market update

Can you tell me what market was higher by 12.3% yesterday( largest % gain since 11-3) and is higher by 7.83 %?  the Vix! Political volatility indeed. Stocks still trading lower with both SPX and NDX down .49%. The lows in the dollar were scored roughly at 10:00 this morning  the London fix  time .Yen back below the 89 handle as the currency play has subsided.Stocks lower and bonds,gold still pressing higher.

let’s talk copper.Real nice day today  as comex +7 handles and LME right up on 6000 level,a level that prices don’t like to be above.Managed money net longs at an all time high  the End users,commercials  net shorts at an all time high.LME  spot copper/3 mo spread approaching  highest levels since last summer.Who will win this battle between shorts and longs?Fundamentals rarely apply to Copper complex so i will touch on them briefly,more for background information then  reason for strength. Today is last day  of negotiations between Union and management at world’s largest copper mine.Thought are they will strike.Secondly 2 smelters in China will be down for maintenance  thus limiting the supply of copper.

Apple earnings

Bloomberg has a great tool that incorporates option activity to create a range for how much a stock may move on earnings release.

aaple

If you look at the bottom two lines you can see the implied move in apple post earnings is 3.8% up/down.if you reference the top Portion of the Box that would be close to a 3 standard deviation move.I will update tomorrow to see how accurate this metric is.

morning 1-31

Let’s start with a comment from BlackRock’s global chief investment strategist “we have greater confidence that inflation will meet central bank targets, with some scope for overshooting in near term”. Overnight in Europe Inflation numbers were better or less bad all across Europe, EZ GDP was the highest reading in 3 quarters. This has many starting to talk from ECB. Less than an hour ago Trump Trade advisor said Germany is taking advantage of a weak EURO. Euro jumped 60 pips on comments. I am just repeating what many are saying Trump does not want a strong Dollar! Trumps Immigration Policy had a bigger impact on NASDAQ yesterday as a handful of top tech companies have workers Impacted by policy. Something to remember if this Continues to be an issue.US Political Volatility on the rise and quite possibly here to stay.

This Political volatility has been a benefit for gold as it climbs for a third consecutive day, still in a downtrend until it trades above 1223.it hasn’t really caught the attention of the treasuries yet. IFR News points to the Increase in Inflation and Inflation expectations as the Driving force for Bonds, Not the political landscape. The harder US politics become to predict the more expensive it will be to hold Dollar denominated assets.

Yesterday the Bank of japan left rates and QE Unchanged as Expected. They said risks are still tilted to downside and no talk of taper. In the Press conference to follow statement, BOJ Kuroda said lasts week increase in Bond purchases was not going to be the Norm and will only be used if Yields move away from zero. NKY didn’t like this and closed lower by 1.69%. European Stocks are mixed Most bourses are up a few ticks. Month end today so a good portion of the action could be related to this event.
Oil is little changed to higher this morning. Most headlines are bearish overnight. Hamm. Nat Gas lower as winter is almost over.
Plenty on the political calendar so I will be keep on twitter as usual

• 9:30am: Senate Judiciary Cmte to vote on nomination of Sen. Jeff Sessions, R-Ala., for attorney general

• 9:30am: Senate Energy and Natural Resources Cmte to vote on nomination of Rep. Ryan Zinke, R-Mont., for Interior secretary, and former Texas Gov. Rick Perry for Energy secretary

• 10am: Senate Finance Cmte to vote on nomination of Rep. Tom Price, R-Ga., for HHS secretary

• 10am: Senate Health, Education, Labor and Pensions Cmte votes on nomination of Betsy DeVos for Education secretary

• 10am: House Energy and Commerce Cmte holds hearing on Medicaid

• 12:20pm: Senate to vote on nomination of Elaine Chao for Transportation secretary

• 2pm: House Oversight and Government Reform Cmte hearing on “Fraud, Waste and Abuse under the Affordable Care Act”

• 8pm: President Trump says he will announce his Supreme Court nominee from White House

Morning 1-27

Subdued trading overnight as an Overall theme is lacking. Spoos Steady and Nassy higher, Dax and stoxx 50 a touch lower. Treasuries down bunds up. Dollar a touch higher, Euro unchanged but the yen down 60 pips. Yesterday’s BOJ bond buying program was altered a bit as more focus was placed on the 5-10 year sector as yields were moving too far away from Zero. The amount of JGB purchases were unchanged, that is an important characteristic to remember. None the less more buying in the 10 year sector caused yen to drop and continue to trade lower. All yen crosses are down on the day, EURJPY +70 pips this strength is keeping Euro unchanged vs. Dollar. Today we see first look at US GDP for Q4 a surprise would be a number that misses consensus.
Slow news night but here are a few items of note. UBS reported ugly earnings as clients pulled $15 b from the bank in Q4 this is weighing on all European banks. The banking sector -1.1% and Oil related companies -.7% are leading European stocks lower. Technical picture of Dax and Stoxx 50 is not one that makes believe a rally will be forthcoming. Japanese officials said they are “preparing for all possible US trade contingencies’ also “Japan to monitor impact on its firms from US-Mexico relationships”. A reminder Mexico is One of U.S. largest trade partners if they retaliate in any way it will have an impact on our markets, this isn’t a one way argument. Chatter also about month end activity picking up. A phone call between trump and Putin has been scheduled for Saturday.
Oil lower as failure to trade above yesterday’s highs give pause to the bulls. Nat Gas lower,-110 ticks as No more cold for the rest of winter, I guess. Gold lower for 4th consecutive day as the uptrend has turned into a downtrend.
• Trump and UK PM May press conference scheduled for 12:00
• Next week FOMC, BOJ and BOE
• MSFT beat earnings but Goog and Starbucks missed. American airlines reported huge drop in profit

churnning

Plenty of action today but direction lacking.Spoos have been up ,down sideways but still only have 7 handle range.Bonds were sideways /heavy but a strong 7 year auction  was enough to see buying come into the complex. Remember previous auctions this  week were bad.Crude oil caught an early bid on issues in the North sea  and haven’t looked back.Waiting to see if crude closes above Yesterday’s highs $53.47.( which it has)

China is on holiday for one week and it may have been the reason why base metals puked just after 10:00  this morning.Copper,Lead and  zinc all flushed lower without an apparent reason.Next week will be slow for  Any China related products,base metals sits at top of that list. Possibly some position squaring or profit taking before the quiet week.Copper dropped by 1.75% in 10 minutes and Zinc by 1.7%.A  crazy move indeed.

Trying to place a theme on today’s trade is somewhat elusive  as both stocks,bonds and dollar higher.I believe markets still waiting for  Facts from trump  so this churn,chop  higher spoos trade to continue.