A Few Things

SPX daily Candle Chart looks a bit troubling for the bulls but we need to see how today plays out to feel confident in calling A short term top.Chicago PMI missed expectations and touched a 22 month low as prices ,new orders and Employment all fell vs last month.Consumer confidence beat consensus and came in near upper end of range of expectations as optimism regarding labor market rebounded from last month.per Bloomberg “Buying plans for Cars,homes and major appliances cooled”

Tale of the Tape

Soybeans going to Zero it appears as both July and November beans touch new contract lows today

SX9

Morning 4-30

Overnight news:

China PMI missed consensus but fell within the range of expectations, Spoos dropped about 6 handles on the release and copper down .5%  Shghai closed +.5% Chinese markets closed for remainder of Week. Due to holiday

Eurozone GDP beat consensus   .4%  f/c .3% markets  paid little attention to release, what caught the markets attention was Italian GDP released at 5:00 A.M. which showed a positive number thus signaling  Italy is out of a recession and giving a boost to ”risk”. Stoxx 50 rallied some .5% and the Mib rallied .6% post release.

Google or alphabet reported disappointing earnings stock at one point down almost 8%.  Other side solid earnings from McDonalds, Visa, and Merck will cause the SPX to outperform Nasdaq.

German CPI, just release beat expectations handily 2.1 vs 1.7%, add this to Italian GDP beat and the talk of Stimulus from ECB may go quiet. Bunds -60 ticks Euro +30 ticks or so. Dollar index -.3% looking at 3rd consecutive down day

Crude  and Brent both +1.4% as Saudi Arabia hinted at keeping supply cuts in place till end of the year. Venezuela’s opposition leader Guaido calls for military Uprising in a video with soldiers.

 Other markets show Gold +.5% copper +.9%, Silver +.6%. Spoos little changed NASDAQ recoup losses down only 10 handles. Month End today and European holiday tomorrow could cause some action Around the European /London closes. FOMC meeting tomorrow likely to have a dampening impact on today’s trade

Calendar:

  • 7;30 Employment cost index
  • 8:45 Chicago PMI
  • 9:00 pending home sales and Consumer Confidence
  • 3:00 apple earnings

Treasury Complex Pt.2

Here are the bloomberg Story comments regarding the curve

Weak inflation and the end of the hiking cycle spells
steepener: “With 2s/10s up against this year’s steeps, we are
biased for a breakout and the commencement of the cyclical
resteepening of this section of the curve”

* Bank of America (Bruno Braizinha, Mark Cabana and others,
April 26 note)
** “2s10s curve could steepen to 40bps with a recovery of data
in Q2 and a steady Fed;” expect 10-40bps range for now
** Team favors 10s30s steepeners; long 30-yr TIPS

Barclays (Rajiv Setia, Anshul Pradhan, Amrut Nashikkar, in
note)
** Expects 2s10s slope to remain positive “as a dovish Fed in
the face of modestly above-trend economy should lead to some
build-up of term premium;” remaining neutral on duration, but
“we see scope for a modest move higher in yields across the
curve”




Treasury Complex

Bonds On the offer this morning,whereas shorter maturities relatively stable, A few reasons for today’s activity. A handful of block trades in the 5 year ,A heavy IG slate with 30 year maturities, Stocks are trying to maintain a bid as SPX scored a new all time high today, a bit of a rally in oil and thus curve steepening theme .Today’s 7:30 PCE missed expectations but not a surprise as Fridays quarterly PCE was weak,so it is not worried about Inflation ,Month end activity? maybe.But what we know for certain is that the Curve is steepening,look at grid below .Bloomberg article talking about how some Firms are changing their call from a flatter curve to a steeper curve “Supporters of a steepening trade are gathering on the street” Reuters telling us that”bear steepening flows dominate today” So more about the curve then anything else on a quiet day before an event filled holiday Week.

