From Dave Lutz of JonesTrading, here’s a quick guide to what traders are talking about this morning:
Good Morning! US Futures are breaking higher, with Russell, NDX and S&P all adding 50bp early. The global rally started in Asia – Hong Kong’s Hang Seng index rose 1.2% and the Shanghai Composite jumped 2.1% as President Xi Jinping signaled a nationwide expansion of free-trade zones. While Falling Ore weighed on Miners keeping Aussie in the red, and Nikkei fell 40bp despite stronger Retail Sales Data — India added 50bp on chatter reforms coming to boost growth. This shift in global sentiment is helping Europe recover, the DAX has added 1.3%, EuroStoxx 1% as the Banks recover yesterday’s weakness — SX7E gaining 1.5%. Most EU markets are trading very light still, with volumes 30-50% below normal. Russian equities are bouncing and the Ruble rallying — helping sentiment in Europe. Keep an eye on Brazilian equities — EWZ is continuing yesterday’s rally from lows, gaining 3% – PBR marked up 2% as the street covers shorts post election.
The 10YY is higher here, mirroring a weakness in German paper as the Fed starts their 2day meeting — The DXY is continuing its rally — making gains against the Euro, and getting back upside 108 to the Yen. Keep an eye on Sweden’s Krona — just took out 3Y lows against the $US as their Central Bank cuts to 0% to fight deflation. Despite the headwind from the stronger dollar — most commodities are well bid. Silver and Copper are rallying, while Brent/WTI are up 50bp despite headlines Iran saying no OPEC cut next month. Grains and Beans are popping as yields in Australia and Russia may drop because of extreme weather — this is another crowded short. Scheduled catalysts include Durable Goods Orders at 8:30, S&P CaseShiller at 9, at 10 we get Consumer Confidence and Richmond Fed, and finally at 1 we have a $US29B, 2Y auction
Focus remains on earnings today (TWTR off 10%, downgraded BofA, SF, Nomura, RBC) — we have AET, AMTD, CIT, CMI, DD, FCX, GLW, HOT, MMC, PCAR, PFE, and TRW pre-open and AFL, AJG, AMP, BXP, EA, FB, GILD, MAR, WDC, and X after the bell. I’ll also be watching the Oil Service Stocks, OIH never recovered with the commodity yesterday. Brazil remains interesting, as EWZ has been a straight line higher since yesterday’s down 10% opening — Despite lighter Eco data yesterday, the ITB (Builders) managed to rally above the 200dma, and close near 3M highs — With rates slightly higher, watch tailwinds in Fins — there was a massive liquidation Friday in the XLF, seemed tied to a hedge coming off in Options. Finally, Ebola headlines are fading, and the Airlines continue to rocket higher — UAL, AAL and DAL are all up double digits for October.