Market Recon Wednesday

Good Morning,
.
Forex
                    There have been some wild fluctuations in currency valuations this morning. The British Pound took off, and then spiked lower, now trading beneath 1.30, while the Euro did quite opposite and is now trading around 1.122 after touching 1.118. Bank of England Deputy Gov. Nemat Shafik rattled a few cages this morning while speaking from London. Shafik is a voting member of the MPC, and she made clear that she still expects to see an economic slowdown in the UK due to last June’s “Brexit” referendum. On top of that, she expects that the BOE will again have to ease monetary policy. If that isn’t enough, on top of the six US central bankers that will speak today, ECB President Mario Draghi is scheduled to speak from Berlin at 10:30 ET. He is expected to address current EMU economic conditions and possibly push for stimulus on the fiscal side.
.
Deutsche/Financials
                     Deutsche Bank shares found some support today. That is in turn supporting Europe’s financial sector, and equity markets in general. The German weekly “Die Zeit” reports that German authorities are putting together a rescue plan for the bank should it find itself unable to raise the capital required to meet it’s obligations, and litigation costs. This is in stark contrast to the message that German Chancellor Angela Merkel reportedly tried to put forth this past weekend in different German publication. If there is more than smoke here, this should even lend some support to the US financial sector. Though that sector did perform with the market yesterday, financials are the only sector in the red over the last five days. Though, that has as much to do with shrinking yields as it does German banking woes, removing a significant roadblock like this would, in my opinion… improve the sector’s outlook six months plus going forward.
.
OPEC/Energy
                      As you’ll see below, the API data, if confirmed by today’s numbers should lend Crude prices a helping hand. Unfortunately, headlines from Algiers are likely to overmatch any such data. Indications are that Saudi Arabia is quite comfortable waiting until the official OPEC meeting on November 30th before getting serious about any talk of a production freeze, and now it appears that when Iran talks about reaching their pre-sanction production rate, they mean market share, not actual barrels produced. This would mean that they can take their current production level of about 3.4M barrels a day up to 4.2M (a 12% market share) before they consider themselves square. Clearly, that is not a positive for the underlying commodity going into the fourth quarter.
.
Macro
.
08:30 – Durable Goods Orders (August): Expecting -1.7%, July +4.4% m/m.
08:30 – ex-Transportation (August): Expecting -0.4%, July +1.5% m/m.
08:30 – Core Capital Goods (August): July +1.6% m/m. Headline Durable Goods roared in July after having printed in contraction for most of the year. Even the important ex-Transportation purchases strip-out was fairly robust for the month, as were Capital Goods purchases. It’s been twelve months since this series put up a two month winning streak, and almost no economists are expecting to it happen this month. This data will impact Q3 GDP expectations.
.
08:45 – Fed Speaker: Minneapolis Fed Pres. Neel Kashkari is due to speak at an investor conference in Minneapolis. Kashkari does not vote in December, and doesn’t really extend himself when it comes to monetary policy. He will however participate in a Q&A session.
.
10:00 – Fed Speaker: Federal Reserve Chair Janet Yellen testifies before the House Financial Services Committee on the Fed’s supervision, and regulation of the financial system. Obviously, this is an event that could move the financial sector in real time. How deeply she’ll go into monetary policy is unknown at this time.
.
10:15 – Fed Speaker: St. Louis Fed Pres. James Bullard is set to deliver the opening remarks to a banking conference in St. Louis. Bullard will have a vote until the end of the year. This Fed official is the wildcard. He’s been calm for a while, but anything can happen in the marketplace when James Bullard speaks. He is currently dovish. This event could be your sleeper.
.
10:30 – Oil Inventories (Weekly): Expecting +3M, Last Week -6.2M barrels.
10:30 – Gasoline Stocks (Weekly): Expecting -500k, Last Week -3.2M barrels. Again, the API’s data surprised to the downside last night. API reported a draw of -752K barrels at the headline, and a draw for gasoline of another whopping -3.7M barrels. If the API’s numbers are close to confirmed by the EIA, this will, at the headline be the largest four week draw-down for Crude in three years. That would be bullish for the commodity, and for the Energy sector.
.
13:30 – Fed Speaker: Chicago Fed Pres. Charles Evans will give the keynote address at the same conference in St. Louis that James Bullard will have already spoken at. Evans is widely regarded as the most dovish of Fed officials outside of Lael Brainard. He will regain his vote in January.
.
16:35 – Fed Speaker: Cleveland Fed Pres. Loretta Mester, who dissented in favor of a rate hike at last week’s FOMC policy meeting, will speak on the economy from Cleveland. She will expose herself to questions from both the media, and the audience. Mester will lose her vote after December.
.
19:15 – Fed Speaker: Kansas City Fed Pres. Esther George will give the keynote address at a forum for minority bankers in Kansas City. George, considered to be the most hawkish member of the FOMC, as she dissented not only last week, but several times throughout the year. George will lose her vote at the end of the year.
.
Wednesday’s Earnings Highlights
 .
Before the Open: BBRY (-.05), PAYX (.57)
 After the Close: PIR (.06)