Welcome back…if you were not trading today – you didn’t miss anything other than the debt ceiling discussion imploding. At the start of the day, the Dow Jones Industrial Average [DJIA] remained within 2.5% of its record high while the S&P 500 was within 1.5% of its record high. The German ZEW data checked in at 52.8 vs. exp of 49.6 as Europe continues to show signs of improving. On the U.S. corporate earnings front, reports picked up today and will continue to do so through next week. So far, in the early stage of the reporting season the reports have been mixed to a little better. The [DJT] was expected to be firm in the early trade as [FDX] announced a $32M buyback. Also, renowned fund manager David Tepper: No way can the Fed taper because of the shutdown.
Today started with 259k ESZ and 600 SPZ traded on Globex, ESZ trading range was 1697.25 – 1709.75. Today’s pit trading hours, open outcry opened 3.5 handles lower at 1700.00 – 1701.00, traded down to 1695.50 before grinding 10 handles higher to 1706.00, just above yesterday’s pit session 1705.70 high before fading back to today’s VWAP of 1700.70 area in listless trade through the noon hour. william_blount (11:38) did ya’ll really think converting 1702.5 would be that easy, especially with a ‘right shoulder’ at “1709.67” cash and a ‘rope follows expanded day’ DURING EXPIRY WEEK?
FED GOVERNOR DUDLEY: POLICY NEEDS TO BE NORMALIZED IN A ‘TIMELY WAY.’ Thanks for sharing that with us…as our elected politicians continue to play hardball as time is running out. Speaker Boehner said: House Republicans have made “no decisions about what we will do,” but will work to avoid default & end shutdown. However, most of the people trust they will agree to a short-term deal that will have this matter back in the media much sooner than we would like. Harry Reid suggested the ratings agencies could downgrade the U.S. as soon as tonight. This was following yesterday’s comment by Fitch rating agency: US bank regulators’ asset review flags potential risks; improvements in asset quality have stalled y/y and underwriting standards have diminished post-crisis.
GS: BOTTOM LINE: The House and Senate now have competing debt limit increases, which both extend the debt limit to February 2014 and reopen the government through January 2014, but differ on details. The differences are not enough to block enactment of a debt limit increase, but could delay enactment past Oct. 17 given the procedural timelines in each chamber of Congress. That said, the fact that the proposals are so similar implies that a final agreement is close at hand. Senate could present a procedural obstacle if even one member objects, since consideration can take as long as 5 days in that chamber.
Midday the VIX was trading new intraday highs, up 17.1% / 1.03. Yep, gotta believe concerns will continue to grow as time passes with no deal…certainly the clock is ticking while vol got bid up – adding pressure to the equities. iceChat (13:32) postponed again…Dick Durbin announces senate talks suspended until house GOP works out their plan. Oh. the VIX was trading north of 18.50, up over 2.50 on the day as the the SPZ dropped to a new intraday low of 1689.50.
The SPZ was trading in the 1695 area when the early look of the closing imbalance showed (14:00) MiM – MrTopStep Imbalance Meter at 78%, and a modest $212M to the buy side, followed by a decline to (14:20) 66%, $161M and a very small $75M to buy at 2:47. The cash close traded 1692.20 area and settled at 1693.30, down 12.3 handles.
After hours Yahoo! rises on earnings beat, reduced Alibaba sale – weaker guidance…[YHOO] SEES 4Q REV. EX-TAC $1.18B-$1.22B, EST. $1.25B.
*PELOSI SAYS DEMOCRATS WON’T SUPPORT HOUSE PLAN AS DESCRIBED
*PELOSI SAYS HOUSE REPUBLICANS MUST ACT SOON
*PELOSI SAYS SHE’S DISAPPOINTED IN HOUSE GOP ‘SABOTAGE’ OF DEAL
*HOUSE DEMOCRATIC LEADER PELOSI SPEAKS AFTER OBAMA MEETING
*PELOSI SAYS SHE’S STILL OPTIMISTIC FOR DEBT CEILING RESOLUTION
Econ data as it stands now: NAHB housing and Beige Book tomorrow, jobless claims, industrial production and Philly Fed Thursday morning followed by leading indicators on Friday. Earnings – post close today [INTC], [LLTC], [YHOO]. Earnings premarket tomorrow [BBT], [FITB], [GS], [HBAN] to highlight a few.