Market Recon Thursday

Good Morning,
OPEC Agreement.
                    OPEC agreed to their first production cut/freeze in eight years, Crude prices ran wild, and the Energy sector has it’s best day in eight months. Undeniably a market moving event, as hope became somewhat priced into the space. This agreement reminds me a little bit of that guy in the Popeye cartoons that used to say “I’ll gladly pay you Tuesday for a hamburger today”. In this case, they were paid immediately, and “Tuesday” comes at the next formal OPEC meeting in Vienna on November 30th. That next meeting is when the cartel will slice and dice this 32.5M barrel cap amongst it’s member nations. No cause for strife there. On top of that, there is already talk that Iran, Libya, and Nigeria will all be exempt from the agreement. Possibly three exempt nations in a fourteen nation group. Sounds to me like they have only agreed to consider putting together an agreement …. in two months.  Actually, forget the cartoon guy, it’s more like two kids agreeing to stop fighting until Mom leaves the room.
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Trading Oil
                    While Crude roared yesterday, the commodity still is not close to it’s Summer highs. the door to higher prices swings open only if WTI Crude breaks, and holds 49.80, which is still quite a ways off.  If there is eventually such a break, 53 becomes possible. Prices in the 50’s have their problems though, such as binging off line producers back on line.  Let’s not forget non-OPEC producers who would not be subject to any such agreement if it were indeed actually ratified. Russia produces 11.1M barrels of oil a day. Curtailing output could just be handing over market share to others who will gladly seize it. Apparent support levels as this starts to sink in across the Street are at 46.10, and 44.90 for WTI.
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All Day Fed Speak, Day Two
                    Philadelphia Fed Pres. Patrick Harker spoke from Dublin early this morning. He was hawkish in his tone, which really comes as no surprise. Harker has stated before that he feels that policy normalization is a good thing. Right now the DXY is back above 95.50, and the US Dollar is firmer against the British Pound, the Japanese Yen, and the Euro. Harker, who is not a voting member of the FOMC this year was only batting lead-off. There are five more Fed speaking engagements on today’s schedule, coming after yesterday’s six. Key among those speaking will be Gov. Powell (permanent voting member) at 10am, and the Fed Chair herself after the closing bell.
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Macro
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08:30 – GDP (Q2-final): Expecting 1.3%, Q2-rev 1.1% q/q SAAR. The second quarter was not very pretty. That’s already history. There is expected to be a slight upward revision to this, the third and final look at the quarter, but unless there is a big shock here, markets are already focused upon the third quarter. FYI, the Atlanta Fed lowered their forecast for Q3 from 2.9% to 2.8% yesterday, and will likely revise the expectation again tomorrow after the August Consumer Spending release.
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08:30 – Initial Jobless Claims (Weekly): Expecting 260k, Last Week 252k. The four week moving average for this item is down to 258,500. The entire range of expectations spans just 9k, from 256k to 265k. This data-point is no longer a significant mover for equity index futures markets.
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08:30 – Goods Trade Balance (August): Expecting $-62.4B, July $-59.3B. This data-point is actually a component of the August trade Balance that you’ll see next week. This is not a market mover, but it is interesting. This deficit is actually considerably larger than the overall trade balance deficit, because the US is better at selling services than goods, and these numbers will eventually matter when GDP estimates roll around.
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08:50 – Fed Speaker: Atlanta Fed Pres. Dennis Lockhart will speak from Orlando, Florida. Lockhart has regularly been one of the more hawkish regional district presidents, and he will field questions from both the media, and the audience. Lockhart is not a voting member of the FOMC this year. Atlanta does not regain their vote until 2018, and Dennis Lockhart is planning to retire this February.
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10:00 – Fed Speaker: Federal Reserve Gov. Jerome Powell is set to deliver the keynote address at the same banking conference in St. Louis that James Bullard, and Charles Evans spoke at yesterday. It was easily forgotten once the OPEC news broke yesterday, but Evans did move the markets on his dovish comments. Powell has leaned toward very gradual interest rate hikes when he has spoken; he is a permanent voting member of the FOMC.
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10:00 – Pending Home Sales (August): Expecting 0.2%, July 1.3% m/m. Pending Home sales have been inconsistent all year, printing in contraction in six of the last twelve months. It looks worse than it is, as this is supposed to help predict Existing Home Sales, and that number has been running back and forth between an annualized rate of 4.75M, and 5.5M just about every month over the same time frame. This release will not move the marketplace.
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10:30 – Natural Gas Inventories (Weekly): Expecting 54B cf, Last Week 52B cf. Possibly the only weekly data series more regular than the Initial Jobless Claims series.  This one is headed for it’s 23rd consecutive inventory build in 24 weeks. I haven’t traded Nat Gas myself in a few years. I wonder if they still get worked up for this print every week now that there are so few surprises. Would love to hear from someone regularly in the space.
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14:30 – Fed Speaker: Minneapolis Fed Pres. Neel Kashkari will speak “town hall” style in Rapid City, South Dakota. Kashkari will not be a voting member of the FOMC until January. Banking regulation is comfort zone, as he is not very outspoken on monetary policy.
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16:15 – Fed Speaker: Kansas City Fed Pres. Esther George will speak for the second time in two days. George is scheduled to cover opportunities for and challenges to the banking system. She is opinionated on monetary policy, and will likely opine. George is the most hawkish member of the committee.
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17:10 – Fed Speaker: Federal Reserve Chair Janet Yellen will attend the Kansas City Fed’s Minority Bankers Forum through video conferencing. She will likely answer some questions, which always carries some market risk. At least this speech is after hours.
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Thursday’s Earnings Highlights
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Before the Open: ACN (1.30), CAG (.48), PEP (1.31)
 After the Close: COST (1.73)