Morning Note September 12, 2016

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Monday, Sept 12, 16

 

SPX Down, Dollar Up, Crude Down , Global Bond Selloff

The value at risk shock continues to plague global markets now in the second session. At the epicenter is the BOJ’s steepening of its yield curve. Not less than 24 hours, the FED provides hawkish comments who Fed’s Rosengren saw a “reasonable case” for rate hikes. The combination of BOJ manipulation of yield curve plus Fed Hawk speak has induced a global bond selloff spilling over into commodities and currency readjustments.

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Morning Note September 9, 2016

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Friday, Sept 09, 16

SPX Down, Dollar Up, Crude Down

Our curiosity has peaked this week with the entrance of a global bond sell off underway. Since Brexit, Global Bond Yields have bottomed (bottom right) and are now spiking higher. Rumors of Japan is about to unleash a VAR Shock could be in the mix. Reuters added that “The Bank of Japan is studying several options to steepen the bond yield curve, say sources familiar with its thinking, as authorities desperately seek out policy tools to revive an economy that has failed to emerge from stagnation despite years of massive stimulus.” Prior session, Gundlach projected his EOY’16 projection of the UST10Y to end at 2%. In the pre US cash session, spillover of global bond yields spiking is seen in global stocks. Perhaps, we’re at the point where central banks have started questioning their own monetary policy.

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Morning Note September 8, 2016

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Thur, Sept 08, 16

SPX Down, Dollar Down, Crude Down

ECB leaves interest rates unchanged at September 2016 meeting:

  • Main refinancing rate 0.0%
  • Deposit rate -0.40%
  • Marginal lending rate 0.25%
  • QE €80bn per month
  • QE to run to March 2017 or beyond if necessary

ECB: The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

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Morning Note September 7, 2016

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Wed, Sept 07, 16

 

SPX Down, Dollar Down, Crude Down

Prior session’s US non-mfg. ISM hit it’s lowest level in six years (51.4 vs. 54.9 exp.). To make things worst, ISM mfg. printed at six months lows as US manufactures continue to struggle from weak business spending and uncertainty in the global outlook. Here is a chart to complete ignore-

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Morning Note September 6, 2016

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Tues, Sept 06, 16

 

SPX Flat, Dollar Down, Crude Down

While Wall Street was on holiday prior session, the oil market turned heads with headlines suggesting Saud/Russia freeze deal. WTI and Brent surged more than +500bps with gains not sustainable after the market realized it was more political jawboning via headlines. The inability to hold these gains on an illiquid day confirms the short squeeze ammo is out of juice. In fact, The Oxford Institute for Energy has a Feb’16 report titled: Russia and Opec Uneasy partners laying out argument of Saudi/Russia oil freeze deal is highly unlikely.

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Morning Note September 2, 2016

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Fri Sept 02, 16

 

MISS: NONFARM PAYROLLS

The August Payrolls Report will be an important guideline for September’s rate hike probability. Here are the expectations by bank:

  • JPM +150k
  • Deutche Bank +160k
  • UBS +160K
  • Goldman +165k
  • Citi +170k
  • Wells +176k
  • BofA 180k
  • MS +185k
  • UBS +200k
  • Barclays +200k
  • Nomura +200k
  • CS +200k
  • SocGen +225k
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Morning Note September 1, 2016

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Thursday Sept 01, 16

 

US Futures Up, Dollar Flat, & Oil Down

Over in the US, the main story has been the recent decline in crude following a bearish EIA report prior session. The report indicated a +2.276m build in stockpiles with a modest gasoline and build in distillates. Price action of both API and EIA reports coupled with unfavorable supply comments from OPEC has sent WTI spiraling in recent sessions from the 48 handle to now probing in the 44 level. DOE Inventory plus crude product inventory soars above 1.4 Billion barrels for the first time ever. This is 40% above the 25-year normal average. Insiders at Shell and ConocoPhillips management teams now stress a 2017 rebalance. The truth emerges that the EIA lied about “overestimated” crude and gasoline demand in the 1h16 by 16%. On watch is China’s SPR with reports of full or near capacity. JPM estimates that China’s SPR demand was near 1mm bpd. This could spell a global demand decline in the near term that would be detrimental to crude’s price. Forex concerns still remain as dollar strengthens and CAD/USD continues it’s tumble.

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Morning Note August 31, 2016

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Wed, Aug 31, 16

 

US Futures Flat, Dollar Stalls, & Oil Down

S&P futures continue a volume less rotation of 2175.5 in the overnight session. Global markets are mixed from Asia to Europe. US Dollar strength is now probing into the 96 handle plaguing global commodities. Bloomberg’s commodity index fell prior session for the 5th straight day with all 24 major commodity futures in the red.

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Morning Note August 30, 2016

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Tues, Aug 30, 16

 

US Futures Flat, Dollar Up, & Oil Up

US Index futures are flat in the pre-US cash session as overnight markets are relatively quiet. Fed’s Fisher releases statements this morning, but the market’s reaction is mute. Here is a summary of his statements:

  • FED’S FISCHER/BBGTV: YOU CAN’T SAY ONE AND DONE, CHOOSE PACE
  • FISCHER: PACE OF RATE HIKES DEPEND ON DATA
  • FISCHER: ECON PESSIMISM ABOUT GROWTH, LARGELY PRODUCTIVITY
  • FISCHER: CAPITAL MARKETS OF THE WORLD MORE INTERCONNECTED
  • FISCHER: FED TAKES INTO ACCOUNT FINANCIAL MARKET POSITIONS
  • FISCHER: LEARNED C BANKS DOING NEG RATES THINK THEY ARE WORKING
  • FISCHER: NEGATIVE RATES DIFFICULT FOR SAVERS
  • FISCHER: US ECONOMY GROWING AROUND 2%, PRODUCTIVITY LOW
  • FISCHER: HAVE SEEN APPRECIATION OF USD, NEAR FULL EMPLOYMENT
  • FISCHER: STRONGER US $ HAS HAD IMPACT ON INFLATION
  • FISCHER: FED HAS TO DEAL WITH THE WORLD AS IT IS
  • FISCHER: PROPPING UP YELLEN IS NOT SOMETHING SHE NEEDS
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Morning Note August 29, 2016

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Monday, Aug 29, 16

 

US Futures flat, Dollar Advance, & Oil Down

US index futures are flat in the pre-US cash session following Jackson Hole conference last Friday. The US Dollar has advanced more than +157bps to the high 95 handle following senior FED officials indicating US interest Rate hikes near term. The Rate Hike probability for 2016 jumped to 42% from 22% in the last week. The vibrations of an advancing dollar can be felt in commodities, European Equities, Emerging Markets, Commodity FX, and China devaluation threat.

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