What Are Traders Chatting About Right Now? Russia, China, And Euro Banks...

Policemen check oil pipelines during a patrol in Shueiba refinery in Iraq's southern province of Basra August 26, 2010. REUTERS/Atef Hassan Thomson ReutersTo match Interview IRAQ-USA/OIL

Here’s today’s trader chatter from JonesTrading’s Dave Lutz:

Good Morning! US Futures are basically unchanged and have been trading in a quiet band overnight. Russell thus far not giving back any of its outperformance. Europe is having a solid session, with the DAX climbing 90bp in decent volume led by a rebound inn Utilities. Eyes remain on Greece, where their market is off 1.5% and Yields wider (Political uncertainty), but Euro Banks remain in the Green. Russia’s MICEX is jumping 2.5% into their rate decision today (50bp hike expected), while Shanghai rebounded 3%, jumping nearly 5% from the lows as the China Securities Journal said Tuesday’s dip was a “buying opportunity”, with heavy buying reported from Hong Kong. The Nikkei was worst hit, losing 2.5% as wild gyrations in the Yen crosses drove flows from their exporters. Aussie lost 50bp, weighed down by Banks (regulatory capital headlines) — but Miners popped despite Ore falling 1% to $US69/ton

The US 10YY is unchanged, and German 10YY has rebounded 1bp from fresh record lows. The $US is losing slight ground against the Yen this AM, but the DXY is higher as the Euro breaks down. Oil is under pressure, with WTI off 1.7% and just above session lows (Heavy API build, Iran $US40 comments, OPEC upping supply and lowering demand estimates). Both Gold and Silver are retreating as Chinese consumer prices rose at their slowest pace in five years — but very small pullbacks given the day yesterday. Natty Gas is moving into the green (lower projected inventories), while the Grains and Beans are mixed. Pretty light on the Calendar — DOE data for Crude at 10:30 (API showed a massive build last night, despite expectations for a draw. Street looking for a draw of 2.7million from DOE); WASDE data on Grains at 12, at 1 a 10Y auction – Monthly Budget Statement from the Treasury at 2, and a New Zealand Rate Decision at 3

Some Trends I’ll be watching today

·Watch the Euro Safety Trade — yesterday saw sharp equity weakness into the German Close, and Heavy Bund Buying into the EU Credit Close at 12ET. May dictate a pattern again today. Growth (IWO) really started outperforming after the Euros went home.

·Oil remains in focus into Inventory data — XOP well outperformed the commodity yesterday — let’s see how long the “buy The Dip” buyers yesterday hold with WTI breaking down. DOE data at 10:30

·Keep an eye on HY — HYG was under pressure yesterday, there was a big seller at ICAP early in the morning, and the weight of Energy credits could never spark a rally — HYG and JNK are near 2Y lows, but heavy demand came in around SPX2035 yesterday

·Watch the Homebuilders. ITB has been sliding south since touching $US26 in late November — TOL reported (7% weight), and while misses on Revs, sees FY2015 High End achievable.

·Retailers should remain in focus into the Advance Retail Sales print tomorrow — The XRT remains 3% below Black Friday peaks as Holiday sales thus far have been a “Sell the news” –

·Regional Banks posted an impressive session yesterday, led by some of those TX/ND Energy exposed plays (TCBI, HBHC, IBOC, CFR) — With Oil dropping sharply this AM — they could lead smallcaps lower.

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