Market Recon Tuesday

Good Morning,
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Monetary Environment.
                     Monetary conditions continue to tighten here in the US this morning. The US Dollar is stronger, not just against the South African Rand, which is news related, but the DXY is firmer against it’s basket of competitors. The yield on the US ten year is approaching 1.78% (bonds were closed yesterday), which if left unabated, will further pressure the Utility, Telecom, and Real Estate sectors. Markets have clearly read into the central bank’s intent on policy. The question now will be just how far can this tightening cycle be taken. A quarter of a point a year certainly is not very aggressive, but there does seem to be an urgency to get this ship out to sea that was not there until semi-recently. It would appear to me that a mere quarter of a point is nearly priced in. Is there a need to go ahead, and price in a changed environment? Will an economy that seems to be scraping the runway on takeoff even allow for a lengthy cycle?
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Crude. Yes, Again.
                     Crude Oil is off from yesterday’s Vladimir Putin inspired run to victory. One day, after the Russian leader indicated his willingness to play ball with OPEC on a forward looking production freeze/cut, comes news that in aggregate, OPEC pumped 33.64M (+160k) barrels a day in September. The increase in production was led by Iran, Libya, and Nigeria, all nations that were exempted from the agreement in the first place. On top of that, while President Putin was apparently talking up his book, Igor Sechin, who runs Russian oil giant Rosneft, was publicly stating that he doubted OPEC’s ability to implement a freeze, and that his company had no reason to go along with such an agreement. Volatility in this space, as well as Energy, and Transport names will persist.
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Macro
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06:00 – NFIB Small Business Optimism Index (September): Actual 94.1 vs. Expected 94.9.  This release is something of a disappointment. This index has hit the tape in the mid 92’s to the mid 94’s for most of 2016, and has never recovered the optimism seen by small businesses in 2015. The weakness in today’s report comes largely in Current Inventories, as well as Plans to Increase Inventories. When small business owners as a group are low on inventory, and still not building inventory, that has to raise eyebrows. A lot of folks must feel like they’re skating on some very thin ice.
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08:55 – Redbook (Weekly): Last week 1.3% y/y. This item finally saw a much needed pop in the year over year number last week after a run of weeks that printed just a little north of unchanged. Another print like last week’s would probably be too much to hope for, but something between 0.4% and 0.7% would be taken well.
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10:00 – Labor Market Index (September): August -0.7% m/m. This is one of my favorite, and one of the least publicized of economic data-points. What it is, for the uninitiated, is an experimental index created by the Federal Reserve Bank that includes 19 employment related data-points as it’s components. Though not yet an official release, the FOMC is believed to consider this item when considering the overall health of the labor market. Interestingly, while we are constantly told how employment is steadily improving, this item has printed in contraction in six of the last seven months. The only projection that I’ve seen in this space for today is close to +1.0.
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Tuesday’s Earnings Highlights
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Before the Bell: AA (.33), FAST (.45)