Dave Lutz of Stifel, Nicolaus passes along his roundup of what traders are chatting about on this very busy morning.
Good Morning! US Futures are higher this AM — with the E-Minis tacking on 40bp, but Nasdaq lagging by 20bp despite AAPL being well bid into earnings tonight, as CSCO is off 2% (JPM), Solar companies are under pressure (Lower China projections), and there is some bloodletting in Biotech. EU Markets have been steadily recovering from lows, as we remove some of the terrors from last week: France was not downgraded, and the China Trust is not defaulting. Interesting the EU fins are only off 70bp, as headlines from Germany suggest Capital Shortfalls in excess of $US110B (The 2 main banks needing Capital, Credit Ag is off 1%, DB off 70bp). Maybe headlines saying Draghi out saying ECB could expand QE by buying Bank Loans to consumers in a bid to revive lending helping sentiment. The DAX is nearing unchanged, as volume is quite heavy at 150% normal trends as Germany’s IFO highest in 2.5 years. The FTSE whacked as AT&T not buying VOD, and BG lost 13% (#s). Over in Asia, the Nikkei lost 2.5%, but futures are marked up 1% right now — China lost 1% as heavy lock-ups expire this week. The Sensex is getting smacked, with their Property and Financial Stocks off more than 4% into the RBI this week. Aussie was closed for Holiday.
Looking at EM – Indonesia was worst off, losing 2.4% as their Rupah eyeballs 5Y lows. Thailand lost 2% as Japan cancels tourist junkets and more political angst accelerates. Turkey lost1.5% as Lira on fresh lows — South Africa’s Rand hit as well. “Ground Zero” last week was Argentina, and their FX looks stable for the 2nd straight session. While we know about EM angst on Tapering this week — The collapse in US yields is a EM tailwind.
The US 10YY is popping higher by 3bp as some level of risk-taking re-emerges into the Fed’s anticipated $US10B taper this week (WSJ suggests it could be on hold if markets continue unravelling) – Many credit traders were eyeballing Bills that expire towards the end of Q1, as the “Debt Ceiling” approaches anew and rhetoric in DC gets sharper — Some bills were sold sharply last week, with yields leaping 7bp for paper expiring the Start of March. I’m not seeing a big reversal there yet, and I wonder if this is a cause for some of the market angst. The DXY has a bid, mostly against € as the Yen rests on session lows. The stronger $US is a headwind for commodities, yet Copper and Gold rest near unchanged — Nat Gas is leaping another 2% (Polar Vortex 3 this week) — and WTI has a slight bid, with it’s discount to Brent evaporating to $US10 this AM. Today, we have New Home Sales (Dec) at 10, Dallas Fed at 10:30, a small POMO at 11, and Short Interest from the NYSE reported after the bell. We also have the State of the Union tonight
Earnings season continues with AAPL, FB and AMZN highlighting a full roster of quarterly reports. Apple, the largest tech company in the world, will report after markets close on Monday, Facebook is out Wednesday and Amazon on Thursday – Also on tap for next week are: CAT and X on Monday; F and PFE on Tuesday; DOW, HES and QCOM on Wednesday; CB, XOM, V and VIAB on Thursday; and MA on Friday