Market Recon Monday

Good Morning,
Light Macro Week.
                    There’s an 800 pound gorilla in the room. With the national election scheduled to finally end tomorrow, and a 24 news cycle that’s squarely focused upon exactly that, it’s hard to imagine anything else impacting the marketplace, at least in the early part of this week. An election that a week and a half ago seemed to be headed toward a forgone conclusion, but looked like a toss-up just a day and a half ago, now seems to be headed back toward some kind of certainty. At least that’s what the markets appear to be telling us.
Where We Stand.
                    The S&P 500 gave up 2% last week, and has surrendered about 3.5% over the last month or so. The longer month long price erosion has been more of an interest rate expectations story. Telecom, and Real Estate (with Health Care for different reasons) have been especially weak over that span, while the Financials as a sector moved higher. The sharper move was last week though, where all eleven sector finished in the red. The pain was led by the Tech sector (with Energy for different reasons), or simply where the most risk/profit had been visible over more than a quarter.
Trader Focus.
                    The question for traders today, will be just how much that reduced uncertainty is worth. S&P futures are about 1.4% higher as this note goes to print. NASDAQ futures (Representative of the Tech sector) are +1.7%. Gold, as it was a safety play last week is now giving much of that move back. Crude is different. Yes, crude is higher as well, but that’s still an OPEC/technicals story. It’s almost certain, at least to me, that any rally/sell-off based on this week’s election results will be overdone in either direction. Today’s European trade smelled of a short squeeze, and all of those major indices have now hit some resistance. That may be our early morning blueprint.  Playing tomorrow’s results feels somewhat speculative to me. Even if one is confident in the result, the value of that result is going to be tough to measure. In the meantime, look for significant pops today across those very same Tech, Energy, and Staples stocks that took on water last week. Keep in kind, that Crude has been moving with the DXY of late, and is doing so again this morning…. meaning that you can’t count on it.  A stronger dollar will work against the entire commodity complex, which will leave the Materials sector behind the pack this morning.
10:00 – Labor Market Conditions Index (October): Expecting -1.3, September -2.2. We are constantly told that the Labor market is improving. Yet, this, the Fed’s own experimental tool has printed in a state of contraction in eight of the last nine months. On top of that, this composite index of 19 labor market related sub-components that are meant to illustrate an overall snapshot of the health of the nation’s employment situation is expected to show further erosion for October.
14:45 – Fed Speaker: Chicago Fed Pres. Charles Evans will make the first of three speeches in two days. Evans tends to be one of the most dovish Fed officials, but of late has tempered that opinion a bit. Evans will not have a vote in December, but he will in 2017.
15:00 – Consumer Credit (September): Expecting $18.4B, September $25.9B. The September increase in consumer level borrowing was the third strong print in the last five. Non-revolving credit (credit card usage) made up $5.6B of that $25.9B, which is good, but not what those who watch the velocity of money would like to see. This item always raises questions that are not easily answered. One never knows if increased borrowing for average Americans is representative of a surge in confidence, or done in desperation to keep one’s family’s standard of living from changing for the worse.
Monday’s Earnings Highlights
Before the Open: RESI (-.36), DF (.36), ROK (1.49), SYY (.58)
After the Close: IFF (1.42), MAR (.88)

One thought on “Market Recon Monday”

  1. Small problem: Part-time work up, full-time work down.
    Small problem 2: Five sectors with fewer jobs than October of 2008 (Mining & Logging, Construction, Manufacturing, IT, Government)
    Small problem 3: Elevated levels of two job wage earners
    Small problem 4: Fewer men working full-time jobs than at the peak if July 2007.
    Small problem 5: Effective unemployment rate when participation is factored into the equation is in excess of 9.74% and may be as high as 12.01%.
    That’s all I have…. now.

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