Market Recon Friday

Good Morning,
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Hawks On Deck
                    After a nice two day run for US equities that was inspired by nothing more than a decision to do nothing, one must ask themselves a question. Is the uncertainty that was priced out of the marketplace over the last two to three weeks, priced back in yet? In other words, is it time for a little profit taking going into the weekend? Certainly, nobody is all that comfortable with where markets are right now, so you would think that at least in spots, that today…there will be movement. There are also a bevy of Fed hawks lined up as speakers for the day.
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Trader Focus
                    Currency exchange rates, and interest rates control everything in the modern marketplace, so let’s start with the US Dollar. The Japanese Yen may have finally hit resistance vs. the greenback, and Service Sector Flash PMIs across Europe, more specifically Germany showed real weakness. The DXY, at least for now, is showing some early strength. Should this strength carry over into the regular session, that will move money out of the Energy, and Materials spaces where much of the positive movement since Wednesday afternoon has been seen. Bear in mind that Crude prices, and subsequently Energy stocks will remain subject to the Rig Count later today, and any head fakes delivered by the OPEC crowd that will meet next week.
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Hiding Spot
                   Money is again flowing back into Treasuries this morning. The US 10 Year Note spent most of the Summer yielding between 1.5% and 1.6%. In fact, the 50 day SMA is currently 1.58%, and the charts certainly seem to be saying that we’ll see that level again … soon.  As long as this keeps up, Utilities, or really any high yielding dividend type name will remain impervious to general market direction (as they were earlier this year), and be a good place for unsure money to hide.
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Macro
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09:45 – Markit Manufacturing PMI Flash (September): Expecting 52, August Final 52. For August, Markit’s manufacturing numbers were not in line with what we saw from the ISM, from Durable Goods Orders, from Industrial Production, or from the regional Fed districts. Otherwise, they were spot on. This data-point will not cause a market reaction today.
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12:00 – Fed Speaker: Philadelphia Fed Pres. Patrick Harker will deliver the opening remarks to the following panel that will discuss “the Role of the Fed in the Community” from Philadelphia. Harker is not one of the more outspoken officials at the Fed, nor is he a voting member of the FOMC this year. Harker is perceived as hawkish, and will vote in 2017.
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12:20 – Fed Speakers: From Philadelphia, the previously mentioned Patrick Harker, Atlanta Fed Pres. Dennis Lockhart, and Cleveland Fed Pres. Loretta Mester will participate on the also already mentioned panel. This panel consists of a rather hawkish crowd. In fact, Loretta Mester was one of the three dissenters in favor of a rate increase at this week’s FOMC meeting. Mester will lose her vote in 2017. Atlanta does not vote again until 2018.
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12:30 – Fed Speaker: Dallas Fed Pres. Robert Kaplan will speak from an Energy forum in Houston, and will answer questions. Kaplan sounded hawkish throughout the Summer, but seemed to back away from that stance as the calendar turned to September. Kaplan is not a voting member of the FOMC this year, but like Harker, will have a vote in 2017.
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13:00 – Baker Hughes Rig Count (Weekly): Last Week Overall 506, Oil 416. As usual, our last domestic economic data-point of the week is a fairly important one. With Crude trading a rough three dollars a barrel higher than it was a few days ago when markets were impacted by that huge draw on inventories, and the weaker dollar, there could be less of a pop in the number of operating Oil wells than we’ve grown used to.