Market Recon Thursday

Good Morning,
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China/Global Demand.
                    The Chinese economy hit a pothole last night. For the month of September, Chinese imports dropped 1.9% (dollar terms) from a year earlier. That concerns Chinese domestic demand, and it’s bad, but what is worse is the 10% (Dollar terms) y/y decrease in exports. This is versus expectations of only -3%y/y, and came off of the month of August. That month also printed in the hole. These numbers put the whammy on global equities this morning as this is a clear reflection on global demand. South Korea, and Taiwan have already reported weak export data this month. If the Chinese (and other Asian exporters) are selling less, it simply means that Europeans, and Americans are buying less. The hope was that the Chinese economy had stabilized. Globally, cages will be rattled this morning as the health of the engine behind much of the planet’s economic growth during the economic crisis will again come into question, as will prospects for consumer inflation.
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Trader Focus.
                Policy. Those looking to the Fed Minutes for clues to what direction monetary policy will take as the year winds down, were left knowing nothing more than they already knew. A sharply divided FOMC, heavily skewed in opinion toward raising the Fed Funds Rate in December if the economy doesn’t roll off of a cliff between now and then. I think that pretty much sums it up. The lack of reaction in the marketplace yesterday afternoon presents as evidence.
                Debt. US Treasuries are seeing something of a safe haven bid today in the wake of the Chinese data. After a semi-soft auction yesterday, this remains in focus.
                Crude. Oil is again, as it has been nearly every day of late, a huge story. On one side, there is Vladimir Putin agreeing to play ball with OPEC. On the other, you have subordinate Russian leaders talking contrarily. You also have an OPEC that continues to increase production in the face of their own (non) agreement. The American Petroleum Institute printed some bearish inventory numbers for Crude last night, and WTI prices did fall at the time. It seems that this $50 level has become the battlefield as far as Crude is concerned. I think it likely that in the absence of hard news, the commodity can trade between 48 and 53 simply on rumor, and weekly data fluctuations. To technically break either one of those levels will require a fundamental reason. the next formal OPEC meeting will be held on November 30th.
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Macro
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08:30 – Initial Jobless Claims (Weekly): Expecting 253K, Last Week 249K. This incredibly stable, even shrinking data-point no longer shocks the market due to the current composition of the labor market. The part-timers no longer lose their jobs due to schedule management. If the Employment Situation were so healthy, the Fed’s own Labor Market Conditions Index would not have printed in a state of contraction in eight of the last nine months.
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08:30 – Import Prices (September): Expecting 0.1%, August -0.2% m/m.
08:30 – Export Prices (September): Expecting 0.1%, August -0.8% m/m. These twin items can represent cross-border demand. The caveat is that Energy prices have been so weak as to skew Import prices lower, while Agriculture prices have been so weak as to skew Export prices lower. Even ex-those items, however, neither of these data-points would have printed positive for August. Today, we look (hope) for a mild push to the plus side for both. There will not be a huge market reaction to these numbers.
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10:30 – Natural Gas Inventories (Weekly): Expecting 89B cf, Last Week 80B cf. The growth in this space keep on going. Today, we look for the 25th build in the last 26 weeks. Almost non-stop growth for half a year. Incredible. Energy traders will be impacted alone by this release.
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11:00 – Oil Inventories (Weekly): Expecting +1.1M, Last Week -3M barrels.
11:00 – Gasoline Stocks (Weekly): Expecting -450k, Last Week +222k barrels. The good news is that the 3M barrels draw last week took US inventories under the 500 million barrel threshold to 499.7M. That bad news is that the historical norm is close to 330M. last night API reported a build of 2.7M barrels for Crude, and a build of 688K barrels for gasoline.  Now we look to the Federal numbers for confirmation. Obviously, this release will have great influence over the Energy sector today, maybe even the equity market in general.
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12:15 – Fed Speaker: Philadelphia Fed Pres. Patrick Harker will speak from Philly. Harker, who will not be a voting member of the FOMC until January said in September that he would support a “rate hike in December if growth stays on track.” Guess he really hasn’t been following GDP very closely this year.
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Thursday’s Earnings Highlights
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Before the Open: DAL (1.68), PGR (.33), WGO (.47)