T3 Live

For the Love of Everything That Is Holy, Can We Please Get a Real Move?


With market volatility at 20-month lows, I'm falling asleep. It's like April-May all over again, but worse.

Thankfully, we've got a pivotal NFP report coming today at 8:30 a.m. ET.

So maybe, just maybe we'll get some real movement today.

Economists are looking for 180K on the headline number, 0.2% MoM growth in hourly earnings, and a 4.8% unemployment rate.

Last month, we saw a huge 107K beat on the headline number, which just about made up for the 122k miss the month before.

On the surface, it seemed like a very much hawk-supporting report, but the market's reaction said otherwise.

Gold and bonds dipped on the report, then ripped like mad. Equities followed through on the decline in rates with a big 1.5% rally in SPX.

Traders assumed that the report wouldn't necessarily make the Fed get more hawkish, and it turns out those traders were right.

Based on some weak economic data (GDP, PCE Deflator) and the Bank of England's huge forecast cut for UK growth (which implies a nasty Brexit impact), the Fed's forward path looks pretty dovish, at least-near term.

But remember, Fed expectations tend to turn on a dime.

Fed funds futures are now pricing in a 37% chance of a December rate hike — but that mumbers was down to 9% post-Brexit.

I'm not in the silly business of making NFP guesses.

But the scenario I would like to see is a modest beat on the headline numbers — say 190k-220k — which I think could drive a rip above 2200 within a day or two on the basis that “the number's not hot enough to move the Fed but it's good enough to show things aren't falling apart.”

SPX futures are up fractionally this morning following modest gains in Europe.

The dollar is down a tad against the euro and yen, while gold is up a hair. Gold miners are indicated up after strong performances in euro-areaminers.

Cybersecurity name FireEye (FEYE) is getting hit hard on its awful quarter. It may end up in the M&A rumor column soon, so maybe put it on your radar screen.

LinkedIn (LNKD) beat by a mile, which means Microsoft (MSFT) timed the deal pretty well. Well done fellas.

The sideways grind means we're working off overbought conditions, and some sentiment indicators have cooled off. The AAII survey shows that individual investors are fairly bearish, and the ISE Sentiment Index' 10-day moving average is coming down a bit.

I will admit that some others like the shape of the VIX curve (though the VIX could drop even more) and Investors Intelligence Survey indicate serious complacency.

So sentiment is still bullish, but slowly moving towards being mixed. I'd rather see more outright bears, but let's deal with what we're given instead of what we want.

Good luck friends!