JonesTrading’s Dave Lutz has what traders are buzzing about right now.
Good Morning, and Happy Friday! Heavy volumes today, as Scotland votes “NO” / We have a “Quad Witch” expiry (Futures and Index Options expire on Open, Single Stocks on the close) / a S&P and EuroStoxx rebalance / The Alerian MLP Indicies rebalance, along with the ARCA Gold Miners / The BABA comes / Finally the S&P trades ex-dividend (SPY). (Rebal details will be in WTAW). Other Scheduled Catalysts today include US LEI at 10 — there is NO POMO at 11 — Moody’s French review after 11:30 – Baker Hughes Rig Count at 1, and “Commitment of Traders” data at 3:30
BABA was priced conservatively at $US68, chatter it is trading 30% higher in the Grey market, while YHOO is marked up 1% (ISI says YHOO will move .89 for every $US5bn in BABA valuation). We have futures marked higher, led by a 40bp pop in the Russell. The FTSE is the best performing market over in Europe, as Scotland votes 55% “NO” — Scottish exposed shares leading the upside. Spain’s market is close behind, as yields are 8bp tighter as Scot vote dampens Catalonia fears. We have heavy volume overseas, with the DAX and FTSE trading 2x normal, but probably due to rebalance/expiry. We have some stress though, as the DAX is well off it’s best levels as Euros move toward Bunds — may be some Ukraine stress building into the weekend, as the MICEX is off 1.5% early. We also need to stay aware of the Moody’s review of France after the EU close — Heavy chatter they will downgrade earlier in the week, which French officials are decrying as “false” this AM.
Over in Asia, Tokyo jumped to its highest level since November 2007 after Prime Minister Shinzo Abe said he would quickly reform the country’s $US1.2tn pension fund so it could buy more stocks, and the Yen got slammed against the surging Dollar. Keep an eye on the British Pound, having rallied over recent days in anticipation of a No vote, the pound seems to be suffering from a classic case of “buy the rumour sell the fact” as it loses ground against the $US. US 2YY are retreating from 3Y highs, and while the 10Y Treasuries and Bunds are flat — they have reversed overnight losses pretty quickly. With the $US rallying, we continue to have a headwind for Commodities. Brent is flat, but WTI is under pressure into Monday’s expiry — while the metals remain under pressure – Silver 1Y+ lows. Grains and Beans? They still hate ’em as chatter increases of transportation issues.