2s30 as proxy for the treasury complex shows a bit of a breakout to the upside

Morning 4-29

 Holidays this week:

  • China Closed Wednesday-Friday
  • All of Europe will be On public Holiday on May 1st,”labor Day”

News:

  • 228 S&P 500 companies have reported for 1Q 2019. 78% beating EPS estimates on +6.92% growth, 61% topping sales ests. on +3.95% growth. (Mizuho)
  • Elections in Spain saw the Socialist or pro-European party win resulting a dip in Spanish yields of about 2 bps.
  •  US-China Trade talks still face significant Challenges(Bloomberg)
  • Putin Said  “OPEC+ States including Saudi Arabia are complying with terms of their deal to limit oil output and haven’t signaled a readiness to exit” (Bloomberg)
  • Above  average rainfall expected over next 6-10 days if so you may see some short covering happen in the Corn complex corn +.9%

Plenty of Event risk this week payrolls, Fed meeting, ISM, Employment cost Index, China PMI, PCE Core today. In addition, some chatter that Investment Grade Supply (IG) will pick up this week after last week’s supply fell short of estimates.

Markets sideways so far today Dax -.25%,Spoos Unchanged, Bunds Steady ,Dollar up a  bit, Gold down .3% oil down .3% but has been rallying a bit this morning but still closed lower prior 3 days. A lot of Event risk later this week but non-today. Choppy trade today expected

Daily % change

Take a look at the histograms below which shows the daily % price change for both Brent and Cl. Crude Light having one of the biggest down days this year as the longs run for the exits. Break of important levels continue to fire off stops,$61.99-$61.87 next target.

Crude
Brent

Energy tale of the tape

Morning 4-26

   White House economic Advisor Kudlow sees the FOMC moving forward with rate cut. “That is my view. It’s true in the open market, the funds rate has traded a bit high, but I think they’re moving toward rate cuts,” Kudlow says in interview with Newsmax. * Kudlow also said he thinks U.S. 1Q growth “may be very close to 3%”

   Comments from China hinting at a Decrease in optimism regarding Economy.   China’s main Property index, SHPROP -0.54% today, down over 6% this week. Down almost 10% from recent highs, and breaking below the 50 day. CSI 300 Real Estate Index -7.09% and the CSI 300 Banks index -4.96% this week (Mizuho)

 Brent and Cl taking it on Chin today as Overbought conditions coupled with a break below support creating plenty of sellers  CL -1.84%, Brent -2%, gasoline -1.3% heating Oil -1.97%. Comments from PVM (Bloomberg) — Brent, WTI face “very worrying” technical developments and a bout of “rally fatigue,” as they struggle
against resistance levels, PVM says

 Holding pattern this morning as markets await Q1 GDP and Spending, Also at 9:00 final look at U of Michigan sentiment for April. Amazon Earnings better than expected Stock +1%, Intel not so good stock -8%,   Ford better than expected  +8 % ,American airlines lowering guidance stock -3% and Uber said its seeking a lower  IPO  valuation target  between $80-$90 B Earnings commentary from JPM:

1. Initial results point to a positive earnings surprise in both the US and in Europe, to the tune of 5% and 2%

2. US: 77% of S&P 500 companies beat EPS estimates. Out of the sample that has reported so far, EPS growth is running at +5% y/y, surprising positively by 5%.

3. Europe: 48% of Stoxx 600 companies beat EPS estimates, down from last quarter. Overall EPS growth is coming in at +4% y/y, surprising positively by 2%.

Other markets show treasuries and Bunds little changed to higher, Nasdaq unchanged Dow -77 Dax and stoxx 50 little changed. Dollar steady, this will be one asset I will watch post GDP report. Yesterday lean Hogs limit down across the first 6 contacts, live cattle flirted with limit down as the Bullishness in the Livestock complex taking a hit.

Live cattle

Live cattle touched limit down yesterday trading heavy again today down some 2.5 handles in the front months.I showed a graph earlier today of front month June so lets keep this in mind if you are trading the Fats today, as of last week speculators held a near record amount of Longs.As @topthird ( follow if you want timely livestock Commentary) so poignantly pointed out longs are puking