Market Recon Thursday

Good Morning,
                    There are two interesting take-aways from this morning’s European data. First EMU Core June CPI printed it’s final revision at 0.9% y/y.  True, this meets expectations, but this item has gone nowhere for a long time.  Buying sovereign, and corporate debt has kept European governments, and businesses from falling into the abyss, but the ECB’s quantitative easing program, and their experiment with negative interest rates has not produced inflation (nor demand). Secondly, those July UK Retail Sales absolutely crushed projections. Coming off of a negative print for June, and expectations of 0.1%, this release hit the tape at 1.4% m/m. Brexit? Never heard of it?, or did it actually drag consumption forward?  Regardless, the British Pound spiked on the news, and is now trading above 1.315 vs. the US Dollar. It is becoming increasingly difficult for Mark Carney to credibly justify further easing of monetary policy in September.
                    It all started less than two weeks ago with some of the smaller. more desperate OPEC nations talking up an informal meeting in late September where these countries would push a coordinated production freeze. Then, the Russians jumped in, and talked up such an idea. I mean, why wouldn’t they talk up the selling price of a product that their economy relies so heavily upon. Throw in a US Dollar that seems to be weakening somewhat steadily against it’s competitors, and a double surprise drawdown from the EIA yesterday for Crude Inventories, and Gasoline Stocks, and …. voila !!  WTI Crude is flirting with $47 a barrel, while Brent tries to stay above $50.  Suddenly, the talk regarding the Energy sector has gone from picking a point of re-entry to wondering if one has missed the trade. Given the multiplier effect that this one commodity has beyond the Energy sector (Transports, Financials), the way WTI Crude reacts to it’s fundamentals, technicals (now, well above 44.50. next 48-49?), and currency swings is more important to the trader than three week old Fed Minutes that merely reflect the Policy Statement already released at that time.
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Macro
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08:30 – Initial Jobless Claims (Weekly): Expecting 266K, Last Week 266K.  The entire range of expectations for this item spans from 264K to 270K. That’s right, nobody expects anything out of the ordinary for this very consistent data-point. The four week moving average is now 262,750. This release still makes TV news, but has very little impact on markets these days.
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08:30 – Philadelphia Fed Manufacturing Index (August): Expecting 1.8, July -2.9.  This item was not as nasty in July as the headline appeared. After all, the strength of the report, much like the also negative August Empire State print was in New Orders & Shipments. There was also some strength in pricing. Hard to call any manufacturing index with positive numbers in those sub-components negative. This item, as the most important regional manufacturing release in the country can impact the marketplace.
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10:00 – Fed Speaker: NY Fed Pres. William Dudley will speak on regional economic conditions in New York. There is a Q&A session planned, and Dudley did make news on Tuesday with some hawkish sounding comments. The President of the New York Fed has a permanent vote at the FOMC.
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10:00 – Leading Indicators Index (July): Expecting 0.3%, June 0.3% m/m.  Nothing to see here. This one is not followed by many, and never moves the markets.
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10:30 – Natural Gas Inventories (Weekly): Expecting 22B cf, Last Week 29B cf.  Today, we expect our 17th inventory build in the last 18 weeks. This item will not impact you as a trader unless you are directly involved in the space.
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16:00 – Fed Speaker: San Francisco Fed Pres. John Williams will speak on the economy from Anchorage, Alaska.  He has had some interesting ideas of late regarding inflation and GDP targeting that personally, I’d like to hear more of. Williams is not a voting member of the committee this year, but he is considered to be influential, and is a favorite of Janet Yellen’s.
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20:00 – Fed Speaker: Dallas Fed Pres. Robert Kaplan will speak from Dallas. We have not heard from Kaplan in about two weeks, when he made a series of speeches within a few days. Kaplan has urged caution on raising interest rates, while trying to say that September was still on the table. Either he’s been unsure of his position on policy direction, or unwilling to make a stand. Kaplan does not have a vote this year.
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Thursday’s Earnings Highlights
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Before the Open: HRL (.35), TTC (.99), WMT (1.01)
After the Close: DV (.60), GPS (.58), NWY (.00)