JonesTrading’s Dave Lutz has a roundup of what traders are chatting about right now.
Good Morning! US Futures are opening flat, as the world awaits our payroll number (the Survey is 235k, High Estimate 314k – Of the 10 Bloomberg “Top Forecasters” 8 of them are all below 235k, but many whispers expecting a big beat based on Seasonality, Weekly Claims Data, and tax Withholding Receipts. Also remember many retailers are “pulling Forward” the Holidays, so Seasonal Hires may come sooner than normal). In Europe, Markets are softer as more Ukraine/Russia escalation headlines hit — and Banks are underperforming as we may see fines for Currency Manipulation Next Week. Spain is getting hit worst, off 1% ahead of this weekend where Catalans will hold an unofficial independence vote in defiance of a Spanish court ruling. Over in Asia, despite the Rouble suffering biggest weekly loss since the fallout of the 1998 Russian crisis, the MICEX is near YTD highs. Nikkei popped 50bp as $US/Y stayed thru 115 overnight; Continue to see Tech shares underperforming as Hang Seng lost 40bp – while China was off small. Aussie was the standout winner, as Basic Materials jumped 2% on hopes China will restart Steel Mills next week post APEC.
Global Sovs Yields are higher — and even the PIIGs are tighter, despite the weakness in Europe. Feels like a continuation of yesterday’s “Strong NFP” trade, where Yields closed on highs, and we saw sharp strength in Economically Sensitive sectors like Industrials, Retailers and Builders (nice spike off 200dma). The DXY is stronger as well, just above 88 and near yesterday’s peaks, causing a headwind for commodities. That said, WTI continues to rally, up 50bp on Export hopes and oversold conditions — Natty Gas is finally taking a breather after leaping 14% this week — and we still see little life in Metals, with Silver, Copper and Gold around unch/slightly lower — It’s early, but the Miners (GDX/GDXJ) have recovered from that 30mln share dump on the close, and are marked higher again this AM — following yesterday’s sharp outperformance against the Metal.
Aside from the aforementioned — keep an eye on the Banks — They are lagging early into Next Week’s Fine announcement, but the 3M5Y curve is steeper, so tailwinds are blowing. Keep an eye on Oil’s impact to HYG — HYG has been weighed sharply by carnage in the Energy HY Sector (15% overall) — and stability may cause a sharp rebound. We have seena reversal lower this week in High Beta — and IBB/XBI start with a major headwind in SLXP (#15 Holding IBB, 1.9% Fund). Scheduled Catalysts include our Employment report at 8:30, Fed’s Evans Speaks on Economy at 9:15, Fed’s Yellen Speaks on “Policy Since the Crisis” at 10:15, At 1pm we get the Baker Hughes Rig Count – then Fed’s Tarullo Speaks on Community Banking at 2:30. 3pm brings Consumer Credit, and the week wraps with the “Commitment of Traders” data at 3:30.