The Morning Hammer: Let’s Eat Some Dove Soup
Traders are buying into the Fed’s hawkish narrative. On Friday, FOMC Chair Janet Yellen very clearly put rate hikes on the table, and market are buying in. Fed Funds futures now imply a 65% chance of a December rate hike, up from 47% a week ago. And September is up to 42% This has gold and silver slightly offf and the dollar up huge Overnight, Italian business manufacturing missed expectations, as did Greek GDP, Swedish retail sales, and Hong Kong retail sales. Australian home sales were also weak. European equity markets are red, while SPX futures are flat. We’ve got some important economic data today, with personal income/spending, PCE deflator, and Dallas Fed numbers on tap. Even though the Fed’s signalling pretty hard that rate hikes are en route, folks will be watching the PCE deflator closely since it’s the Fed’s preferred inflation indicator. If it’s strong, I’d assume folks push those rate hike odds up even more, and we could probably see an intraday selloff in US Treasuries (which are up fractionally in the early going). Beyond that, it looks like we’re going to close out August the way we came in — quietly. The VIX has been ticking up after putting in what looks like a major low on August 8, but we’re still not seeing much actual movement. We haven’t had a 1% down day in SPX since June 27. And it feel slike the more people look for one, the less likely it is to happen. Volatility is mean reverting. Things go crazy, and then they get quiet. And things get quiet, and then they go crazy. This quiet period today though, it’s one for the ages. I just wanna wake up, you know?
Continue Reading -->Rob Smith’s Daily Recap Video: Another Awesome Fed Day
In today’s Daily Recap video, T3’s Rob Smith breaks down the action on a very exciting Fed day.
Continue Reading -->T3’s Take 3: Janet Yellen Sets Off a Rollercoaster
1) Fed Follies: Jackson Hole Edition Traders were looking for a hawkish Yellen and a hawkish Yellen is what they got. At her highly-awaited Jackson Hole speech, Federal Reserve Chair Janet Yellen said that the case for rate hikes “has strengthened in recent months,” echoing recent hawkish comments from other Fed officials. Initially, the market made the obvious moves — the US dollar spiked, and gold and US Treasuries collapsed. However, the moves were very quickly retraced, with the dollar and gold falling. This implied the market was having a massive “sell the news” reaction to Yellen meeting market expectations. 2) The Reaction to the Reaction to the Reaction Following that counter-reaction, the big hawk trade — strong dollar and weak gold/bonds — continued. Here is an intra-day chart of the US dollar index starting at 8:00 a.m. ET, which is a pretty good illustration of the market reaction to Yellen’s speech: As you can see, the dollar briefly dove before skyrocketing into the equity market close. We saw similar zaniness in gold and US Treasuries. 3) Equity Traders Take a Little Ride Fed funds futures now imply a 63% probability of a December rate hike, up from 47% a week ago. The prospect of higher rates had equity traders taking profits. At one point, the S&P 500 looked like it may have its first 1% down day since June 27, and the VIX hit 14.93, a level not seen since early July. However, stocks crawled up into the close, with the index finishing down -0.2% at 2169.04. Stocks that benefit from lower interest rates, like utilities, gold miners, and real estate names, took major hits. On the plus side, biotechnology had a solid up day after afternoon failures on Wednesday and Thursday. P.S. Want to up your trading skills? Check out our free webinars! Monday’s Trading Calendar US Economics (Time Zone: EDT) 08:30 Personal Income (Jul): exp. 0.40%, prior 0.20% 08:30 Personal Spending (Jul): exp. 0.30%, prior 0.40% 08:30 Real Personal Spending (Jul): exp. 0.20%, prior 0.30% 08:30 PCE Deflator MoM (Jul): exp. 0.00%, prior 0.10% 08:30 PCE Deflator YoY (Jul): exp. 0.80%, prior 0.90% 08:30 PCE Core MoM (Jul): exp. 0.10%, prior 0.10% 08:30 PCE Core YoY (Jul): exp. 1.50%, prior 1.60% 10:30 Dallas Fed Manf. Activity (Aug): exp. -3, prior -1.3 Global Economics All Day GBP Bank Holiday 19:30 JPY Household Spending y/y 21:30 AUD Building Approvals m/m Earnings Before Open: None of significance After Close: None of significance
Continue Reading -->Gold Screams Afters Yellen Fails to Move the Needle
Traders were looking for a hawkish Yellen and a hawkish Yellen is what they got. At her highly-awaited Jackson Hole speech, FOMC Chair Janet Yellen said that the case for rate hikes “has strengthened in recent months,” echoing recent hawkish comments from other Fed officials. Initially, the market moved as we expected — the US dollar spiked, and gold and US Treasuries collapsed. However, the moves were very quickly retraced. Here’s the dollar index: Here is gold (GLD): The junior gold miners (GDXJ): TLT: Crude oil is also on FIRE: So we are getting the ‘sell the news’ scenario I presented in today’s Morning Hammer column. (not that I bet on it…) Since Yellen delivered exactly what the market expected, the hawk trades (gold down, Treasuries down) aren’t getting any additional follow-through. In fact, rate hike expectations have actually FALLEN since the speech. Earlier today, Fed Funds futures were pricing in a 57% chance of a December rate hike. That number is down to 55% so Yellen did not move the needle. Biotech (IBB) also ripped off morning lows and is up 1.5%. The VIX is down 8.4%. Meanwhile, SPX fell about 5 points before extending higher above 2187. We’ve gone 34 days without a 1% move in the SPX. That streak may indeed break today. Next step: let’s see if these counter-reactions hold. Fed says often see multiple dramatic moves before the closing bell hits.
