Dave Lutz of Stifel, Nicolaus has today’s trader chat:
Good Morning! US Futures are slightly higher this AM, with large gains overseas providing a tailwind for risk. In Europe, the DAX added over 1% in decent volume, despite the EU fins remaining a source of funds and being unch on the session. We have a bounce of Ukraine sentiment, with Moscow’s Micex up 1%, Russian CDS falling fast, and seeing a nice bounce in Ukraine’s FX. Over in Asia, the Nikkei lost 30bp in heavy trading, as Japanese exporters were hit on a stronger Yen. China’s markets were mixed, with Shanghai gaining small as hopes increase for stimulus from the PBOC. India’s Sensex remains near all-time highs into their elections, while Aussie’s market was quiet, with the miners mixed despite higher metal prices. We will be watching to see if the rotation from Momentum continues today — we are seeing a pre-market bounce in some Alt-Energy, Biotech and Internet names early, including TSLA, FB and TWTR. Financials were clear recipients of those momentum flows yesterday. While the S&P 500 has averaged a decline of 0.41% on Mondays this year, with only 3 up days out of 10, On the 11 Tuesdays that have been open for trading this year, the S&P has averaged a gain of 0.56%, with positive returns 9 out of 11 times
We continue to watch the rolling of duration in Treasuries, with the 2YY resting on 6M highs and 10YY on 1 week lows and nearing a 200dma test as Fed fund futures are fully pricing in the chance of a rate rise by August 2015. The € has given up much of y’days surge against the $US, as German business morale weakened in the face of the Ukraine tensions — driving the DXY back over 80, causing a headwind for commodities. That said, Copper has gained over 1%, rallying from a 4Y low as Chinese liquidation subsides and Anglo shuts production at a mine in Chile – Gold is bouncing from 1M low, and Palladium remains at a 2+Y high on concerns of Russian supply cuts. The Energy complex is higher, with Natty jumping 1% into Thursday’s expiry — and WTI gaining into inventory data despite the “indefinite” closure of a major shipping channel outside of Houston. Schedule Catalysts today include Case-Shiller at 9, Consumer Confidence, Richmond Fed and Richmond Fed at 10, a small POMO at 11, ECB President Mario Draghi speaks at 12, a $US32B 2Y auction at 1, and Fed’s Lockhart Speaks on the Economy at 4:30. Also keep an eye on Brazil’s Bond Auction at 1, as S&P downgraded them to one notch above junk overnight.