Dave Lutz of Stifel Nicolaus passes along what he’s chattering about this morning.
Good Morning! US Futures are weaker this AM, with the S&P off 40bp. While the stronger Yen is a factor – 2 market headwinds this week is Yellen speaking before Congress Tuesday and Thurs (uncertainty) and the Retail Sales Print for January due Thursday (Bad Weather) ahead of a 3day weekend in the States. We also have some overnight weakness in EM, with Ukraine and Hungary’s FX under pressure. The DAX just turned negative, while EU’s Financials are off 1.2% ahead of a Noon Trichet speech in Athens. Volumes in the EU are pacing very light, with Germany trading 40% below the 20day average — EU’s VIX is up 2%, but has lost 20% over the last 5 sessions. The Nikkei gained almost 2%, but the Yen gapped higher at 2amET after a BOJ Corporate Bond Buying Operation — Nikkei futures are off 1% right now. China’s market ripped higher on headlines showing strong spending over their New Years Holiday — and Electric carmakers jumped as China’s finance ministry cut subsidies by a smaller amount than previously announced, and extended incentives through 2015. Aussie gained 1.5% on the back of the Miners. Single Stock movers in the USA include YELP +5% (YHOO partnership) and QCOM — 4% (China Antitrust Investigation).
The 10YY is off small, and testing Friday’s afternoon low of 2.66%. We have a ton of supply at 11:30 – Auction of $US42B 3month, $US42B 6month, $US50B Cash Management Bills (Key to watch as we approach the Debt Ceiling). The € is slightly stronger, but hit sharp resistance at the 50dma against the $US. With the strength of the Yen, however, the DXY is basically flat on the session. We have a bid under Industrial metals on the China headlines, with Silver jumping 1.2% and copper slightly higher. Gold has added 75bp, breaking upside of the 100dma and hitting the highest levels since early November (Record Chinese Consumption). The Oil complex is under slight pressure, with WTI retreating 40bp to test the 200dma, on headlines of increased Libya output ahead of OPEC’s monthly report later this week. Economic Data is thin today, the main catalysts I see include a NY Fed survey of consumer expectations around 10am (approx.), a $US2.25-2.75B POMO at 11, Trichet speaking at Noon in Athens, and World Agricultural Supply & Demand Estimates at 12 as well.
Major Events this week include —-> Multiple FOMC Speakers all week, including Yellen speaking to House Tuesday, Senate Thursday // NO POMO on 2 days this week // China PPI, CPI // Eurozone GDP, IP and German CPI // Advance Retail Sales for January // Monthly Budget Statement on Wednesday key for Debt Ceiling // 13Fs are due from the Funds by Friday // Moody’s will update ratings on Italy Friday // Liquidity will diminish into US 3 day weekend