Market Recon Monday

Good Morning,
                        The UK appears to have a new Prime Minister.  The Brexit will take time, and surely there will be some bumps & bruises along the way.  Clearly though, the UK is not going out of business.  They still have a market for everything that they already had a market for.  The fear mongering was overplayed.  Italy ??  That banking crisis hasn’t really hit it’s stride yet.  Risk on ??  Yeah, it’s not just the passing of a crisis, it’s more like the passing of the punch bowl.
                        The Bank of England is expected to ease monetary policy at their next meeting this Thursday, and Japan…. well, that one’s special.  Remember just yesterday how we talked about a huge fiscal stimulus plan to be funded by the Japanese Treasury through a coordinated selling of it’s bonds to the BOJ.  Sort of a fusion of fiscal & monetary stimulus.  There is much talk in Japan right now about a meeting between former Fed honcho Ben Bernanke, and Prime Minister Shinzo Abe.  The topic ??  Likely direct funding of the Treasury by the BOJ.  On top of yesterday’s 4% run, the Nikkei 225 ran another 2.5% today.  Huzzah !!
                       For those who do not see this one coming, the model has been in my marble notebooks for quite some time.  Ultimately, the BOJ forgives the Treasury it’s debt after the fiscal money is spent.  That money is then erased from Treasury’s liabilities, and the central bank’s balance sheet, but exists in the real economy.  Poof !!  That slice of debt is at this point monetized.  Money supply spikes, and you end up with the consumer based inflation that you’ve been asking for.  Just be careful what you ask for.  I’m sure that globally, all of these debt laden governments with independent central banks would like to hold hands, and jump together, so as to minimize exchange rate impact, and thus disguise such a blatant move from the public.  Only problem with that is that the Fed is much further away from having to do this than are the others.  That said… still probably drawn up somewhere on one of their marble notebooks…. just in case.
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Macro
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06:00 ET
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Small Biz Optimism Index (June):  Model of consistency, this item presents an eighth consecutive release between 92.6 and 95.2.  Today’s print beat consensus at 94.5, which was the above the top end of the range.  Yes, small business conditions do seem to be improving, but to keep things in perspective, the 40 year average for this data-point is 98.0.
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08:45 ET
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Fed Speaker:  A St. Louis Fed Pres James Bullard speech is perhaps the most dangerous event that markets could face on any given day.  That is unless of course, he has pushed the markets around with his sharp changes in policy direction just one time too many, leading traders to take his words far less seriously than they once had.  Bullard will speak on the economics of business from St. Louis.  He is a voting member of the FOMC this year.
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08:55 ET
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Redbook (Weekly):  This item is specific to the retailers.  Having printed at y/y growth of 0.6% last week, this one remains unnoticed as long as that level of growth remains at 0.5% or better.
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09:15 ET
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Fed Speaker:  Federal Reserve Gov. Daniel Tarullo will speak on shadow banking from Washington, DC.  Tarullo does vote, but his area of concentration is in regulation, and I would be surprised if he says something that would juice the marketplace.
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10:00 ET
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JOLTS (May):  There is no direct correlation between the 5.8 million or so job openings that the BLS will report today, a  number that keeps growing, and Labor Market Conditions.  As we saw just yesterday, that Index has now contracted for six consecutive months.  This is a non-event for traders.
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Wholesale Inventories (May):  We look for growth of 0.2% m/m for this item today, which would be a third straight monthly increase.  Markets may react in somewhat muted fashion, given that this information is slightly dated, and that this report is a component of the Business Inventories print that you’ll see on Friday, which will be a huge day for macro.
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13:00 ET
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10 Year Note Auction:  This auction will get some attention.  The US Treasury will sell $20B worth of debt here today.  The last similar auction took place on 8 June.  That day, Treasury sold $20B at a yield of 1.70%, with a bid to cover of 2.7.  The interesting thing to watch for today will be foreign participation.  Last month, indirect buyers took down 74% of the issue.  Will they be as aggressive at 1.47% or so?  I think so, given the state of negative yields persisting in many of these nations.
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17:30 ET
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Fed Speaker:  Minneapolis Fed Pres. Neel Kashkari will be in Marquette, Michigan to participate in town hall style event.  “Too Big to Fail”  has been his calling.  He is not a voting member this year, and may not touch monetary policy, but his take on the recent stress tests could be of interest.  Dodd-Frank is sure to come up.
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22:30 ET
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Fed Speaker:  Cleveland Fed Pres. Loretta Mester speaks for the second consecutive night from down under.  Mester is a voting member of the FOMC, but she steered very clear of monetary policy last night.  Expect no surprises tonight, although, she will expose herself to a Q&A session.
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Earnings
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AM: FAST (.48)