Market Recon Tuesday

Good Morning,
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Post-Debate.
                    One down, two to go. Two and a half to go, if you count the Vice Presidential debate. The Democratic party nominee clearly came in well prepared, and most pollsters gave her the nod afterward. There were however, no knockout punches thrown on either side, and I do not think that either side will gain, or lose substantially based on last night’s performances. What is gaining substantially this morning is the Mexican Peso. Being taken as a reverse measure of Donald Trump’s success, the Peso rallied almost 2% from it’s lows last night. Other than that, there was little market reaction easily attributable to this debate. Asia is higher, Europe is lower. S&P futures rallied throughout the debate, but have come most of the way back in since.
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Oil / Energy.
                    Oil is once again front and center. After an up day on Monday that brought WTI back to Thursday and Friday’s levels. It will be very interesting to see what happens as the commodity approaches prices around 44.90/95, which is where resistance was met in the overnight hours on Sunday into Monday. The Energy sector will clearly be in play during today’s trading session. The sector badly underperformed WTI Crude yesterday. You have oil producers meeting (consulting?) into tomorrow (Iranian officials have already downplayed the event just this morning), and you have a perceived win in a Presidential debate by a candidate who is not considered Energy friendly.
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Bigger Picture.
                    Financials will remain in focus here in the U.S. Deutsche Bank may have halted their slid in Tuesday’s early European trade, but this is a major international bank with lots of tentacles. The European banking sector will likely be unable to fully recover until this story has a happy ending, or at least some kind of resolution. By extension, this issue will remain an anchor hanging around the necks of US banks while the depth of their exposure is determined. Negotiation? Counter-party risk? What if it’s more than one? This could take a while, in my opinion, and coupled with signaled intent on behalf of several FOMC member to raise or not to raise rates could subsequently hold broader markets back from further gains at this time.
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Macro
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08:55 – Redbook (Weekly): Last Week 0.2% y/y. Our weekly barometer of health for the retailers has been getting a little soft of late. Now showing y/y growth of only 0.2% in three of the last six weeks, we would really like to see this get back to a half of one percent, and not test contraction.
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09:00 – Case-Shiller HPI (July): Expecting 5.1%, June 5.1% y/y. The headline print in this space is the year over year, 20 city, non-seasonally adjusted number. June’s growth was the weakest seen here since September of last year, so we are watching this one to see if declining growth is becoming a trend. yes, there’s nothing wrong with 5% growth in a low inflation environment, but in that June report, 9 of the 20 cities reported declines. Among the nine were New York, and Chicago, as the Northeast, and the Mid-west have both struggled to keep up with the rest of the country.
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09:45 – Markit Services PMI Flash (September): Expecting 51.1, August (f) 51.0. Growth in the service sector has slowed to a crawl as witnessed by the most recent data released by Markit, and the ISM. Traders do not watch this item and will not react to it. You might as well wait until next Wednesday for the ISM’s non-manufacturing number.
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10:00 – Consumer Confidence (September): Expecting 98.7, August 101.1. It’s something of a paradox that as this item, which is compiled by the Conference Board seems to have strengthened steadily throughout 2016, while the very similar Consumer Sentiment (Compiled by the University of Michigan) has been moving in the wrong direction. Regardless, this is today, and you’ll have to wait until Friday to see the latter. Market participants do react to Consumer surveys, and chances are that should this one print above 102, or below 97, they will.
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10:00 – Richmond Fed Manufacturing Index (September): Expecting -2, August -11. Richmond will be the tie-breaker this month. At least at the headline, Philadelphia, and Kansas City posted expansionary numbers, while New York, and Dallas (yes, 21 in a row) hit the tape in a state of contraction. Richmond has been one of the better performing regional districts when it comes to manufacturing, having posted positive numbers in four months in 2016 alone, which ties them with NY, and Philadelphia atop the leader-board.
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11:15 – Fed Speaker: Federal Reserve Vice Chair Stanley Fischer will speak from Washington, DC, and will take questions from the audience. Fischer is thought to be hawkish at this time, but did not dissent last week. There is some speculation that this was out of respect for the Chair. Obviously, the Vice Chair is a permanent voting member of the FOMC.
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Tuesday’s Earnings Highlights
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After then Close: CTAS (1.08), NKE (.56)