April 29. Things are different, including the Cubs
–In the not too distant past, earnings reports like FB and AMZN back to back would have caused a surge in stocks in general. Sure, AAPL was a disappointment, but additional tailwinds should be stronger oil and commodities underpinned by a weakening dollar. Going into the end of the week, it’s not playing out that way, with a dramatic end of the day reversal in stock index futures.
–JPY broke through 107 and now sits just above that level. Euro area inflation was -0.2. ZH (citing BAML) reports that bond issue cancellations are soaring in China; it seems the market is no longer welcoming fresh debt with generous terms.
–The NY Fed apparently thought the Atlanta Fed’s GDP Now estimates were a bit too pessimistic and started their own forecast, however, Atlanta was once again very close to the GDP number released yesterday at just +0.5 for Q1. I believe NY will release an estimate for Q2 today; two Friday’s ago it was 1.2%. By the way, the NY Fed also released its staff forecast for the year, which had originally pegged 2016 at 2.5%, and has now shaved that number back to 2.0%.
–Somewhat interesting session in interest rates, as the front end outperformed the back. Reds (year 2) were strongest on the curve closing +5.5 on the day. Golds (year 5) were only +1.625. The two year note yield fell 4.7 bps, while tens only eased 1.9 to 183.7. There are a lot of conditional curve steepeners being placed in dollar options, as expectations for a June hike are squeezed out of the market and the weaker dollar is thought to contribute to a pulse in inflationary expectations. Premium is still being offered hard. As a friend of mine eloquently said, “there is sh-t for depth in front month futures (maybe all futures) compared to the size of the options gamma if this bitch gets going.” And you can PRINT IT. “I don’t know how to make it any clearer to you.” Ok…these last two lines have nothing to do with options gamma or the market, but, being baseball season, they refer to the famous Lee Elia Cubs manager press conference rant of 1983. Quite entertaining but keep the volume low if you’re in a politically correct office. Or, play it full blast… https://www.youtube.com/watch?v=8S0CDtEz_Bo
–So where were we? Right…Personal Income expected +0.3 with Spending +0.2 and Core PCE Prices +0.1. Core yoy prices +1.7 last. Employment Cost Index +0.6. Chicago PMI 53.4.
–Let’s play ball
