Fang and A few Graphs

Merrill lynch Fang Index on Pace for  one of best days  in  Months,very well could be end of  month adjustment instead of buying opportunity of lifetime.Reminder that Apple reports tomorrow after the close.

fannn

Europe’s version of “FAANG” is not made up of tech stocks but of  luxury goods companies as it is used as A proxy For Chinese demand.I use the term FAANG in regards to A  trade that is heavily invested in by majority of Funds,not necessarily a group of tech Stocks.percentage  Change histogram below,index had best day in 6 months.

luxx

SPX  & RTY back in harmony after a brief period decoupling,Overlay daily chart below:

rtys

rate hike Expectations creeping higher again,measured by 2y1m forward rate

rate

 

 

 

Employment Cost index

Department of labor

EMPLOYMENT COST INDEX – September 2018

Compensation costs for civilian workers increased 0.8 percent, seasonally adjusted, for the 3-month period ending in September 2018, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.9 percent and benefit costs(which make up the
remaining 30 percent of compensation) increased 0.4 percent from June 2018.

eci

Maybe  if the ECI can break above the  .8% ceiling Inflation might start to become a bigger worry.

Morning 10-31 redux

Gap and Go has held For European bourses, as Earnings from Facebook, French Companies L’Oréal and Sanofi enticed buyers to step in and hold the gap overnight. Cac + 2%, Dax and Spain’s IBEX +1.2%, Italys MIB though little changed. Nasdaq +1.18%,Spooz +.6%.Overnight market’s did not trade higher in a straight line as gyrations caused by Weak Italian Employment data and Firm EZ CPI were evident.. Bank of Japan left current monetary policy unchanged as expected, But tweaked the monthly purchase plan of 1 and 5 year bonds. The Yuan trading up a bit vs Dollar as the overnight repo rate surged the most in 4 years (month end stuff) Stock markets look good today but looking at the Monthly performance the Global MSCI stock index headed for worst month in 6 years.

 

(BB)Stronger stocks=Weaker Bunds and treasuries, a Risk on Theme so far today. Bunds -20 ticks, BTPs +38 all European sovereign Spreads vs Bunds a bit tighter today. Dollar index steady to lower after touching new YTD high yesterday. API reported a bigger build in Oil then expected, both gasoline and Distillates drew down more than forecast, Oil rallied on data. Tight range in copper sitting little changed. Disappointing China PMI numbers weighing a bit on metals.lead -1.8%..Gold -.5% and Silver -1.18%

A few interesting Notes from Bloomberg
The trade war is taking its toll on China’s economy. The official manufacturing PMI slowed more than forecast this month and new export orders slid to the lowest since 2016. The gauge fell to 50.2 from 50.8 in September, approaching a contraction. The services gauge also slipped. The data showed a broad deceleration, with growth unlikely to bottom soon, Bloomberg Economics said.

 

The Bank of Japan bought 867.6 billion yen ($7.7 billion) of exchange-traded funds tracking the nation’s shares in the month through Oct. 29, the biggest amount since the BOJ began buying the investments in 2010. That’s almost double September’s total after the BOJ slowed purchases the previous month following a tweak to market operations in late July. Japan’s Topix index is headed for its worst month since the height of the global financial crisis in 2008.

Calendar:

7:30 Employment cost Index top tier data point

DXY

Spot dollar index touching new 2018 highs and  highest  levels since Jun 2017.GBP,British pound testing 2018 lows of 1.2662  but has not breached them just  yet.Bank Of England holds policy meeting Thursday where no change in rates is expected and likely tone of post meeting Statement will be  one of Caution as Brexit deal still not set.

Crude oil Closed  A dollar off  session lows as the Z8/Z9 spread rallied for most of day settling higher and more importantly back in  slight backwardation.Comments from US state department

“STATE DEPT REITERATES GOAL TO BRING #IRAN OIL IMPORTS TO ZERO U.S. REITERATES IT WILL WORK WITH COUNTRIES ON IRAN OIL CUTS

Approaching 2:00 CST  Roll up Roll up and place your bets on  where the  nasdaq will close. remember what happened yesterday   afternoon after a  very large Negative Tick value,Spoos rallied 40+ handles into close.

Update

Choppy, nervous  Stock market again this morning not a suprise.IBM did announce an Additional $4B stock buy back which briefly  lifted the major indices.Hope is that more buyback announcements will follow and possibly give  stock markets a sustained boost.Consumer Confidence beat  Expectations,Job metrics continue to be strong and respondents boosted  inflation expectations by .1%  a solid number,But a survey number and not a “hard  data ” number.I am keeping one eye on the russell  as  trading pattern has been sideways last 4 days not  trending down,maybe if it breaks higher it can pull other indices with it.

Dollar index +.3% one reason  is due to tomorrow’s Increase in the Amount that Fed balance Sheet unwind moving to $30B from $24B. Historically, per Morgan Stanley Dollar rises on SOMA day’s so maybe “buy the rumor sell the news” move in DXY