Market Recon Wednesday

Good Morning,
                    Even on Fed Day, it’s Japanese policy that steals the show.  Japanese Prime Minister Shinzo Abe, speaking this morning announced a 28 Trillion Yen (over $350B) economic stimulus plan.  Abe was not specific, but did say that almost half of this plan would be directed toward fiscal measures.  The Prime Minister did say that the plan would be put together next week.  On top of that, it appears that the Japanese Treasury is preparing to offer 50 year bonds in order to get this on the tape.  While not “helicopter money”, 50 year paper may be as close to Ben Bernanke’s “Perpetual Bonds” as the Japanese are willing to go at this time.   Mind you, this is separate from the increase in monetary stimulus that everyone is expecting from the Bank of Japan this Friday.  In response to all of this, the Nikkei 225 is your global equity index leader this morning, but the Yen itself has been all over the place, and is well off of it’s lows vs. the Dollar.
                    The Fed.  Remember those guys?  The FOMC will come out of their two day meeting today, and make a policy statement at 2pm ET.  There will be no dog and pony show today.  There is nearly unanimous understanding on the Street that there will be no policy movement announced here.  What traders will be on the prowl for will be the wordage.  Just how subject does the FOMC feel to global economic, and policy direction?  How sensitive is the committee to US dollar exchange rates?  Basically, the bottom line is…..just how live is September’s meeting?
                    A few noteworthy items came out of Europe this morning.  First, the UK reported Q2 GDP that beat estimates.  Before launching into a round of back-slapping, and high fives, keep in mind that Q2 included just one week of the post-referendum era, and there would have been no economic impact from any Brexit related actions at that time.  Germany.  Two items.  First. Those Deutsche Bank earnings are not a misprint.  They really are reporting a 98% drop in net income on a 20% drop in net revenue.  Second.  Germany offered 30 year bunds this morning, and while the yield awarded remained low, the bid to cover was very soft.  Guess we’re not the only ones.
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Macro
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08:30 – Durable Goods Orders (June): Expected -1.2% May -2.3% m/m, ex-Transportation Expected 0.3% May -0.3% m/m, Core Capital Goods May -0.7% m/m.  This has been a rough spot for our economy, printing in contraction in seven of the last ten months.  That shouldn’t surprise given what the manufacturing sector has gone through.  We expect to see a positive number once volatile aircraft purchases are omitted.  If that is how it plays out, this will be the fourth month in six, which is an entirely different looking trend.  A beat here at the Core, or even at the headline would put the finishing touch on a solid June for the economy.  It could also put upward pressure on bond yields.
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10:00 – Pending Home Sales (June): Expected 1.5% May -3.7% m/m. All of the other housing related number that we’ve seen for the month have shown improvement.  It’s no wonder that I do not find a single economist in negative territory for this print.  Regardless, this item, of all timely housing related data… has the least impact on day to day trading.
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10:30 – Oil Inventories (Weekly): Expected -2.4M barrels, Prior -2.3M barrels.  The expectation is for another significant drop in US supplies.  Last night, we saw the API print come in at a draw, but one of less than a million barrels.  Beware of rising Gasoline stocks.  That’s something that’s been moving in the opposite direction from Crude inventories, and it’s something that we’re likely to see more of today.  Obviously, this number will move the marketplace.
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14:00 – FOMC Policy Decision:  How to put September in play, without doing too much damage to the US dollar.  That’s not an easy task to tackle.  I am sure that Fed Chair Janet Yellen is thankful that there is no press conference today, and that the FOMC can get away with a policy statement.
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Wednesday’s Earnings Highlights
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Before the Open: MO (.80), BA (2.47), KO (.58), DPS (1.20), GD (2.31), GT (1.02), HES (-1.24), IR (1.30), NSC (1.35)
After the Close: AMGN (2.74), EFX (1.36), FB (.81), MCK (3.34), SFLY (-.61)