What Are Traders Chatting About This Morning? Oil, Japan, And Black Friday...
Good Morning! US Futures are under pretty good pressure this AM, with Russell and S&P off 40bp+. This mirrors global weakness, a combination of weak PMIs and collapsing commodity prices. The DAX is off only 20bp, but the FTSE has lost 1% as Europe's Energy sector is off 2%, while the Miners are off 3% in decent volume. Looking over in Asia, while Russia's ruble suffered the worst hit in 16years, the MICEX is jumping 3% - Japan gained 1% as falling Oil and Yen benefit their economy, but Moody's downgrades Japan's sovereign debt rating after Nikkei close, hitting futures for 40bp. Shanghai fell 40bp as China's manufacturing activity fell to a 6M Low - whacking Aussie for 2% in heavy volume as Aussie's energy sector fell 6.4%, taking 3day losses to 16%.
Germany's 10YY hit a fresh record low overnight of 69bp - but profit-taking has yields slightly higher now in the US and Europe - focus shifts to the ECB this week, as Euro zone manufacturing growth stalled in November and new orders fell at the fastest pace in 19 months. "Safe Haven" covering has the yen slightly higher despite the Moody's downgrade. Brent and WTI were off 3.5% earlier this AM, now both off roughly 1%. Gold dropped sharply overnight as the Swiss rejected the SNB gold plan, but has since clawed back into the green. Copper is off 70bp as China's Manufacturing sparks further growth concerns, while Natty Gas is off 3% as warmer weather hits the USA. Scheduled Catalysts today include Markit US Manufacturing PMI at 9:45, ECB's Costa Speaks and ISM Manufacturing at 10, Brazil Trade Balance at 12 - Fed's Dudley Speaks on Economic Outlook at 12:15, while Fed's Fischer Speaks on Global Economics at 1
Some trades I'm watching today include Retailers, as Thanksgiving weekend sales were underwhelming - Weak for Bricks and Mortar, while Strong Online. Impact of Oil falling, with Airlines jumping sharply on Friday, while many regional banks in the TX / ND Oil Patch (TCBI, HBHC, IBOC, CFR, VPFG) were all weaker on Friday. Watch the rate plays, as REITS, Staples and Utilities are all enjoying the tailwinds of collapsing global yields - and finally today is the first trading day of the month, so watch for "Good Harbor" - on Nov15th, the "Good Harbor Tactical Core US portfolio moved to a full equity position going into the back half of the month, with an overall allocation of 50% large cap, 50% mid cap.