Market Recon Friday

Good Morning,
                     The Fed Chair speaks today, finally. It has been a long time since we’ve heard from Janet Yellen. Many think that simply because she may not want to corner herself, that she’ll try to walk a fine line that implies very little going into next month’s policy meeting…. or maybe simply because so many market watchers have placed so much focus on this speech. Dr. Yellen could have skipped Jackson Hole, as she’s done that before.  Ever since Ben Bernanke’s speech in 2010, the Fed Chair speaking at this symposium is met with heightened media attention, and increased market focus. She understands that.
                    The absurdity of it all is quite humorous. On Monday, the key data-point will be the Core PCE Price Index. Then at the end of next week, August Non-Farm Payrolls and wage growth numbers. How much better informed would the Fed Chair be, and would she be able to clarify her intentions if she so intended, if only this speech could be postponed exactly one week? Those looking for a telegraphed message regarding FOMC intentions already have one. In fact, they have several. Over the last ten days or so, William Dudley, Dennis Lockhart, John Williams, Stanley Fischer, Esther George, and Robert Kaplan all spoke. They all had a common theme among them….they were hawkish in their tone. Most of those names are not known as perma-hawks. Only James Bullard has remained dovish in recent Fed speak, and he often lies outside mainstream lines of economic thought.
                    If Janet Yellen sticks strictly to her topic  “Designing Resilient Monetary Policy Frameworks for the Future”, many will be disappointed. Odds are, in my humble opinion, that she would not have taken the podium in such high profile fashion unless she actually had something to say. The flashing red light here is that this assumes a certain level of common sense. If her words are interpreted to be in line with what her colleagues have been telling us, or if she clearly is even mildly in opposition, currencies will move, yields will move, commodities will move, and yes, equities will move. The most greatly impacted at first will be Financial names, and obviously the Utility or defensive names and dividend plays. Then Energy, and Materials will move with the Dollar’s impact on the commodity space. Commodities, in turn will move the Transports.
                   Should the good doctor take a pass, today is still Friday. Have a great weekend, everyone. Let’s go Mets.
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Macro
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08:30 – GDP (Q2-rev): Expecting 1.1%, prev 1.2% q/q SAAR.  Inventories were a weak point in that disastrous first look at Q2 GDP.  For June, we saw upside beats for Wholesale Inventories, and the headline number, Business Inventories as well.  Will that be enough to nudge the second snap-shot of Q2 GDP a little higher? Most economists are guessing that it will not. Some fear that the 4.2% print for Personal Consumption Expenditures may be revised a tad lower. The range of expectations for this item today is anywhere from 0.8% to 1.6%. Any market impact from this item will be sentiment based at this point. The markets are now focused on Q3, and obviously, monetary policy.
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08:30 – Goods Trade Balance (July): Expecting $-62.8B, June $-63.3B. June was the most negative number ever printed in the short life of this data-point, which is really just a component of the headline Trade Balance. That number will hit the tape one week from today. In that June report, there was growth for both imports, and exports.  The balance may have been exacerbated, but increased two-way cross border demand is a positive in any economist’s book. This release will not impact today’s trading activity.
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10:00 – Fed Speaker: Federal Reserve Bank Chair Janet Yellen speaks from Jackson Hole. The topic of this speech is “Designing Resilient Monetary Policy Frameworks for the Future.” This is the speech that the street has been waiting on all week. Her words will be used as fodder for driving market direction regarding currencies, treasuries, equities, and commodities.
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10:00 – U of M Consumer Sentiment (August-rev):  Expecting 90.7, initially 90.4. Two weeks ago, the preliminary August report in this space printed in mild disappointment. The street looks for a revision that is actually a bit higher than the original. In fact, there are some economists as high as 94 on this one. The lowest estimate I’ve seen is the preliminary 90.4, so a mere affirmation of the original survey will not be good enough. Markets do watch consumer based data-points on normal days.
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13:00 – Baker Hughes Rig Count (Weekly): Last Week 491 total, 406 oil. The number of oil producing rigs in operation is what traders watch in this space.  Last week’s print of 406 was the eighth consecutive weekly increase. This number has as much impact on intra-day Crude prices and the Energy sector as does the Inventory number on Wednesdays. Perhaps only currency valuations have a greater market impact.
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Friday’s Earnings Highlight
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Before the Open: BIG (.46)
 After the Close: something disgustingly bad for you, but delicious.