Morning 8-16

A sense of calm overtaking Market so far today, Spoos are seeing a slow and steady rally that started yesterday evening. Stoxx 50 in Europe say a bit more of a two sided trade but results is higher prices. Stoxx +1.1% if settled here would be best day of week, Spoos, +.9%, Bunds +33 ticks   and treasuries a bit soft. Gold -.5% Dollar steady to higher Euro down 30 pips looking at 4th consecutive day of lower closes, All-important Yen off a bit.2s10 yield spread positive on day steeper or wider for second day in a row trading +3.115. Theme today is not one of Risk on or off it a sense of calm for now. Bloomberg article talking about the SPX yield is close to exceeding thirty-year yields, this has only happened 3 times in history, Rare times indeed. Oil with a small bid, OPEC out with Monthly Oil Outlook and it appears traders have selected the bullish aspects of report and ran with it.

A few comments from Overnight:

The St Louis fed president Bullard had this to say yesterday

 World is in the middle of global slowdown assessing what it means for the US; Trade war creating a lot of uncertainty outside the US with natural flight to safety driving US rates lower Will not prejudge Sep meeting, but has eye on TIPS breakeven showing low infl exp;  wants to hit infl tgt and would not mind if infl moves higher than 2%; Fed does not need to do inter-meeting action; Some of recent mkt downdraft may be overdone given fundamentals; fundamentally labor mkt is strong; despite a big selloff mkt is up this year and a repricing may have been expected (ITC markets)

  • Trump from yesterday evening : “If they don’t get this Trade Deal with the U.S. done, China could have it first recession (or worse!) in years. There is disinvestment in China right now. Also, the Fed is too tight
  • Deere earnings   out this morning Headline reads Deere turns to costs after Ag operating profits slammed, they revised lower full year profits and sales growth. Trade war the main culprit
  • Chairman  Powell is speaking Next Friday morning, 9:00 at Jackson hole
  • North Korea launched a few more missiles overnight
  • Trump  Thinking about buying Greenland

Calendar:

7:30 housing starts

9:00 U of Michigan Confidence

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