Market Recon Tuesday

Good Morning,
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Asia.
                    Surprisingly, the Chinese data that global economists were watching beat expectations for October. Both the Governmental (NBS), and private (Caixin) manufacturing PMIs came in on top of projections, as did the government’s number for the service sector. Does this suggest that the Chinese economy has found a bottom? New orders, the most important sub-component of any manufacturing report did show improvement, on a foundation of improved commodity pricing, and increased fiscal spending. Neither of which can be counted on long-term.  The Bank of Japan held their fire at last night’s policy meeting as expected. In their first decision since targeting the yield curve in September, the BOJ did push back their projection for hitting 2% consumer inflation from 2017 to 2018. Though expected, this solidifies the perception that global central banks have come close to the point where they feel that monetary policy has done about as much good as it possibly can. The horrific Japanese data for Industrial Production, and consumer level inflation released over the weekend would serve as evidence of a far less aggressive monetary nature going forward.
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Trader Focus / Utilities/ 2115.
                    With the FOMC in session, and the general election looming with all of the peripheral noise that surrounds it, there is no doubt we are all distracted from the task at hand. Our mission, as reminder is first to simply survive, and then to possibly excel in the environment provided. I present the curious case of the Utility Sector. Crude oil, and the US Dollar both obviously have great impact upon these markets. With OPEC , and OPEC’s pals seemingly walking around in circles, and with the perception in the US that rates are headed higher, both of these items should present headwinds to market health.
                    The slightly higher yields now seen in the Treasury market, and that perception already mentioned should also present a headwind to the dividend paying Utility sector. Yet, money is flowing into utilities…. over the last week, and over the last month while the general market has struggled. Could this be the trickle ahead of a flood into a defensive posture ahead of a significant market move lower? Take a look at the SPX 2115-2120 area. That spot has provided consistent support this Autumn. That same spot provided stiff resistance from last Autumn through this Summer. It may take a while, it may not even happen, but it’s on my radar. We are testing that area right now. Should that spot break, due to an election shock, or a breakdown in crude prices, or just because it’s time, the next stop will likely be around 2075, and could be as low as 2040.
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Macro
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All Day – Total Vehicle Sales (October): Expecting 17.5M, September 17.8M annualized. September was the second strong month in three for auto sales. the problem here, statistically is that 17.8M annualized units is a tough number to beat, and even if we see a strong (for 2016) print here, it could still pull October headline Retail Sales lower when we see that data in two weeks. This information is released piecemeal by the auto makers, and will take hours for the complete picture to form, thus reducing immediate market impact.
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08:55 -Redbook (Weekly): Last week 0.3% y/y. Until last week, the Redbook had a nice three week mini-streak going, at least on a year over year basis. Look for this one to slide back up to 0.5% y/y this week.
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09:45 – Markit Manufacturing PMI (October – f): Flashed 53.2. Last week, this item flashed decisively above expectations. That said, this is a non-event. They could probably put almost anything to the tape for this item today, and traders would wait for the ISM number fifteen minutes later.
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10:00 – ISM Manufacturing Index (October): Expecting 51.7, September 51.5.  I think after the experience of printing at 49.4 in August after a five month run above sea level, economy watchers will be pleased to see the pace of expansion simply hold it ground. This is the most important economic data-point of the day, and for any kind of change in narrative you would have to see a ghastly miss in this space. Given the way that Philadelphia and Richmond hit the tape, from a regional perspective this item will not likelly stray too far away from 50.
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10:00 – Construction Spending (September): Expecting 0.5%, August -0.6% m/m. This is a somewhat dated, wildly volatile item. After printing in contraction in four of the last five months, the expectation of growth in this space is refreshing. That said, the data presented here is not to be trusted until the second month as the Census Bureau is often forced to dramatically revise these numbers.
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Tuesday’s Earnings Highlights
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Before the Open: AEP (1.21), ADM (.46), BP (.04), COH (.45), ECL (1.28), K (,87), OSK (.86), PFE (.62), RDS.A (.24)
After the Close: DVN (.06), EA (.43), HLF (1.09), PZZA (.50), X (.84), ZNGA (.13)