Macro
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08:30 ET
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Housing Starts & Permits (May):  Starts are really a pretty good barometer of economic health.  Maybe more so than any other housing item, this one implies construction jobs, and the purchase of building materials… not to mention all of the peripheral spending that a new home sale will eventually require.  Unfortunately, this item, after steadily improving from the dark days of 2009 through mid 2015, has gone sideways to slightly lower for a year now.  By the way, this one has never again come close to the levels last seen in 2007.  Today, we’ll expect another lateral print.  Look for 1.15 million units for Starts, and that very same number for Permits.  Maybe just a smidge lower for the Permits.  These numbers, in case you are new, are seasonally adjusted, and annualized.  That’s why they look gigantic.
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11:00 ET
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Central Banker:  ECB Pres. Mario Draghi will speak from Munich.  With all that surrounds “Super Mario”, this could be very interesting.  Not only is he speaking less than a week before the Brexit referendum in the UK, but he will also probably have to say something about the recently begun corporate debt purchase program.  Generally, Draghi is pretty good with his words, but his last couple of times at the plate haven’t gone as well.  Batter up.
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13:00 ET
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Baker Hughes Rig Count (Weekly):  Last week, 325 US Oil Rigs were reported as operational.  This was up 3 from the week prior, and down 307 from last year at this time.  On top of the news that saw out of PXD yesterday, this number could adversely move the price of Crude if it looks too strong.  That will likely move the Energy sector…. which could move the stock market depending on it’s mood.

Lunchtime Recon

Good Afternoon,

                       Pretty safe to say that we haven’t seen the end of this period of increased volatility.  All markets seem poised to over-react to whatever the out come of next week’s Brexit vote might be.  I’ve seen that if the referendum goes that way, that the target for the exit is actually sometime in 2019.  Never the less, there will be an oversized collapse in common sense in our immediate future that seems unavoidable.
                      How about Gold, gang?  The precious metal has skyrocketed to levels well above $1300 an ounce, the VIX is trading above 22.  Treasuries are very strong, as we see the ten year approach yields around 1.5%, and the Utility sector is way ahead of the pack… again.  Trading volumes are poor again.  We really have only seen sizable trading this week at all in yesterday’s late going. Technically, the S&P 500 has held the 2050 level today.  I thought that we might squeeze a couple of extra points out that sell-off, but the tape is the judge, and the tape is never wrong.  Let’s check on today’s victims, shall we ??
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1) The Swiss 30 year moved into negative territory today.  The global debt super-cycle will feed off of itself forever….  until it doesn’t.  Who’s that guy who doesn’t sell gold, but has been telling folks to buy it for a while now ??
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2) The US Dollar is strong today against a basket of global currencies, despite Yen strength.  This is putting a further hurt on Crude, and Energy Stocks, and really puts an exclamation point on Gold’s move.
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3)  After the Energy sector, the “Ugly Stick” has also paid a visit to the Transports, the Techs, and of course…. Financials.
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4)  Are markets perverse right now ??  Of course.  You’re not wrong.  Do we even need to have a central bank ??  I don’t think so, but that’s a fight for another day.  One that I will never win.
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5) Yes, health food.

