Dallas Fed President

* 29-Jan-2016 11:52:00 AM – FED’S KAPLAN SAYS MESSAGE FROM FOMC IS THAT MORE TIME NEEDED TO ASSESS GLOBAL SITUATION -REUTERS INTERVIEW
* 29-Jan-2016 11:52:26 AM – KAPLAN: FED HAS NOT DOWNGRADED FORECASTS, BUT NEEDS TO BETTER UNDERSTAND EFFECT ON U.S. -INTERVIEW
* 29-Jan-2016 11:52:46 AM – FED’S KAPLAN SAYS GOOD REASON TO BE PATIENT ON POLICY GIVEN FINANCIAL CONDITIONS HAVE TIGHTENED -INTERVIEW

These Comments just hit wire from Dallas Fed president Kaplan( non voter)  Sound dovish to me , looks like Fed in no hurry to raise rates and  worried about global issues.

World equity Indices

lets take a look at how  Worldwide Equity  indices fared this Month.Changes are in Domestic currencies

  • Dax -8.8%
  • Stoxx 50 -6.8%
  • Cac -4.75%
  • Ibex(spain)  -7.6%
  • MIB( italy)  -12.9%   Umphhh

Asia:

  •  NKY -7.96%
  • Hang Seng -9.45%
  • Shanghai -22.65%
  • CSI 300  -21%

Bond yields changes  for the month,10 year maturity:

  • Bunds -30 Bps
  • France -35 Bps
  • Italy -21 Bps
  • japan -16 Bps
  • China +3.9 Bps
  • Russia +53 Bps

 

oil

A couple of reasons for the price drop:

  1. Opec/ Russia deal unlikely
  2.  Opec oil production for January Jumped to highest in recent history as Iran back on line post Sanctions.Production was 32.60 Mln.  barrels a day  compared to 32.31 in December
  3. Roughly 8.5% rally this week may cause little profit taking before the weekend.

Risk On

after the surprise Interest rate  cut from the BOJ  markets have been trading risk on/QE trade. QE trade, buy everything except Currency where Stimulus is being implemented.Yields are dropping around the world,Record low negative rates in japan as maturities up to 8 years have negative rates.The new lending  rate 0f-.1  will only apply to new deposits,so the Impact on Stimulus might not be as great as market pricing in.Both bunds and US 10’s  yields at lowest level  since April

yen did drop 200 pips immediately after announcement,and trades down 177 now.This could be the start of another currency war.No country wants to give up an inch in the shrinking export pie,so thus we could see more action by other countries to weaken their currency.China???   Euro??   down 100 pips  now .Dollar +100 ticks  and the leader  of the risk on movement as USA  on a tightening cycle.

Amzn  Big miss on holiday earnings,But it was up 6% yesterdays  so today 8% drop is insignificant.Whirlpool,Colgate -Palmolive complained about strong dollar hurting earnings and Chevron lost money in the quarter for first time since 2002. Mastercard, MSFT and American airlines had solid earnings

GDP was in line with consensus,and may have surprised some pundits who were calling for a disaster.yes it was a big Slowdown vs. Q3   but consumer spending and real final sales  were above consensus.For all of 2015 Consumer spending was +3.1%,the best year since 2005.For all of 2015 GDP was roughly $18 trillion!

Russia rumors regarding  OPEC  just that rumors.But still Oil up on the day as the Risk on /Good GDP Higher energy stock provide a tailwind.Lets  see if Spooz can maintain momentum  above 1910.

FANG

FANG stocks to the rescue.The cleverly named group pulling  the indexes higher.Even Apple(+.50cents) being pulled up.Watching that $92 level in apple,today’s lows 92.39. Amzn +7%  as  it will report earnings after the close.Goog +5%  and FB +13%.  Biotech is still down on day,if IBB could rally we would have a real nice up-day in the Nasdaq.

Can You guess what the volume leader is for stocks today’s ?  FB? SPY? BAC?  Nope it is the 3x long crude ETN(uwti) it has done 110 mln shares.yesterday it did 166 mln. The price is $2.44 so the 34 cent  net change good for 16% move higher.  Crazy.

European Cash  Equity Indices closed lower on the day  and the futures are not in the mood to follow US peers higher.Strong Euro also a problem.The worries about Italian banks  too high to join in the FANG rally.Broader market  we have seen 299 new lows  and only 83 new highs.

Soy broke below the bottom of the range  but very little excitement followed.lean Hogs giving back some of its nice gains this week.

Risk On with oil and Stocks higher and gold lower.

Soybeans

Soybeans heavy today and looking to test the bottom of the range at 870. A couple  reasons:

  1. Brazilian Crop tour showing early harvest better than expected
  2. Favorable rains for drought stricken Argentine Crops
  3. China canceled  a cargo of US soybeans

here is hourly chart that shows the range  of beans since mid January.870 is  the bottom of the range,your horizontal line.

S H6 Comdty (SOYBEAN FUTURE    M 2016-01-28 09-45-12

OPEC Follow up

Still no confirmation of meeting between Russia/Opec. But plenty of jaw- boning and these bearish for prices comments

  • OPEC Delegates said no No Plan yet for meeting w/Russia
  • Iran  seen to challenge any deal to cut production

No worries though as the Flood of Bullish comment were reported quickly after:Senior gulf delegate   says of Possible OPEC-Non -Opec deal”The door is open  and all possibilities are there”. and “Saudi Arabia and Gulf nations willing to cooperate to stabilize markets”

The option to cooperate is there  but will they follow through with it.The USA  will not cooperate with cuts ,so why would Saudi Arabia want to throw a lifeline to shale?

I’m still waiting to hear a confirmation or denial  from Saudi Arabia

Oil

More comments from Russia hinting at an OPEC-Russian meeting next month where they could agree to jointly cut production by 5%!  All we have heard from is Russia on this matter waiting to hear from  Saudi Arabia  or Some high Ranking OPEC members. This very well could be just talk,but is has accomplished its goal.The shorts are covering,Downside may be limited for a time.This all done without actually changing any production.

RBOB,GASOIL  and  Heating oil all strong as expected.Stock market Strong as well  the energy sector will drive the broader market higher on the cash open

Afternoon swoon

Just a thought,  that the post Fed meeting sell  off  in stocks has less to do with  what the  Fed said and more to do with the ongoing  trend of Weak NASDAQ stocks?Fang stocks been trending down/sideways all day.Once fed statement out of way the trend accelerated to downside.Same with biotech .Maybe the market wanted more from the fed or  they just wanted Fed out of the way. Something to think about as Nasdaq down 108 points. 93 -100 NDX stock down on day.

FB still has to report,Amzn as well.Apple did not set a good precedent for tech stocks