Continue Reading -->The Morning Hammer: Will Yellen Pull a Fast One at Jackson Hole?
All eyes are on FOMC Chair Janet Yellen’s 10:00 a.m. ET speech in Jackson Hole. Fed officials have been out in force the past few weeks pushing a hawkish narrative, and the market has responded. Fed fund futures now imply a 57% chance of a December rate hike, up from 47% a week ago and just 9% after the 6/24 Brexit. 57% is far from certain. However, the trend has been up, and the trend is what counts. This has been pushing up bank stocks and putting pressure on gold, particularly the miners (GDX). So now we’re at an interesting juncture. If Yellen indeed comes out hawkish as many traders expect, I wonder if we get an immediate spike in the dollar and dip in gold, with both moves getting reversed by the end of the day. I almost feel like all the Fed heads have been overselling the idea that rate hikes are coming, which could set up a sell the news situation. On the flip side, if we get a repeat of June — doves flying when everyone’s looking for hawks — expect a monumental rally in GDX. SPX futures are as flat as an ironing board, and crude oil is down fractionally. Aside from all the Fed-sanity, I’m really interested to see what biotech does. For 2 straight days, IBB has gone from first in the morning to worst in the afternoon on heavy volume. (see chart) The alleged cause has been Presidential candidate Hillary Clinton’s attacks on Mylan’s (MYL) pricing practices, which raises fears about future price controls. The reality is that no politician — not even the President of the United States — can simply wave a magic wand and lower drug prices. So I wonder if traders have been looking for excuses to sell, and Hillary happened to serve it up. IBB is down -16% on the year, but it’s also up 19% from its February low. We’ve also got GDP, U. of Michigan Sentiment, and the Baker Hughes Rig Count on the economic calendar. So maybe, just maybe we’ll get some excitement today after 34 days without a 1% move in SPX.