Market Recon Thursday

Good Morning,
                       Wouldn’t you just love if one reporter would have asked our dear good doctor the one question that traders wanted asked ??  A guy by the name of Matt Horween wrote a piece at The Street a couple of days ago, on the topic, and I think he nailed it.
                       With an economic expansion that keeps dragging it’s feet…. With the odds of an eventual recession (though not imminent) running around 20% to 25% in any given year (especially this late) in an expansion according to at least one very well known economist…. With a proven inability to force higher rates on this economy…..  Have you even thought about taking advantage of these low yields and reducing your balance sheet at a profit ???  Ya know….clean house a little bit, just in case you end up having to buy this crap again.  That would require creativity, and situational awareness.  Now, tell your people to stop flappin’ their gums and do something productive.
                      This is why when you put people in important decision making positions, they should always be folks who’ve had to figure out how to make it in the real world.  Time to lower the draw bridge and leave the castle.
                      Oh, and did any of you take a look at those fortune telling economic forecasts.  The low end of the range for the Fed Funds Rate in 2019 dropped from 2.1% to 0.6%.  That’s right kids…… since March, one of these “world class” economists…. one of these “geniuses” lowered his or her view on this by 1.5%.  Do we laugh ?? It’s not funny.  Whoever this is…..you know who you are, and you know that you have no place in a position of authority.  This is where you apologize for drawing a salary, and resign.  Anyone could have done that.  Anyone.  But, thanks for coming in, and wasting our time.
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                    BOE on deck.  What can they do today ??  Carney will be interesting.  BOJ kept the kerosene away from the bonfire.  What day do you guys think that the Yen catches the Penny ??  Anyone ??  No idea ??
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Da Macro
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08:30
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CPI (May): Not the preferred measure of consumer inflation by our friends at the Federal Reserve, but in real life…the preferred measure of consumer inflation by most other life forms.  “Why, oh why…. dear Sarge, would the FOMC choose to look at a different data-point than just about everyone else when measuring such an important item ??”  It’s simple, my friends.  Core CPI has been running above Core PCE for quite sometime now.  Well above.  By choosing to only recognize the one that’s running below the Fed’s stated target, the FOMC can then continue to keep their collective heads in the sand, thus creating more “flexibility” going forward.  Today, look for 0.3% m/m at the headline, and 0.2% m/m at the Core, gang.  Just for giggles, on the year over year Core print, we’re expecting 2.2%, up from 2.1% in April.  This will be the seventh consecutive month of year over year consumer level inflation that hits the tape either at, or greater than the Fed 2.0% target.  Pay no attention to that man behind the curtain.
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Initial Jobless Claims (weekly):  This week, consensus view is for 269K, which is pretty much right on top of the four week moving average. That would be up small from up from last week’s 264K.  The entire range for this one today spans from just 262K to 270K, which means that there’s almost no chance for a surprise…. or nobody’s doing their own homework.  Let you know at 08:30.
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Philly Fed (June):  After yesterday’s surprisingly positive Empire State print, I though it might be difficult to get the children to bed as they anxiously awaited today’s number out of Philadelphia. (Kids love manufacturing data)  After I explained to them that although New Orders, and Shipments looked pretty decent, that Unfilled Orders fell off of a table, and this will likely hurt employment going forward….well, then they drifted right off.  Looking for Philly to squeak out a +1.0 print.  Then again, Philly has answered expansionary expectations with a contracting reality for two months running.  The market watches this one, gang.
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10:00 ET
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Housing Market Index (June): This one is new-home centric, so it’s not really a good measure for the housing market as a whole.  That said, new homes provoke more peripheral spending than existing homes.  This diffusion index has been stuck at 58 for four months running.  For that entire time, expectations have been for either a 59 or 60 print.  Today, the “pros” are looking for 59 yet again.
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10:30 ET
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Natural Gas Inventories (weekly):  I know most of you played “Kill the Guy with the Ball” when you were kids.  You may have had another name for it.  That’s what we called it in Queens, but everyone of you knows the game I speak of.  Well, if you’re feeling adventurous, pick that ball up, and trade Nat Gas futures around 10:30.  Might just remind you of those olden times.  You can expect a build here today of something close to 65 billion cubic feet.  If that’s how things turn out, this will be the ninth consecutive small to mid-sized increase in this space.
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Thursday’s Earnings Highlights
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Before the Open: KR (.69), RAD (.04)
After the Close: ORCL (.81), SWHC (.54)

