Dave Lutz, the head of exchange-traded funds at JonesTrading, has a quick overview of what traders are talking about on Tuesday. In brief:
- US stock futures are lower after the long weekend, as are the major indexes in Europe. On Monday, the FTSE ended its 14-session streak of all-time highs.
- The pound is surging, up 2.5% against the dollar, after Theresa May’s speech confirmed that Britain will leave the European single market. It is on pace for its biggest gain since 2008.
- Morgan Stanley reported fourth-quarter earnings that beat on the top and bottom lines.
Good Morning! US Futures firmly in the red despite some Heavy M&A (BAT/RAI for $50bn — Luxottica/Essilor for $50bn — NBL/CWEI for $2.4B) – While Spoos are off 40bp, the Russell is off nearly a double as the $ weakens overnight. Pretty much a sea of red in Europe, where the DAX smashes below 50dma, losing nearly 1% but is staging a late morning recovery right now. Energy and Fins are leading to the upside, while Autos and Industrials falter — volumes pacing pretty good, with Frankfurt 25% heavier than normal trends. FTSE broke it’s record string of ATH’s yesterday, and is down another 40bp today as the Pound catches some upward mojo. In Asia, Aussie saw profit-taking – Nikkei lost 1.5% as Yen ripped higher and Autos get whacked – Shenzhen recovered 1% of the 3%+ it lost Monday on IPO chatter, while most of EM Asia fell despite the dollar weakening overnight.
The US 10YY is under some decent pressure, with Yields testing 2.3% as German Bunds catch a big bid the last 2 days, knocking the German 10YY back under 30bp. Trump and Scaramucci talking down the $ over the weekend, and Carney Hawkish Headers and stronger than expected inflation data from London have a sharp recovery in Sterling, while Germany’s ZEW comes in hot, helping Euro near 1.07. The $/Y 6week lows and struggling to stay upside 1.13. Commods all love the falling dollar – Copper just off 18month highs – Gold 2month peaks up 1.4% in the overnight after a decent rally yesterday. Oil is up 1.3%, while Gasoline seems to be leading, gaining 2% in the early go. Softs are bid higher across the board.
Ahead of us today, we get all the talking heads in Davos with interviews of CEOs and heads of State — at 8:30 we get the NY Federal Reserve Empire Manufacturing Survey, just before Fed’s Dudley Speaks on Consumer Behaviour in New York at 8:45. Bank of England Bond-Buying Operation Results are the last scheduled catalyst at 9:50 — until Fed’s Williams Speaks in Sacramento at 6pm tonight. Earnings starts to roll (MS / TIF (sales) / CSX, UAL / UNH all pre-open), while we have several unlocks (ACRS, NKTR, PI, PTHN, RGC). 3 Conferences for today – Jefferies Winter Consumer Summit; Peters & Co. Energy and Argus Americas Crude Summit. Down in Washington, the Senate works on 2 confirmation hearings: Ryan Zinke (Interior) and Betsy DeVos (Education.)