Continue Reading -->T3’s Take 3: The Fed Is Dead Ahead
The power of quantified trading… Next Thursday, T3’s Rob Smith is hosting a special strategy session on his unique Quant Edge methodology. Learn more about it. 1) All Eyes on Yellen Traders are eagerly awaiting Fed Chair Janet Yellen’s speech in Jackson Hole at 10:00 a.m. ET tomorrow. Fed officials have been very hawkish as of late, and today, Kansas City Fed President Esther George said on Bloomberg TV that higher rates were warranted since the US is near full employment with rising inflation. Dallas Fed President Robert Kaplan also offered hawkish comments on CNBC,. Traders are now pricing in a 55% chance of a December rate hike, up from 47% 2 weeks ago and just 9% after the June 24 Brexit. However, keep in mind that the Fed has been fairly unpredictable this year. So it will be interesting to see if Yellen gives the hawkish statements everyone is expecting. 2) Flat as an Ironing Board The market once again went nowhere, with the S&P putting in its 34th day without a 1% move. The index finished down -0.01% at 2172.47, and there wasn’t much action in the other indices either. Economic data mostly solid today, with jobless claims and durable goods coming in better-than-expected. The data supports the case for Fed rate hikes. This and all the hawkish chatter sent up regional bank stocks, and pushed gold lower. And in a near-perfect repeat of yesterday, biotech stocks led in the early going before falling hard in the afternoon on pricing controversies. The Nasdaq Biotech ETF (IBB) fell -1.2% to 282.87. 3) Jeff Cooper’s Take on Biotech Here’s what Jeff Cooper had to say about the action in IBB: Yesterday, I mentioned that the fall in the biotechs on the heels of Hilary’s comments reminded me of the pop in the bubble in 2000 on Bill Clinton’s and Tony Blair’s comments on biotech and the genome. A daily IBB chart shows yesterday’s large range outside down day (LROD or Lighting Rod) on a large increase in volume. Yesterday’s lows nominally undercut the prior peaks from the spring and summer and the previous breakout pivot. IBB is in a potentially weak position if today is a Pause Day prior to downside follow-though. P.S. Sign up for one of our FREE trading webinars. US Economics (Time Zone: EDT) 08:30 Advance Goods Trade Balance (Jul): exp. -$63.0b, prior -$63.3b 08:30 Wholesale Inventories MoM (Jul P): exp. 0.10%, prior 0.30% 08:30 GDP Annualized QoQ (2Q S): exp. 1.10%, prior 1.20% 08:30 Personal Consumption (2Q S): exp. 4.20%, prior 4.20% 08:30 GDP Price Index (2Q S): exp. 2.20%, prior 2.20% 08:30 Core PCE QoQ (2Q S): exp. 1.70%, prior 1.70% 10:00 Fed Chair Yellen to Speak at Jackson Hole Policy Symposium 10:00 U. of Mich. Sentiment (Aug F): exp. 90.8, prior 90.4 10:00 U. of Mich. Current Conditions (Aug F): prior 106.1 10:00 U. of Mich. Expectations (Aug F): prior 80.3 10:00 U. of Mich. 1 Yr Inflation (Aug F): prior 2.50% 10:00 U. of Mich. 5-10 Yr Inflation (Aug F): prior 2.60% 13:00 Baker Hughes U.S. Rig Count (8/26): prior 491 13:00 Baker Hughes U.S. Rotary Gas Rigs (8/26): prior 83 13:00 Baker Hughes U.S. Rotary Oil Rigs (8/26): prior 406 Global Economics 04:00 EUR M3 Money Supply y/y 04:30 GBP Second Estimate GDP q/q 04:30 GBP Prelim. Business Investment q/q All Day Jackson Hole Symposium Earnings Before Open: Big Lots (BIG) After Close: None of significance
Continue Reading -->The Morning Hammer: We Won’t Get Fooled Again?
Get a Quant Edge in Today’s Markets Today after the close, Rob Smith is hosting a FREE webinar on his unique Quant Edge Trading Strategy. Read all about it ********************************************************************* The bears had a great day yesterday. SPX only fell -0.5%, but with Hillary Clinton’s help, they sent biotech from first to worst in a matter of hours, and some key momo stocks like Twilio (TWLO) and Acacia (ACIA) took beatings. Oil also fell on a very bearish inventory report and the VIX got a little pop. Overnight, German business sentiment missed expectations, while Spain reported above-consensus GDP. And Bloomberg is reporting that Chinese authorities may act to cool off Shanghai’s surging property market, including restrictions on mortgages and development loans. This morning, we’re seeing some minor downside follow-through with SPX futures down 5 handles and crude oil off 30 cents. We’ve got a big chunk of economic data coming today with jobless claims, durable goods, Markit PMI, and the Kansas City Fed on tap. However, the big story is still FOMC Chair Janet Yellen’s speech in Jackson Hole tomorrow. Traders have been ratcheting up rate hike expectations, and Fed Funds futures now imply a 54% chance of a December rate hike, up from 47% a couple weeks ago. That’s been putting pressure on gold and US Treasuries. I won’t hazard a guess as to what she’ll say because trying to game the Fed has been extremely hard this year. Everyone was geared up for a big hawk move in June and Yellen came out dovish. In fact, now that I think about it, there are two major parallels with June. We’re heading into a Fed event where everyone is expecting a big hawkish twist. Funny, just as I wrote this, Kansas City Fed President Esther George (FOMC voting member) came out swinging the hawk hammer, saying the “time is right” for a rate hike and that gains in inflation give the Fed room to remove some accomodation. And we’re heading into an OPEC event where a lot of traders expect a production freeze or cut. In June, the Fed and OPEC disappointed the masses. Are we about to get fooled again? I’m not going to make any predictions since I’m not rolling the dice on Yellen’s speech. Just keep in mind that Mr. Market’s primary mission is to fool as many traders as possible at all times.
