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Market Recon Friday

Good Morning,

                     It’s Friday, gang.  Of that I am sure.  I am also sure that you’re ready for a weekend, I know that traders in China probably are.  The Shanghai Composite gave up almost 6.5% today, bringing it’s slide to over 13% for the week.  That index is now up a “mere” 120% for the year, so it’s all in the angle of the prism that you’re looking through.  Today, we’ve got nothing coming our way from Planet Macro….absolutely nada.  That does not mean that you’ve got nothing on your plate.  Far from it.  Today brings us a triple…errrr, make that a quadruple witching.  Everything expires today, everything that is…except your marriage licence.  You can expect heavy volume across the board in futures, options, and equity markets, and you can expect much of that increase in volume to be concentrated on the two bells.
                    On top of that, we’ve got a couple of Fed speakers on the docket, which is a pleasant change.  San Francisco Fed Pres. John Williams speaks at 11:40 ET on monetary policy from San Fran.  Cleveland Fed Pres. Loretta Mester will give it a go from Pittsburgh at 12:15 ET.  So, you may have to stay at 50% alert, while you enjoy your lunch, kids.  Williams is a voting member of the FOMC this year; Mester is not.
Sarge’s Gripe 
                   I keep seeing in various media circles this week, that the market has rallied over the last couple of days since Janet Yellen’s press conference, because she was perceived as being dovish. Really?  That’s sticking in my craw a little bit.  Did they ask any practitioners?  Did they pay attention to the press conference?  Janet Yellen basically told you that she’s still intent on raising the Fed Funds rate this year, with residual hikes to come. She told you this despite understanding what the first quarter did to GDP.  The economy in her opinion, is still improving.  That’s slightly hawkish, gang, not dovish.  We’ve had a ZIRP policy in place now for many years.  Saying that you are still on tract to change that policy this year is NOT dovish.  We all thought that September was going to be the month for a slight increase.  Nothing has changed there.  Most traders expect that the equity market can continue to go higher despite small, gradual interest rate hikes, because there still is not a lot of competition for you investment dollar.
                  The reduction in GDP expectations, and that tiny Core CPI  number yesterday were more dovish factors than the Fed Chair was in what she said.   What traders liked from her, was they correctly read the playbook.  They’re on the same page as the Fed Chair.  We understand that the FOMC has to go slow.  To some degree, at least for now, the uncertainty from that corner is somewhat reduced…..and we like that.  C’mon, if you’re going to report on this stuff, you have to get in tune.  If you don’t know…..just ask….and don’t ask some guy who has never risked his own money.
Sarge’s TRADING LEVELS
SPX: 2147, 2135, 2127, 2119, 2112, 2106, 2098
RUT: 1304, 1300, 1296, 1288, 1283, 1278, 1272

Market Recon Thursday

Good Morning,

                     Good news !!  If you’re up early in the morning, reading stuff like this….then you’ve already proven that you’re in the fight.  Half of winning a fight is simply showing up for it.  The rest takes some brains, and some guts.  I bet you’ve got that too, so let’s do Thursday.

                     There’s kind of a lot on your plate today, in fact there’s too much to focus on.  Sooooo, let’s burn off some of this haze.  That way, you trader types can key in on what’s important, and get rid of what’s just noise.  First off…… just throw out the Q1 Current Account print at 08:30 ET, and the Conference Board’s Leading Indicators at 10am.  They may be important to economists, they may important to some kid writing a term paper.  They don’t make markets move, and they won’t make you money.  Gone.

                     Today, we do get the CPI.  A day after the FOMC announcement, we’ll get a read on consumer level inflation.  Party on, dudes.  At 08:30 ET, the Bureau of Labor Statistics will hit us with these numbers.  The headline consensus is for a m/m increase of 0.5%.  The skew seems to me to be on the low side, but a little birdie (who is smarter than I) told me that it may come in just a smidge higher than consensus.  Can’t wait to find out.  The Core print is expected to post a gain of 0.2% m/m.  Same little birdie told me that the core may come in a bit light.  Forget money, I’m bird watching.
                     There is another key item due at this time.  That’s the weekly Initial Jobless Claims print, which traders generally do overreact to, impacting the futures market. For the Claims number, we’re looking for something close to 277K, with a tight range, so anything outside of 265K to 285K will surprise the crowd.  FYI, there has been no volatility in this report for quite some time.  We’re sitting on the four week moving average.
                     There’s more.  At 10am, the Philadelphia Fed releases their Manufacturing Index, which is usually a focus item, but after the Empire State fell flat on their face earlier in the week, it’s even more important than usual.  The projection (hope) here today is for an improvement from May’s 6.7 to something close to 8.1.  After that, the Nat Gas crowd gets their weekly number at 10:30 ET, and at least economic data-point wise, we then call it day.
Don’t forget to say a prayer for those folks in South Carolina, and their families.  Do it now.