Market Recon Tuesday

Good Morning,
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Sub-Five Minute Mile
                     This game sure is more fun when equity markets are on the run…. and I think you have to at least mention it when the S&P 500, DJIA, Nasdaq Composite, and Russell 2000 all hit all-time intra-day highs, and close at all-time record on the same day. This had not happened since December 31, 1999. Apparently, the smart money was not nearly as worried about a worldwide Y2K systematic technology failure as were the rest of us.
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Such a Deal
                     Though equity markets in aggregate moved higher yesterday, there was a serious change in leadership, which is at least very interesting. The Energy sector ripped, as WTI Crude ripped, and Crude is on another tear this morning, btw. Materials, and Utilities also out-performed. These sectors responded well to a (thank goodness) pause in the onward march of the US Dollar against it’s competitors, as well as bargain hunters hunting down some of those lower bond prices. As far as Crude and Energy are concerned, many OPEC players are saying the right things, or intentionally allowing certain scraps of information to leak out of an ongoing “pre-meeting” meeting in Vienna. This morning, an official from the Nigerian delegation told reporters that he expected to see the groundwork for a production cut laid out this week. While this may or may not be intentional, the market impact is undeniable. Exemptions ?? Shhhhhh.
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We’ve Got Legs
                      The most blatantly optimistic signal to come out of yesterday’s record setting push was the positive performance of the sectors, and industries that had led since the election (though they did not lead). Within Financials… the Banks, Consumer Finance, and Capital Markets all shaded green, while inside the Industrials sector, not only did Aerospace & Defense keep up as did Air Freight & Logistics, but Railroads, and Construction/Engineering names actually out-performed the broader indices. Game on. Then there’s the impact that the much strong dollar, possibly less regulation, and protectionist policies coupled with economic growth is having on Small Caps. Whoa. Pauses are inevitable, but I am not paring longs on anything other but a stock specific basis for now. Oh, and shorts are only synthetic, through long puts for now. No holding stop signs up in front of steam rollers.
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Allocation Changes
                      In an effort to provide at the most simplified level, a skeleton for personal allocation that will allow for appreciation without getting one’s face ripped off, I’ve tweaked the entire model since it’s last publication. Almost all of you know that I took gold back down to 5% from 7.5% when it crossed through 1305  on the way down. That 5% stands for now, and will be moved back up to 7.5% when either one of two targets is reached. I am going to jack equities up to 55%, from 47.5%, which s still low, but we are conservative here, because we are family types. This is grocery/broken water heater money. Bonds will be cut to 15% (still kind of high) from 17.5%, with the concentration split between Treasuries, Munis, and some Corporate. Still absolutely no junk !!! Cash will be cut to 25% from the 27.5% that we had it at going into the election. Cash is always high in this space. We’re regular people here, not daredevils. Should the opportunity arise to take the gold allocation back up, that money will come out of cash.
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Thanksgiving Bonus: No Fed speakers are scheduled to get in the way today for the first time since November 3rd. There are no Fed Speakers scheduled for the rest of the week.
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Macro
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08:55 – Redbook (Weekly): Last Week 0.9% y/y. We’re starting to see some momentum in this space, at least on a year over year basis. Six of the last seven weekly prints have been at least acceptable when measured against my 0.5% minimum target, and the last three have all showed steady improvement upon each other, successively. Look for a slight slowing in the pace of that growth today, but still above our goal.
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10:00 – Existing Home Sales (October): Expecting 5.43M, September 5.47M SAAR. Existing Home Sales have averaged just above 5.4M units a month when seasonally adjusted, and annualized for 2016. Unlike New Home Sales, and now Housing Starts that have heated up in recent months, this item, which is easily the largest slice of the housing pie.. has continued to go sideways. In fact, this item has gone sideways now for close to two and a half years. An upward surprise here today after what we saw last week, would be very encouraging. The market doesn’t need it, though.
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10:00 – Richmond Fed Manufacturing Index (November): Expecting 1, October -4. November seems to be a better month than we have seen for large slices of American manufacturing in quite some time. New York, Philadelphia, and Kansas City have all printed in expansion at the headline level, and New Orders were a strength for all three, particularly in Philly. The last month that four of the five major regional Fed District manufacturing prints hit the tape above zero was way back in January of 2015.
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Tuesday’s Earnings Highlights
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Before the Open: ADI (.89), BKS (-.39), CPB (.95), DLTR (.78), HRL (.45), MDT (1.11)
After the Close: GME (.47), HPE (.60), HPQ (.36)