Continue Reading -->Morning Call Express: A Day to Take Notice
In today’s Morning Call Express, T3 Live Chief Strategic Officer Scott Redler discusses the action in SPX and IBB, as well as gold. P.S. My buddy Rob Smith is hosting a free trading webinar after the close today. Click here to check it out.
Continue Reading -->T3’s Take 3: Hillary Clinton Beats Up Biotech
The power of quantified trading… Thursday after the close, T3’s Rob Smith is hosting a special strategy session on his unique Quant Edge Trading Strategy. Learn more about it. 1) A Little Scare We have now gone 41 days without a 1% down move in the S&P 500, but the bears made some progress today. The S&P 500 finished down just -0.5%, but below the surface, the action was pretty ugly. The red hot Nasdaq Biotech ETF (IBB) was up 1.0% in early trading, but it collapsed intraday and closed down -3.4%. Presidential candidate Hillary Clinton attacked pharma company Mylan(MYL) for raising the price of its EpiPen emergency allergy treatment, which implies that the drug industry could again come under fire over pricing practices. We also saw many hot momentum stocks like Twilio (TWLO) andAcacia (ACIA) get hit hard. But only time will tell if I finally get paid on my VIX calls… 2) Oil Takes a Hit Crude oil fell nearly 3% on a very bearish inventory report from the Energy Information Administration. Traders expected an -850K decline in US crude stocks, but they actually grew by 2,501K. This 3,351K barrel miss just about erases last week’s 3,458K beat. However, keep in mind that oil has been moving on chatter about a possible OPEC production freeze, so keep an eye out for those headlines. 3) Playing in Italy This morning, I added a position in the iShares MSCI Italy ETF (EWI). Italy is one of the worst-performing and most hated markets in the world, and options traders are putting up big money in the options market to bet on further declines. Since sentiment is so incredibly negative, Italy may be washed out, so I decided to dip my toe in. I plan on treating this as a “set it and forget it” position. P.S. Don’t forget to sign up for Rob Smith’s FREE training session! Thursday’s Trading Calendar US Economics (Time Zone: EDT) 08:30 Initial Jobless Claims (8/20): exp. 265k , prior 262k 08:30 Continuing Claims (8/13): exp. 2155k , prior 2175k 08:30 Durable Goods Orders (Jul P): exp. 3.40% , prior -3.90% 08:30 Durables Ex Transportation (Jul P): exp. 0.40% , prior -0.40% 08:30 Cap Goods Orders Nondef Ex Air (Jul P): exp. 0.20% , prior 0.40% 08:30 Cap Goods Ship Nondef Ex Air (Jul P): exp. 0.30% , prior -0.20% 09:45 Markit US Services PMI (Aug P): exp. 51.8 , prior 51.4 09:45 Markit US Composite PMI (Aug P): prior 51.8 09:45 Bloomberg Consumer Comfort (8/21): prior 43.6 10:30 EIA Natural Gas Storage Change (8/19): exp. 16 , prior 22 10:30 EIA Working Natural Gas Implied Flow (8/19): exp. 16 , prior 22 11:00 Kansas City Fed Manf. Activity (Aug): exp. -2 , prior -6 18:30 Fed’s George to Meet Fed Up with Other Fed Leaders Invited Global Economics 04:00 EUR German ifo Business Climate 19:30 JPY Tokyo Core CPI y/y Earnings Before Open: 1-800-Flowers.com (FLWS) Dollar General (DG) Dollar Tree (DLTR) Sears Holdings (SHLD) Tiffany & Co (TIF) After Close: Brocade Comm. (BRCD) GameStop (GME)
Continue Reading -->Webinar Replay: What You Need to Know About Forex
In this special webinar, T3 Live Forex Strategist Kurt Capra breaks down: How to get started in forex trading Why stock and options traders should consider forex The 5 major lies that stop traders like you from making money in forex Interested in joining our next Forex Profit Accelerator Trading Lab at a special discounted rate? Call our team at 1-888-998-3548 or email info@t3live.com.
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