Market Recon Wednesday

Good Morning,
                       I’m sure that by now, you’ve noticed that MSCI decided including Chinese A-shares at this time in their Emerging Market Index.  Barriers to inclusion were some of the thing we’ve talked about…. most importantly the ability for managers to get out, once they in.  This news surprised me a little, but it certainly did not surprise Chinese investors themselves.  The Shanghai Composite was among the globe’s top performers today.
                       European equities, and US equity index futures found a bid this morning.  I’d like to think that technically, regaining the SPX 2074 level on the close last night had a hand in this, but realistically…. I think they are hoping that Janet Yellen throws them a little breathing room with a cautious, yet optimistic spin on things here in the US (with an eye on the global situation).
                       Could be a tough day to get things done, gang.  I would think that despite a plethora of mid to high level macro out there today, you might see some movement.  That said, volumes will be light until after 2pm, and even then the real action probably won’t hit until after 2:30pm, when the Fed Chair takes the stage.  A lot of traders will go into that press conference close to flat.
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Macro
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08:30 ET
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PPI (May):  As far as market participants are concerned, Producer level inflation is not nearly on the same level as consumer level inflation.  With the CPI due tomorrow, any impact from this item will likely be minimal, and short in duration.  Due to the obvious volatility in the energy space, the Core (ex-food & energy) prints are the only ones that traders look at when they look at data on inflation.  We look for Core growth of 0.1% m/m today, which if so, will be the fourth consecutive month that this prints between -0.1%, and +0.1%.  In other words… no movement.  At the headline, the expectation is for something like 0.3% m/m thanks to those Crude prices.
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Empire State Manufacturing Index (June):  As far as our monthly manufacturing numbers go, New York bats lead-off every month, and last month was a doozy.  This data-point hit the tape at -9.0, when the street was looking for something close to +7.  Every Fed district followed NY into contraction in May, and that’s where NY is expected to go again today.  Consensus is around -3.6, with the very high end of the range at -2.
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09:15 ET
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Industrial Production (May):  Industrial Production has not put together two consecutive months of positive growth since July and August of last year.  We have that opportunity today, coming off of April’s print of 0.7% m/m, which was only the second positive monthly number in the space since that August release.  Economists in general, do not see this happening today, though.  Projections are for a mild retreat of -0.2% m/m.  The high end of this range is just a smidge above the flat line.
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Capacity Utilization (May):  Cap Utilization bounced off of March’s six year low with April’s still pitiful 75.4%, which did not break the trend line.  The experts are projecting that this item goes back into contraction for May with something like a 75.2% release.  This alone won’t move markets on a day with an expected speech from the Fed Chair, but it certainly will be mentioned as part of a mosaic of lousy macro, if that is the hand that we are dealt.
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10:30 ET
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Oil Inventories (Weekly):  I guess, at this point, we consider reductions in supply to be victories for this item.  If that’s the case, we now have a there week winning streak, and have seen drawdowns in four of the last five.  Oil pros are looking for a further reduction today, to the tune of -2.3 million barrels.  Last night the API print came in at an inventory build of 1.2 million barrels, which is why WTI has been banging around below $48 this morning.
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14:00 ET & 14:30 ET
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FOMC Policy Decision, FOMC Forecasts & Fed Chair Press Conference
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                 As for this decision, obviously there will be no move at this meeting.  The language of the statement, and the press conference itself will be where any news is indeed made today.  I suspect that the Fed Chair may go out of her way to stress that July or September are still on the table for an increase in the Fed Funds Rate.  If for some reason, she does not go there, she will surely be asked.  So, it will be covered.  I think that inflation forecasts will be interesting.  Don’t forget, the high end of the range for PCE inflation that any of these folks has is just 2.1% for as far as the eye can see.  Dot plots ??  LOL.  There isn’t person left who considers those a tool of any kind.  The Fed Fund Futures, which is what traders look at, is still pricing in just one rate hike this year.  Two rate hikes this year ??  Seems silly, but the FOMC may try to still play that song.  We all know by now that reasoned thought, and situational awareness are not strengths among this crew.  How the good doctor addresses that one item will impact the rest of your day
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16:00 ET
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TIC (April):  By the time the bell rings, you equity traders probably won’t give a rat’s tail about this release, but this really is one of the most interesting data-points that we see on a monthly basis.  On top of that, bond and currency traders certainly care.  we are coming off of back to back months of strong net foreign demand for Long Term U.S. Securities.  A couple of news items came out of the March data last month.  One, foreign accounts had been unusually large buyers of corporate debt, and two…  Though Chinese accounts had cut back on Treasury holdings, Japanese accounts had made up for it.  We look for a net positive $23B today, coming off of that print of $78.1B last month.
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Earnings
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After the Close: JBL (.15), KFY (.54)

Lunchtime Recon

Good Afternoon,

                       Sloppy markets.  Pressure on equities.  Light volume…again.  The VIX is all over the map.  Market sentiment ?? Very poor.  Very poor is usually sort of good in my experience.  Cash levels are high.  We already knew that, but we got confirmation of that this morning.  You may not have known that they were at the highest levels in five years.  In that same report that came out of B of A Merrill Lynch, we also learned that net allocations to equities are at four year lows, and that the percentage  of investors that thought both stocks & bonds were overvalued was it it’s highest level in over a decade.  On top of all of that, you may notice that Fitch downgraded Japan’s credit rating to negative, oh…..and those pesky Brexit polls.  Other than all of this, people seem pretty optimistic.
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Puzzle pieces, yeah….we’ve got those.
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1) Continued mixed performance for US Macro.  May Retail sales were decent, even better than expected at the headline.  That item had the Atlanta Fed’s GDPNow tacker move from 2.5% to 2.8% for Q2.  This gives the good doctor a positive talking point should she need it, tomorrow.  Pay no attention however, to those May Import and Export prices.  What looks like 1.4%, and 1.1% respectively month over month becomes 0.4%, and 0.3% when you omit fuel, and food prices.  April Business Inventories disappointed, and brought with them a downward revision to March.
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2)  All ten sectors reside in the red so far today, with Financials being hit the hardest for obvious reasons.  Within that sector, the Banks, and really anything to do with Consumer Finance are spending some quality time with the “Ugly Stick”.
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3) WTI Crude seems destined to test that $48 level, and Gold…well Gold is stong again this morning, even in the face of some profit taking.
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4) Keep you eye on the Dollar, kids.  Right now, the DXY stands just below 95, which does not really rattle too many cages on it’s own.  The fact that, the Euro, the Pound, the Yen, and Wampum are all weak together at the same time.  That could rattle a few cages.
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5)  As for the S&P 500, my support level for today is 2063, which remains unbroken (and untested, unless I’m wrong & the level should be 2064) at this time.  The level to the upside is 2074.  That spot acted as early support, and has resisted the move from below on the only attempt made to this point by the “buy the dip’ crowd.