Market Recon Thursday

Good Morning,
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England.
                   The GBP/USD cross has just been impacted by a court case that ruled against Prime Minister May’s authority to trigger Article 50 without Parliamentary approval. Taking that power away from the PM has already caused an early spike in Pound valuations. I would think that this court having overruled the will of the people will face an appeal, but as traders, that’s not our fight.
                    On top of this news, the Bank of England will step to the plate at 8am today. No change in monetary policy is expected. Gov. Mark Carney, who has been criticized for being too aggressive in response to post-Brexit referendum economic concerns, will speak at 08:30 ET. What you’ll likely hear will be an acknowledgement that the immediacy of those concerns was far less urgent than thought at the time. The Governor will most likely back away from his stated intent to get even more dovish if needed than where the BOE took policy back in August. (Don’t forget, Carney is something of a hawk at heart) I won’t delve into the particulars, but what traders need to know is that the British Pound should see some added strength today on that Mark Carney speech, adding to the DXY weakness already seen earlier this week.
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The FOMC.
                    The FOMC really walked a thin line on Wednesday, trying very hard to offer little in the way of a defined direction for the December meeting. Just going off of the CME Group’s website, the probabilities of a December increase stand at 71.5% this morning, but moved everywhere from the mid 60’s to the low 80’s in the aftermath of yesterday’s statement. This quotation from the text is about as non-committal as the FOMC could make it …  “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”  Same as it ever was? Does the “independent’ Fed have a different trajectory depending on who wins the White House? The DXY seems to have gotten this message earlier in the week. The objective here should have been to make intent as clear as a bell to market participants. That job will once again be left up to the plethora of Fed speakers who will restart their collectively heavy schedule on Jobs Day, tomorrow.
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Trader Focus.
                    Trader Focus remains on Oil. The collapsing price of Crude thanks to the unravelling of the OPEC inspired rally that probably never should have been has been front and center. Add to that yesterday’s EIA announced inventory build that took US supplies back to early September levels, and you are left with an Energy sector that has underperformed the S&P 500 over the last week, and over the last month. That weakness this week has come in spite of the US Dollar’s new found softness, a factor that has pushed other commodities such as Gold higher. The national election has taken the spotlight. That will be over by Tuesday. OPEC does not meet until November 30th, and the Fed takes another swing on December 14th before that cast of characters becomes a more dovish crowd. There may be light at the end of this tunnel, but it’s a fairly long tunnel.
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Macro
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08:30 – Initial Jobless Claims (Weekly): Expecting 256K, Last Week 258K. The most consistent item in macro-economics will not likely rock your trading session. The four week moving average now stands at 253K, and you would probably need to see a print up around 280K in order to rattle some cages.
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08:30 – Non-Farm Productivity (Q3): Expecting 1.9%, Q2 -0.6% q/q SAAR.
08:30 – Unit Labor Costs (Q3): Expecting 1.4%, Q2 4.3% q/q SAAR.  These two items that truly go hand in hand have been perhaps the weakest link in this economy over the last three quarters.  Over that time worker productivity has persistently contracted to the tune of -2.2%, -0.6%, and another -0.6%. Unit Labor Costs have dramatically increased over that same time period by 3.3%, 4.5%, and 4.3%. People need not wonder why there is so little upward pressure on wages. The causes? Less business investment, rising health insurance costs, new employees in unfamiliar fields, large increases in part-time labor, or multiple jobs holders. You can pick your poison. The good news is that if expectations come to fruition, the third quarter will actually see production outpace Labor Costs, and break this awful streak. These two prints have the potential to move the WIRP.
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09:45 – Markit Services PMI (October -f): Flashed 54.8. Again, this release will have little to no impact on what you are doing at 9:45. Wait the fifteen minutes.
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10:00 – ISM Non-Manufacturing Index (October): Expecting 56.0, September 57.1. September was the strongest print of the year for the service sector. That print wildly beat expectations, and came just one month after the weakest month of the year in this space. What’s most important here is New Orders. That item posted at 60 in September. Anything close to last month’s numbers at the headline, and for New Orders will have be a plus for this economy, and supportive of a December rate hike.
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10:00 – Factory Orders (September): Expecting 0.2%, August 0.2% m/m. The expectations are for little change in September Factory Orders. In fact ex-transportation, the projection is for a flat print. The problems with this one is that this is dated information, and sometimes brings large revisions with it. For those reasons, markets will not likely react to this release.
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10:30 – Natural Gas Inventories (Weekly): Expecting 62B cf, Last week 73B cf. The beat goes on. This only matters to those directly trading the space. Projections are for a 23rd inventory build in the last 24 weeks, or for a thirteenth week in a row.
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Thursday’s Earnings Highlights
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Before the Open: APA (-.14), AVP (.04), BLL (.94), CI (1.90), IGT (.44), SMG (-.28)
After the Close: ATVI (.42), ED (1.47), FLR (.88), GPRO (-.34), MHK (3.46), SBUX (.55), TWLO (-.05), WTW (.45)