Good morning! Dave Lutz of Stifel Nicolaus passes along the top topics about which people are talking today:
Yesterday was the worst Feb start since 1933 (lost another 15% that month) – While the VIX, % NYSE Stocks under 200dma, and ARMS showed oversold conditions — we did not get the same confirmation from the Put/Call, TICK and “Overbought/Oversold” indices yesterday. With the DJIA and Nikkei under the 200dma, focus points toward support for the S&P’s 200dma near 1707. Angst is building quick into our Employment Print Friday, as the ISM has decent predictive power into that number. Right now US futures are up 40bp, while overseas markets are playing catch-up to yesterday’s smackdown. The DAX is off 1%, but EU fins trading near unchanged in decent volume. In Asia, Japan was crushed for 4.4%, worst drop since June, now off 14% from itsDec31 Peak as the Yen surges (Futures are up 1% right now). While Shanghai and Taiwan remain shut for Holiday, Hong Kong reopens and looses 3% in heavy trading. Aussie was hit sharply as their Central Banks lost their dovish tone, sending the A$ surging higher. Focus will remain on the VIX, which posted a close above 20 in record volumes (1st since October, only 2nd time in last year). Right now VIX futures are marked 3% lower, and despite the weakness overseas, EU’s VIX is off 2%.
The 10YY is popping, after nearing a test of the 200dma overnight (2.55%) — and we have stability in EM FX, with Turkish lira, South African rand, Indian rupee, Brazilian Real and Hungarian forint all higher against the $US. The € is slightly weaker against the $US, as the WSJ opines that the Euro is getting “Safe Haven” status. Focus should be on the US Treasury’s Bill Auction at 11:30 — They are auctioning off $US8B in 4 week Bills that mature on March 6th — and right now that paper is indicated to yield 11bp, well above the 0bp Bills normally yield, as the “Debt Ceiling” looms large. The DXY has a bid right now (but capped by the 200dma, where it failed last week) — so Commodities have a slight headwind. That said, we see Copper higher (China optimism?) — Nat Gas jumping 2% (Another Winter Storm approaches) — and WTI outperforming Brent (Storage Data tonight expected to show a huge Cushing draw). ‘safe Haven” gold is getting hit — could be Margin Call from Asia/EU — or it could be a reversal in the rush for safety. Today’s Scheduled Catalysts includes Lacker (Huge Hawk) speaking at 8:30 on the Economy, Lew speaking at 9 on the Debt Limit, ISM for NY at 9:45, Factory Orders for Dec at 10, a $US2.25-$2.75B POMO at 11, the 4week auction at 11:30, Fed’s Evans (Huge Dove) speaking at 12:30, and API data for Crude at 4:30 tonight.