Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about on Wednesday morning:
Good Morning! US Futures are getting whacked early, with the S&P off 1.8% and Nasdaq 2% – Equities are still following Oil, and WTI is keeping up its downward trajectory into Expiry later today. Earnings not helping, as Financials continue to be punished and Tech hardware under sharp pressure this week on IBM’s #s. Over in Europe, Most markets are getting smoked for 3%+. Every major sector is off at least 2%, with financials and discretionary names the heaviest hit on volume that is nearing 2x normal. In London, the FTSE is nearing a bear market — Banks getting crushed with Barclays, Standard Chartered and HSBC all down 4%+, but the epicentre remains is a 6%+ drop in the miners. In Asia, India Fresh 52-week lows, while the Nikkei lost almost 4% to plunge into Bear Market territory as the Yen gathers upward mojo. Hang Seng lost 3.8% as Energy issues were pummelled and the HK$ gapped to 10Y lows — while Shanghai lost 1% in another volatile session. Volumes across Asia were elevated relative to 20day averages.
Haven trades en fuego, with Gold up 50bp and heavy buying Treasuries pushing the 10YY below 2%, nearing a test of the August/October “Double bottom” near 1.9%. Fed Funds are in fast retreat on another March Hike, now showing a 23% chance, down from 52% at the start of January. Commodity Currencies getting crushed this AM — Rouble record lows, Loonie hit into BoC call at 10 am, while the Mexican Peso, Kiwi and Aussie $s are whacked on Oil. We also have some Dollar Peg nightmares — HK$ hits 10Y low (China) and Saudi (Oil) bans shorting the peg — keep an eye on $ strength on haven flows. Save Gold (Haven) and Natty (Winter storm), all commodities are under pressure. Industrial metals like Copper are off 1%, while WTI drops 3% as traders dump spot contracts (Expiry today) along with the back end of the curve (Iran headers forecasting “lower for longer” — Keep an eye on HY today, the basket of high-debt levered E&Ps were hit for almost 10% yesterday, and Symantec / Veritas renegotiating terms may weigh on sentiment, as BofA and MS were having problems locking down the loan.
Ahead of us today, at 8:30 we get Housing Starts and Permits for December, along with US CPI and Real Avg Weekly Earnings. The Bank of Canada Rate Decision is at 10:30 (Most expecting a hold, but the doves have gotten very loud in the last week) — At 2:30 the current WTI contracts roll over, just ahead of API Inventory data at 4:30 – Crude Supplies Seen Rising 2.75M Bbl (Up from 2.5M yesterday). At some point during the session, we get the Architecture Billings Index for December (a leading indicator for commercial real estate). Down in Washington, the Senate is in session while House is on break. At 10:30 U.S. Attorney Gen. Loretta Lynch testifies before Senate Appropriations subcommittee on implementing Obama’s executive actions on gun control — while President Obama speaks at the North American International Auto Show in Detroit on the domestic auto industry’s rebound just after3pm. We should endure headlines from Davos throughout the session. Earnings focus tonight will be squarely on KMI in the battered energy space.
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