Tag Archives for " market preview "
The Morning Hammer: Post-Debate Happiness
The Mexican peso is up 1.7% this morning, which means Mr. Market thinks Hillary Clinton won last night’s steel cage match US Presidental debate. Meanwhile, the pound sterling is still falling in the wake of Friday’s flash crash. Crude oil is rising after Saudi Arabia’s energy minister said crude could hit $60 by year-end. OPEC recently announced a production cut, though market participants would certainly like more detail. European equities are up for the first time in 4 days on strength in automakers, throuhg banks are still looking weak. Deutsche Bank (DB) failed to announce a deal with the Department of Justice as some traders expected. China resumed trading after a week-long holiday, and the yuan dropped to a fresh 6-year low. Goldman Sachs says that US and European markets could stumble a bit into year-end due to political risks, a weak economy in Europe, and high stock prices in the US. The US dollar is still in bull market mode despite Friday’s slightly soft jobs report. Traders are pricing in a 64% probability of a December rate hike, though keep in mind, the pace thereafter what matters. According to some very smart folks I’ve spoken with, there’s an excellent chance the Fed is one and done. However, gold is catching a bid today, so I’d watch for a pop in the beaten down gold miners (GDX). Apple (AAPL) is up fractionally this morning on news reports that Samsung temporarily stopped production of its Galaxy Note 7 smartphone. The device was already recalled, but even replacement models are catching fire, which is a PR disaster. SPX futures are up about 11 handles this morning, so we’re starting the week off on a positive note. Biotech is catching a bid this morning — it’s been lagging to see if the weak trend breaks.
Continue Reading -->The Morning Hammer: Maybe the Fed Went Too Far
One key trend we’ve been pointing out here again and again has been the degrading trend in US economic data, culminating in yesterday’s trio of misses. Now all of a sudden, the market’s thinking that maybe the Fed went too far in pushing its rate hike case because we’ve seen such lousy data as of late. Traders are now pricing in a 52% chance of a December rate hike, down from 60% last week. September odds are down to 24% from 34% last week. Gold has been on a rampage while the dollar’s taking heat. Equities of course, are still going nowhere. SPX volatility is at a near 2-year low. We haven’t had a 1% SPX move since July 8, and we haven’t had a 1% down down day since June 27. I’m long VIX calls, so I have good reason to be bitter. But I’m also just plain bored out of my mind. Individual stocks are moving around nicely, but I’d love to see a little excitement in the broader indices. Chipotle (CMG) is up this morning on news that Bill Ackman’s Pershing Square took a 9.9% position. Ackman’s going after the board to shake things up. Grovery chain Sprouts Farmers Market (SFM) cut its earnings outlook on competitive pressures and ongoings deflation. Whole Foods (WFM) is down in sympathy with it, The economic calendar is pretty light with no market-moving reports, so it looks like we’ll be in a holding pattern today ahead of tomorrow morning’s ECB rate decision. Good luck… staying awake, that is.
Continue Reading -->The Morning Hammer: Happy Jobs Day!
It’s been about a decade since the market’s made a real move, but maybe we’ll get some excitement with this morning’s August NFP report, which hits the wires at 8:30 a.m. ET. Traders are looking for 180K on the headline number with a 4.8% unemployment rate and 0.2% month-over-month growth in average hourly earnings. With the way the dollar’s been acting, it seems like the market is expecting a beat, which would help clear the way for the Fed to raise rates. The Fed heads have been out in force as of late preparing the market for coming rate hikes, but the market itself may need a little more convincing. Fed funds futures are currently pricing in a 60% chance of a December rate hike. That’s up from just 9% post-Brexit, but still — it doesn’t exactly scream total certainty. So maybe if we get big numbers today (headline number above 220K and 0.3% growth average hourly earnings), those odds push higher. On the flip side, if we get an in-line report or a miss, I’d expect the gold bugs to have a big party while equities pull back. I’d especially watch for a selloff in regional banks (KRE). But no one really knows. SPX futures are doing nothing this morning, which should come as no surprise since they’ve been doing nothing for 2 months. As I’ve said about 10 million times, the SPX hasn’t had a 1% down day since June 27. But with jobs numbers hitting, I guess today’s as good a day as any to break this miserable streak. Crude oil is up this morning, giving us a break from the downtrend. Russian President Vladimir Putin said he’s like OPEC and Russia to reach a deal to freeze supply. Nigerian exports also fell in August. So for now, it’s steady as she goes, though I’m hoping that changes when the big jobs report hits.
Continue Reading -->The Morning Hammer: More of the Same Yawns…
Crude oil is dipping below $46 on the American Petroleum Institute’s inventory report, which said US crude stocks rose 942K barrels last week. Remember, we get EIA data today at 10:30 a.m. ET. Traders are looking for a 1300K build. It should be interesting. Two weeks ago, we saw a massive beat, but last week was a huge miss. We’ve also got the ADP Employment Change, Chicago PMI, and Pending Home Sales on the calendar, but folks are really waiting for Friday’s big jobs report. SPX futures are flat, which shouldn’t be a surprise to anyone given the past 2 months of basically no volatility. The dollar is up as the hawk trade is still raging, though gold is down only fractionally. The miners got destroyed yesterday and I’m curious to see if there are any dip buyers there. In deal news, cloud software name Interactive Intelligence (ININ) is being acquired by Genesys for $60.50 a share, or $1.4 billion. ININ had been rumored to be exploring a sale. Overnight, European markets are mostly positive. EU inflation beat expectations in August, which extends the streak of better-than-expected post-Brexit economic data. German and Italian unemployment, and UK house prices were also solid. Irish airline Ryanair warned that it may reduce earnings guidance if ticket prices continue to drop. Looking out today, crude oil is obviously important, but I’m closely watching biotech. The major indices are holding up well, but IBB has been deteriorating over the past week or so, implying profit taking. I’d also watch the hot new issues like Acacia (ACIA), Twilio (TWLO), and Line Corp (LN). They’re all over the place as a group, but if they start declining in concert, that could be a sign of trouble. But for now, the bull is holding things together pretty well. Maybe Friday’s jobs report will be a catalyst for volatility, but that feels like wishful thinking after a horribly boring August.
