Here's today's trader chatter from JonesTrading's Dave Lutz:
Good Morning! US Futures are basically unchanged and have been trading in a quiet band overnight. Russell thus far not giving back any of its outperformance. Europe is having a solid session, with the DAX climbing 90bp in decent volume led by a rebound inn Utilities. Eyes remain on Greece, where their market is off 1.5% and Yields wider (Political uncertainty), but Euro Banks remain in the Green. Russia’s MICEX is jumping 2.5% into their rate decision today (50bp hike expected), while Shanghai rebounded 3%, jumping nearly 5% from the lows as the China Securities Journal said Tuesday’s dip was a “buying opportunity”, with heavy buying reported from Hong Kong. The Nikkei was worst hit, losing 2.5% as wild gyrations in the Yen crosses drove flows from their exporters. Aussie lost 50bp, weighed down by Banks (regulatory capital headlines) – but Miners popped despite Ore falling 1% to $69/ton
The US 10YY is unchanged, and German 10YY has rebounded 1bp from fresh record lows. The $ is losing slight ground against the Yen this AM, but the DXY is higher as the Euro breaks down. Oil is under pressure, with WTI off 1.7% and just above session lows (Heavy API build, Iran $40 comments, OPEC upping supply and lowering demand estimates). Both Gold and Silver are retreating as Chinese consumer prices rose at their slowest pace in five years – but very small pullbacks given the day yesterday. Natty Gas is moving into the green (lower projected inventories), while the Grains and Beans are mixed. Pretty light on the Calendar – DOE data for Crude at 10:30 (API showed a massive build last night, despite expectations for a draw. Street looking for a draw of 2.7million from DOE); WASDE data on Grains at 12, at 1 a 10Y auction - Monthly Budget Statement from the Treasury at 2, and a New Zealand Rate Decision at 3
Some Trends I’ll be watching today
· Watch the Euro Safety Trade – yesterday saw sharp equity weakness into the German Close, and Heavy Bund Buying into the EU Credit Close at 12ET. May dictate a pattern again today. Growth (IWO) really started outperforming after the Euros went home.
· Oil remains in focus into Inventory data – XOP well outperformed the commodity yesterday – let’s see how long the “buy The Dip” buyers yesterday hold with WTI breaking down. DOE data at 10:30
· Keep an eye on HY – HYG was under pressure yesterday, there was a big seller at ICAP early in the morning, and the weight of Energy credits could never spark a rally – HYG and JNK are near 2Y lows, but heavy demand came in around SPX2035 yesterday
· Watch the Homebuilders. ITB has been sliding south since touching $26 in late November – TOL reported (7% weight), and while misses on Revs, sees FY2015 High End achievable.
· Retailers should remain in focus into the Advance Retail Sales print tomorrow – The XRT remains 3% below Black Friday peaks as Holiday sales thus far have been a “Sell the news” -
· Regional Banks posted an impressive session yesterday, led by some of those TX/ND Energy exposed plays (TCBI, HBHC, IBOC, CFR) – With Oil dropping sharply this AM – they could lead smallcaps lower.
