Market Recon Wednesday

Good Morning,
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Equity Beat-down.
                    There were so many holes in the equity markets yesterday that it was hard to define the actual weak spot, or narrow the cause down to just one catalyst. Obviously Health Care led the way lower, both on bio-tech (ILMN’s pre-announced revenue miss), and Hillary Clinton’s now commanding lead in the polls, but the carnage was far broader than that. There was blood evenly spread across Discretionary names, Energy, Financials, Industrials, Tech, Mining, and Utilities. Fear. Fear over the coming earnings season. Fear over Dollar strength. Fear over what might be in today’s Fed Minutes. Fear over the fact that an OPEC deal still seems somewhat fantastical. Fear over the imminent release of seasonal data from the Financial sector, the one sector that is projected to be out in front this quarter. After all, yields did only start to give the banks some breathing room in the last 30 days or so. Even over that last month, the waters have been choppy. These Financials miss as a group, and this may turn into the “Season of giving…. back”.
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Trader Focus.
                   The British Pound finally caught a bid this morning as the UK’s Parliament filed a motion for a transparent debate on just how hard the break with the EU will proceed. Still, even with some Pound strength, the DXY stands close enough to 98 to probably make the Fed, and US multi-national corporations nervous. In the past, the Fed has given the appearance of a DXY preference closer to 95. This is the point where in other months, they would send out the doves. That does not seem to be the case this time around, and we will hear from two high profile voting members of the FOMC this morning prior to seeing those already mentioned Minutes this afternoon. The odds of a December rate increase are now close to 70% as interpreted through the Fed Funds Futures market. I have said in the past… if the FOMC as a group is afraid of something (and they do seem afraid of something), they’ll act whether it seems correct or not. economically.
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Macro
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08:00 – Fed Speaker: New York Fed Pres. William Dudley speaks from Albany, NY this morning. New York has a permanent FOMC vote, and Dudley, like most of his colleagues has been rather hawkish of late. It is unlikely that we’ll hear any change in his recent direction.
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09:45 – Fed Speaker: Kansas City Fed Pres. Esther George will speak from Chicago, Illinois. George has gone from being a lone voice in the wilderness to the leader of what has become a hawkish uprising at the Fed. George will lose her vote at the end of the year, and will likely push to get something on the tape before that happens.
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10:00 – JOLTS (August): Expecting 5.75M, July 5.87M. A slight pull-back is expected for August. This number has regularly been indicating what should be a strong hiring environment. The financial markets, like the actual labor market will not react to this item.
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13:00 – Ten Year Note Auction: Last Auction (Sept. 12) 1.70% 2.4. With the ten year trading at yields above 1.78% yesterday, and then re-testing that level later in the day, this auction will be closely watched. Not only will we watch for the yield awarded but also for the bid to cover, which has been weaker of late.  The level of foreign participation, will also be important, now that it has become inconsistent.
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14:00 – FOMC Minutes. With three dissenters at the last FOMC policy meeting, and with a few more that may have sat on the fence, these Minutes may hold more than stale information. In fact that fear may have contributed to yesterday’s sell-off. In what will likely shape up to be a light volume day, this could be, and likely will be a market moving event.
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Wednesday’s Earnings Highlight
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After the Close: CSX (.45)