Continue Reading -->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 -->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 -->The Morning Hammer: The Bears Are Long F.O.M.O.
Get a Quant Edge in Today’s Markets Tomorrow after the close, Rob Smith is hosting a FREE webinar on his unique Quant Edge Trading Strategy. Read all about it The waiting game continues. We’ve now gone 32 trading days without a 1% up move, and 40 days without a 1% down move. It’s been a beautiful ride for the bulls becuase they’ve been enjoying a picture-perfect grind up. But it’s been hell for bears, particularly those buying put options. The slow upward movement and declining volatility slowly kills the value of those puts a penny at a time. I always think it’s far better to lose fast, because at least you get it over with. Now it seems like a lot of bears are tempted to capitulate to stop the slow bleed. But at the same time, there’s a big FOMO (fear or missing out) element. What if you cover just ahead of what seems like an inevitable market drop? I’m long VIX calls (which is basically a highly leveraged SPX short), so that’s the boat I’m in. I’m down about 9%, which isn’t the end of the world on an options positions, but I admit I’m growing restless. SPX futures are up fractionally following a decent up day in Europe. The stalemate looks set to continue ahead of FOMC Chair Janet Yellen’s Jackson Hole speech this Friday. It seems like traders are starting to buy into the recent hawkish trend in Fedspeak. Fed fund futures now imply a 53% chance of a December rate hike, up from 45% a month ago and 9% post-Brexit on June 27. That has gold and Treasuries sagging a bit. Crude oil is off a little on the American Petroleum Institute inventory report. The API said we had a 4.5 million barrel build in US crude stocks last week, which was a surprise. We get EIA data today at 10:30 a.m. ET. The current consensus calls for an -850K decline in inventories. However, remember that oil has been moving on chatter about the September OPEC meeting. We’re seeing a lot of conflicting news reports about whether OPEC will institute an output freeze or cut, so it’s getting hard to gauge the importance of data. I’m long oil (through the KYN and BGR closed-end funds), but I’m not going to hazard a guess as to what OPEC’s going to do. We’ve also got Existing Home Sales and the FHFA House Price Index on tap today. Housing stocks were up huge on yesterday’s big New Home Sales numbers, so maybe there’s action there again today. But I think biotech (IBB) may tell the tale for now. That group’s been pretty strong the past couple of days, and recent history shows that when biotech does well, the bears tend to fail. Good luck out there. P.S. Don’t forget to sign up for Rob Smith’s FREE webinar.
Continue Reading -->The Morning Hammer: Something’s Gotta Give!
Don’t Fear Forex… Attend my buddy Kurt Capra free webinar tonight and learn why so many stock and options traders are embracing the lucrative world of forex. Click here for more info. European markets are up this morning on solid economic data. Euro area PMI rose to 53.3 in August from 53.3, which implies little impact from the Brexit. France’s was better than expected, while Germany’s was a little weaker. On the US economic calendar, we’ve got the Markit US manufacturing PMI, Richmond Fed, and New Home Sales. Best Buy (BBY) beat by a mile and is up 14%, extending what’s generally been a pretty decent earnings season for big box retailers. Meanwhile, the Bank of Montreal (BOM) beat on strong retail banking activity. SPX futures are in modestly positive territory following yesterday’s yawnfest. Biotech is indicated higher following massive outperformance on the back of the Pfizer (PFE)/Medivation (MDVN) deal. Bloomberg is reporting that Bayer and Monsanto (MON) are closer to closing their deal, which has been stuck on issues like the price and termination fee. Crude oil is down again this morning after Iraq’s Oil Minister asked foreign oil companies to increase oil production and exports. The dollar is down after making solid gains on hawkish comments from the Fed’s Fischer and other officials. Some traders may be taking their feet off the gas ahead of FOMC Chair Janet Yellen’s Jackson Hole speech this Friday. I’m not in the business of trying to game the Fed, so I’ll just point out that in June, Yellen came out dovish after a barrage of hawkish comments from Fed officials. So please, tread carefully. Otherwise, we’re back to the same old grind. The action’s been so lame that it makes the April-May lull look like a firestorm in comparison. I am long VIX calls and I’m sitting on a loss of about 8%. That’s not the end of the world, but now I’m in that no man’s land where I’m worried about getting shaken out at the worst possible moment. But I’m going to stick it out for now. Arguing with the market is for fools, but we’ve gone 31 days without a 1% move. And we’ve gone 39 days without a 1% down move. Something’s gotta give. Right? P.S. Don’t forget to sign up for Kurt Capra’s free forex trading event!
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