Market Recon Thursday

Good Morning,
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Market Reaction
                     The September FOMC policy announcement has come and gone. What is clear is that although there were three dissents, perhaps four if you count Stan Fischer, the Vice Chair. The decision to leave interest rates unchanged for now was the correct decision at this time, but as you can see, markets seem to be pricing a possible December hike back into the various instruments that were impacted over the last couple of weeks when due to all of the hawkish “Fed Speak”, the possibility of a September rate increase had to be rapidly priced in. Down goes the US Dollar. Up goes Gold, and Crude, as well as Energy, Material, and Utility names. What may be good for the portfolio, may not be good for Federal Reserve credibility. Will markets continue to trust anything said by the nation’s central bankers going forward?
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Credibility
                     Between the Fed’s Statement, and the Fed’s Economic Projections, which were also released at 2pm yesterday, there were some moving parts that just did not fit.
1) Statement: “Labor Markets continue to strengthen” Projection: Increased the central tendency and the lower end of the range for 2016 Unemployment.
2) Statement: “Economic activity has picked up” Projection: Cut the central tendency and the range for 2016 GDP.
3) Statement: “Household Spending has been growing strongly” Projection: Cut the central tendency and the range for 2016 PCE inflation.
                    Clearly, the statement, and the hawkish sentiment behind it are not truly supported by the group’s own expectations for the economy. Not the best recipe for fostering trust. In fact, going out to 2019, not one member of the Federal Reserve Board, nor one regional President sees GDP above 2.2%, yet at least one contributor sees a Fed Funds Rate of 3.8%.
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Global Cognizance
                     With the Bank of Japan out of the way, and that nation’s markets closed for a holiday today, global equities did rally on the news from the Federal Reserve. There is still some chance that foreign central bankers will impact our markets today. ECB President Mario Draghi will address the European Systemic Risk Board today at 9am ET in Frankfurt, and Bank of England Gov. Mark Carney speaks from Berlin at 1pm ET. Either one of these two speakers is very likely to impact currency exchange rates….. which would subsequently impact those previously mentioned Energy, and Material names.
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Macro
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08:30 – Initial Jobless Claims (Weekly): Expecting 261k, Last Week 260k.  The time has come once again for the most consistent series in domestic macro-economics. The range for today spans a whopping 7k, from 258K to 265K, and the four week moving average is now 260,750, just 250 individuals below our expectation, and 750 individuals above the week prior. This one will not likely disrupt your trading session.
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09:00 – FHFA HPI (July): Expecting 0.3%, June 0.2% m/m. Our domestic HPI’s are both rather dated information, and those following along choose to follow the Case-Shiller variety due to it’s broader scope. That one will be released this Tuesday.  As this item only covers single family homes with mortgages backed by Fannie Mae & Freddie Mac, this number will pass unnoticed by the marketplace.
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10:00 – Existing Home Sales (August): Expecting 5.44M, July 5.39M SAAR. This, the largest slice of the housing pie, disappointed in July after New Homes Sales had knocked the cover off of the ball the day prior. That made the disappointment seem even more dramatic than it should have really been for a number that was in line with 2016 norms. This is the most important macro-economic data-point to be released today.
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10:00 – CB Leading Indicators (August): Expecting 0.1%, July 0.3% m/m.  Exect this data-point to illustrate the economic slow-down in August from July. Do not expect the market to move on it. In more than 30 years on Wall Street, I have never heard anyone without the word Economist in their title mention this one.
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10:30 – Natural Gas Inventories (Weekly): Expecting 55B cf, Last Week 62B cf. Will Natural Gas supplies ever contract again? This weekly number looks to expand for the seventh consecutive week, and for the 22nd week in the last 23. You will only be impacted by this print if you are specifically trading the space.
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11:00 – Kansas City Fed Manufacturing Index (September): August -4. Not as messy as Dallas, but still a mess. Kansas City has fully participated in the “Depression” that the US Manufacturing sector has been going through for several years now. Considered a minor regional Fed number, this will not have the market impact of the Philly Fed, which btw put a nice headline number out there this month, but without support from the right sub-components.
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Thursday’s Earnings Highlights
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Before the Open: AZO (14.24), RAD (.03)