Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about before markets open on Thursday:
Good Morning! S&P Futures have recovered all of yesterday’s losses, gaining 70bp but failed to get upside 2000 in the early go. This mirrors strength in Europe, where the DAX has gained 1.6% as ECB’s Nowotny has gotten all dovish overnight, a quick reversal from 3weeks ago. Tech remains the strongest sector, as M&A chatter intensifies in Semis – but Consumer, Materials and Fins are all gaining 1.5%+ in light volume. The FTSE is up 1.5% as the Miners rip higher, but UK Banks are under pressure from Capital shortfall headlines, and Burberry comments has Luxury names under pressure again. Over in Asia, Shanghai rallied 2.3% to a 2month high on “speculation regarding another wave of SOE reform” – the Kospi added 1.2% as the Bank of Korea left rates on Hold – The Nikkei rebounded 1.2% from yesterday’s smack, and Doves bid up Aussie for its first gain in a week as miners rallied.Emerging Markets are loving the dovish Fed and weaker Greenback, with all Asia EM closing Green.
The US 10YY is up 2bp, but it just made a run at 2%, but was rejected quickly – Nothing but Dovish Fed Analysis out there, and the Fed Funds Futures have collapsed, with only a 26% probability of a hike in 2015, and less than a 50% shot now in March 2016. The Dollar is staging a rally against the Euro as Nowotny comments hit the common currency, but that Yen continues to leg higher – with the $/Y cross collapsing near 118 in the overnight hours. Despite the pop in the DXY, Gold remains bid as all metals move higher – and it’s a surprise that the Crude Complex is only off 1%, as WTI continues to hold $46 despite API saying that crude oil inventories spiked up 9.3mln barrels, well above the ~2.6M estimate expected by the street. Soft commodities continue to see profit-taking from the recent El Nino induced surge higher.
Scheduled catalysts today include Weekly Jobless Claims and US CPI at 8:30 – Philadelphia Fed Business Outlook at 10 – Fed’s Bullard and Fed’s Dudley Speak at separate venues at 10:30, along with Natty gas Inventory data, followed by DoE data for Crude at 11 – and we get the Monthly Budget Statement from the Treasury at3:30 (more importance than usual due to Debt Ceiling approaching) – and after the bell Cleveland Fed’s Mester speaks in New York at 4:30. MAT and AMD earnings after the close. Throughout the session we get Credit card charge-offs (AXP, JPM, BAC, COF, DFS). Down in Washington, the SEC Meets to Talk on ETF’s, Enforcement, and Market Structure at 10, and at 1pm Energy Sec. Ernest Moniz and EPA Administrator Gina McCarthy hold event on hydrofluorocarbon coolants.
Some areas of focus for me early: XBI may test $60 to the downside as VRX off 7% early on headlines / Puerto Rico stocks shud be on fire today (AGO, AMBC, MBI, FBP, BPOP and OFG) / GS #s slashed into today’s earnings – let’s see if a “Buy the News” (USB, C, KEY and BBT this AM as well) / Hospitals will be ugly with HCA warning – UHS and THC – but many shorts hiding in the space – First Data Confirms 160 Million Share IPO Priced at $16 Each, well below range – No word from ABS / and WMT continues to see selling, off another 1% (by the rule of 3’s, tomorrow likely the last day of washout).