Collective Intelligence!
Our prayers go out to the victims and their families, as well as everyone who was affected by the Washington Navy Yard shooting.
Adding insult to his psyche: Back in 1998 Larry Summers was in “The Committee To Save The World” and was in favor of the Wall Streets leveraging the off the balance sheet risks – aka OTC derivatives and such was considered by many as a main architect of the financial crisis that followed as the bubble burst and 5 years ago today the “Financial Crisis” was born. http://read.bi/T12t8N
Summers walks and both the bonds and equities fly. The timing couldn’t have been better for the bulls as the mid month money was put to work – with risk on traders and investors opening up their wallets. Other names have been mentioned in the press beyond Summers and Yellen (inc. Donald Kohn, Tim Geithner, Roger Ferguson, Stan Fisher, Jeremy Stein, Christina Romer, and others) but this really seems to have been a two-person race from the start. According to press reports the White House has only been doing serious groundwork on Summers and Yellen and while Geithner is well regarded by Obama based on every indication the former Treasury Sec doesn’t want the job (Geithner apparently affirmed Sunday that he isn’t interested in the Chairman role according to Bloomberg). Also, the global equities were also leaning on the Syrian chemical weapons agreement between the U.S. and Russia over the weekend. However, there seems to be plenty of time for toeing the line and future developments…stay tuned.
Today started with 380k ESZ traded on Globex, SPZ trading range was 1699.80 – 1699.50. Friday’s regular trading hours (RTH’s), SPZ pit session trading range was 1675.30 – 1682.20 – *high of the day made in the closing range…before settling at 1682.00 up 3.70 handles. Mid month monies being put to work – or was it something else? Also, another disappointing economic release – the Empire State manufacturing data checked in at 6.29 vs exp of 9.20 – in front of Wednesday’s FOMC / tapering decision.
We have been posting the stats lean to the upside through the roll and the quarterly rebalance. It will be interesting how this week plays out – following the gains over the last 45 days. Coming into today, the S&P 500 has been up 7 of the 9 trading sessions in September, and this month alone the December contract has rallied from the Friday, Aug. 30, settlement of 1624.60 to this morning’s new all time high of 1700.00 just days in front of the FOMC decision, tapering and who the heck is going to take over for Fed Chairman Ben Bernanke. Yellen is comfortably the front runner. Don’t worry… The debt ceiling is discussed below.
Today’s December S&P 500, SPZ pit session gapped 17.5 handles – sharply higher to 1699.80 – 1699.50 and traded a new all time high of 1700.00 before fading back 8 handles finding support at 1692.00. The gap higher opening briefly breached the all time high of 1699.40 in the SPZ. The above average globex volume and the gap higher open left little room for improvement and actually trapped some weak bulls, caught long near the freshly printed highs. The shooting at Washington Navy Yard lead the equities to an early low, 1692.00 along with [AAPL] retesting $452 area, down 2.5% in the opening 90 minutes as the sideways to higher grind set in while the markets digested the positive Summers and Syrian news.
The S&P fell short of a retest of the opening range and began to drift lower midday as a sell program took out the morning low, trading 1690 – yes, 10 handles off the high after electing the small stops sitting below 1692 area. By 12:50 the equities were grinding back up, but the bulls were spent – trading a lower high on the light volume bounce and the SPZ faded back to a new intraday low of 1689.50 before bouncing to another lower high. The early look on the closing imbalance showed (14:23) MiM – MrTopStep Imbalance Meter showing a slight 60%, a small $67M to the sell side as the NYSE was approaching 417M in volume, a bit ahead of Friday’s volume which is disappointing considering the size of the todays gains. The equities continued to step lower, at 2:45 the SPZ was trading 1689 area when the closing imbalance showed $320M to the sell side. The cash close traded 1690.50 area before settling at 1691.20, up 9.2 handles on the 3:15 futures close. The S&P is currently seeing its largest up move in 8 months
Did someone say something about a retest of the contract high? Shot Thursdays at 10:00CT: Brian Shepard and Jill Malandrino @TheStreet http://bit.ly/186FaiE Also, posted on Friday: Jason Carter (10:16) bull flag 120 min vs right shoulders forming. buying vol may be the way to go. See Sept vol bid into FOMC. elway (10:46) hard to sell a quiet tape with positive breadth on the friday before expiration.
The following was posted the 9/6 jobs data – overall these show almost no change to prior expectations.
CS – Sept taper, -$10b MBS and -$10b Tsys or Opt2 of -$10b Tsys, -$5b MBS
Moodys – Sept taper of -$10b Tsys
MS – Sept taper of modest amount w/explanatory language
TD – taper is on; BMO- Sept 18 taper if next data don’t disappoint
RBS – Sept taper of -$10b Tsys and -$10b MBS, cld be trimmed if ylds rise
SG – small Sept taper; Wrightson- Sept taper is on
HFE – Sept taper is on; Jefferies- Oct taper more logical
BAML – “more likely to wait (to Dec) but it remains game-day decision.”
FannieMae – Sept taper likely; FTN- Sept taper, did not say size
Goldman – Sept taper, perhaps a dovish taper
RBC – Sept taper
Nomura – SepT taper
[GS] Goldman’s Hatzius: “While the August employment report was a moderate disappointment, we believe it is probably not weak enough to prevent the FOMC from tapering in September. However, it does raise the likelihood of a “dovish taper,” which could include a small size of the overall adjustment to purchases, and which we think would likely coincide with an enhancement of the forward guidance.
Beware…The U.S. government has returned from vacation, both the House and Senate are in session…with only days before the end of the fiscal year and before the current spending authority expires. Without action (including a one-month emergency extension) shutdown on Oct. 1. Treasury “X Date” May Hit As Soon As October 18: http://bit.ly/15T6Jv6
Shutdown deja vu on Hill: Here we go again… President Obama Calls GOP Debt Ceiling Demands an Assault on US ‘Constitutional Structure’ — WASHINGTON — On the eve of another fiscal showdown with congressional Republicans, President Obama is outright refusing to negotiate over an increase to the nation’s debt limit, saying doing so would alter “the constitutional structure of this government entirely.” “What I haven’t been willing to negotiate, and I will not negotiate, is on the debt ceiling,” Obama told ABC News’ George Stephanopoulos in an exclusive interview on “This Week.” “If we continue to set a precedent in which a president … is in a situation in which each time the United States is called upon to pay its bills, the other party can simply sit there and say, ‘Well, we’re not going to put — pay the bills unless you give us … what we want,’ that changes the constitutional structure of this government entirely,” Obama said. http://abcn.ws/16xEypW
