Market Recon Monday

Good Morning,
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European Banks.
                     It didn’t take long for Friday’s late session ugliness to continue into this week. Major global equity indices are all off more than a percent, with European banking shares leading the way lower. Actually, it’s Deutsche Bank that’s leading those banking shares. DB is own a rough 6%, while the broader group is off around 3.5%.  The culprit seems to be an article in the German magazine “Focus” in which Chancellor Angela Merkel claims to be against providing state aid to the bank in the wake of the US Justice Department’s proposal that DB pay $14B to settle a mortgage securities investigation should the bank need more capital. Is counter-party risk an issue? Is the Chancellor playing tough? The US Financial sector will let us know what markets think at 09:30 ET.
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Presidential Debate: Market Impact.
                    There will be no immediate impact on the economy, nor on the general marketplace for that matter, but it is undeniable that tonight’s Presidential debate between Democrat Hillary Clinton, and Republican Donald Trump will be front and center in terms of attention given. Any market reaction to this first debate will most likely be a short-term trading opportunity. That said, there are two political footballs to keep your eyes on. Healthcare, and Energy. Depending on who appears to come out on top tonight could provide direction to these two sectors. Energy is a regulation play, while Healthcare becomes about the perceived success or failure of Obama-care. These two candidates have very different ideas on these two areas, and an upper hand on Tuesday morning for either candidate could provide movement.
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Trader Focus.
                    The week ahead is jammed with potential roadblocks and detours. On the macro side, after today’s New Home Sales, we’ll see data on Durable Goods, a last look at Q2 GDP, and on Friday, perhaps most importantly Core PCE for the month of August. Oil traders, and those involved in the Energy space will be watching for headlines out of this quasi-OPEC meeting in Algiers that culminates on Wednesday as well. It is, in my opinion, however, that “Fed Speak” will by the end of the week, be what has impacted the marketplace the most. There are several speakers out there today, but not real newsmakers. This Wednesday, I am tracking six scheduled speeches. Included in the six are the Fed Chair, the unpredictable James Bullard, perma-dove Charles Evans, and two of the dissenters from the last FOMC decision (Mester & George). That’s the day where you’ll see some cages being rattled.
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Macro
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09:30 – Fed Speaker: Minneapolis Fed Pres. Neel Kashkari speaks on “Too Big to Fail” from Minneapolis. Kashkari does not vote on monetary policy until 2017, and likey will not go there in his speech. However, he can move the Financial sector with his word at times.
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10:00 – New Home Sales (August): Expecting 597K, July 654K SAAR. This item is very important, not only for what the data represents at the headline, but also for implied job creation, but for all of the peripheral spending implications that can also be applied to buyers of new homes.  The July number was an absolute blow out print….way above expectations, and at the highest annualize rate since 2007. As focused on as the headline number will be today, the revision to July will be just as focused upon.
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10:30 – Dallas Fed Manufacturing Survey (September): Expecting 1, August -6.2. This, while not a high-profile event, is a very interesting event. Dallas has printed in contraction for 20 consecutive months. December of 2014 was the last month that the Dallas Federal Reserve District printed it’s manufacturing data in state of expansion. There is hope. Every market has a bottom, and the similarly streaky Kansas City has shown expansion in two of the last five months. That’s a winning streak in this league.
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11:05 – ECB Speaker: ECB Pres. Mario Draghi will be in Brussels to testify before the European Parliament’s Committee of Economic & Monetary Affairs. Draghi will need support if he intends to further ease policy as inflation remains stubbornly below ECB expectations. Traders will also be on the watch for any clues on his thinking regarding the Bank of Japan’s targeting of the yield curve. This speech as much as any event on this day could impact exchange rates, which in turn would impact almost everything else.
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11:45 – Fed Speaker: Federal Reserve Gov. Daniel Tarrullo speaks from Yale in New Haven on the evolution of stress testing the banks. As a Governor, Tarullo’s vote on the Committee is permanent, but he is not very outspoken on monetary policy. He likely will stick to regulation today.
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13:30 – Fed Speaker: Dallas Fed Pres. Robert Kaplan will speak from San Antonio, Texas to the Independent Banker Association Convention. Kaplan is not known for making attention grabbing headlines, and will not be a voting member of the FOMC until January. There will be a Q&A session with the media following the event.
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Monday’s Earnings Highlight
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Before the Open: CCL (1.89)