The yen is rising this morning on what looks like an advance “sell the news” reaction in advance of the Bank of Japan Meeting on July 28-29.
Remember, the yen has been ripping all year:
Most economists expect the bank to increase its ETF purchase prices, cut rates, and increase its JGB purchases, which could mean it's all but priced in.
The Nikkei is off -1.4% and most European markets are red.
SPX futures are flat, and I'm surprised they're not down more.
Crude oil slumped under $43 and the key biotech sector is getting roughed up in the early going.
Gilead (GILD), which is 8.1% off the IBB ETF, is taking a big hit on its disappointing earnings reports, and is off 4.3% in the early going.
IBB is indicated down -0.9%. That's not the end of the world, but we can all agree that things are just plain better when biotech keeps its act together.
There have been 4 horsemen leading equities since the 2/11 low — biotech (IBB), oil, high-yield (HYG), and the Russell 2000.
Biotech and oil are obviously feeling the heat. High-yield is closely linked to oil (since oil prices drive default rates on energy bonds).
Here is a chart of the HYG ETF vs. crude oil over the past year:
So we have 3 of the 4 in some kind of trouble.
Therefore, keep your eyes on the Russell. If that starts giving up, maybe the bears will score a victory.
Post-Brexit, they haven't been been able to do much.
I still see an April-May-style sideways grind for the time being.
Markets are a little stretched and sentiment is positive, but you can't argue with price.
Frankly, with the yen up so much and oil now 15%+ from the high , I expected SPX futures to be down at a least a half-percent.
But they're flat.
In other earnings news, industrial giant United Technologies (UTX) is up after beating.
The economic calendar picks up a little bit today, with S&P Case-Shiller, Markit PMI, Consumer Confidence, Richmond Fed, and New Home Sales numbers coming.
However, the big news comes after the close with Apple's (AAPL) earnings report. Expectations appear to be pretty low, but remember, it takes a lot of money to move Apple, so they really need to deliver.
Twitter's (TWTR) also reporting, and given how much that stock has run since Microsoft (MSFT) bought LinkedIn (LNKD), it will be in close focus.
Still not fan of that one.
Good luck friends!