Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about on Monday morning:
Good Morning! US futures are off small, being helped by M&A (JCI for TYC) despite Oil’s cover bid evaporating. Expect thinner trading conditions, as many in New York have had their commutes impacted by this weekend’s blizzard. Europe is meandering around unchanged, as Banks are getting hit across the continent, along with Oil and gas companies leading to the downside. Yield sectors are generally outperforming, and most exchanges are seeing average volume. 2 outliers are Italy, which is hit for 1% as Financials resume their plunge, while Greece is outperforming on S&P’s late Friday upgrade. The FTSE is unchanged, with Energy Companies and retailers (Kingfisher) weighing, countered by a nice bounce in Healthcare stocks. Over in Asia, Stabilizing currencies helped China/HK gain ~1% with coal/steel names outperforming (more overcapacity cut chatter) — Nikkei bounced 1% on continued short covering ahead of the BoJ — while Aussie closed up nearly 2%, getting back upside of 5,000 as Energy Stocks jumped. All Asian Emerging Markets closed better.
In addition to sharp pension rebalancing flows (MS notes January has seen the largest monthly gap between stock and bond returns, around 11%, since October 2008), we have positioning ahead of the Fed on Wednesday and the Bank of Japan on Friday dictating flows. Treasuries are starting with a slight bid early, while the Euro is shrugging off a 11month low German Ifo sentiment read to gain ground against the Greenback. The Yen is bouncing a bit after last week’s sharp surge, will be key for equity bulls for the Yen to hold 118 today. We have a solid bid still in Metals, with Platinum gaining 2%, Silver 1%, Gold back over $1100 and copper adding to its 2week highs — while Oil is retreating from its best 2day rally in 7 years. Natty has a bid to it on the sharp cold weather here in the northeast, while the grain complex finds itself under pressure to start the week.
Very quiet on the Catalyst Calendar today, with only the Dallas Fed scheduled at 9:30 today. We do get a handful of earnings today (DHI, HAL, KMB, and MCD out pre-open and CR, PKG, SANM, STLD, and ZION post-close) — while down in Washington, Federal Offices are closed and candidates will dominate the headlines into Iowa next week. The rest of this week does heat up, with FOMC Rate Decision (No Presser), the Bank of Japan Decision , Germnay’s GfK Consumer Confidence, a House Committee hearing on developments in the prescription drug market, and Pending and New Home Sales for December expected. This is also the busiest week of earnings season – Some big earnings prints upcoming.