5 Fed speakers today!
We also have a 20-Year Bond Auction at 1pm and Waller (noon) and Williams (12:30) speak ahead of the auction – both hawks who will attempt to keep the auction from failing and, at 1pm, Bowman speaks – another hawk. After the Beige Book (2pm) we have Harker at 3:15 (dove) and Cook, the dove of the day, buried at 6:55 this evening.
That lineup already has the Dollar bouncing off the 106 line and we’ll see if we make another run to 107, which would probably erase the whole week’s index progress – which really only came Monday morning anyway.
It’s all good as long as we hold 4,320 but we’ve been saying that for two years now and we’ve never made it to the next zone for very long so this is either one Hell of a consolidation or we are so overvalued up here the buy programs simply shut themselves down at these levels and progress is impossible.
Either way, it’s a great time to grab those hedges while they are cheap (see Friday’s Report). On Monday we asked ShelBot how the week would go and he predicted we’d close Tuesday at 4,360 and we actually closed at 4,373 and that’s close enough. For today, ShelBot says back to 4,340 but 4,370 is where he thinks the week will close – we’ll see how he does but this is very impressive for a volatile earnings week so far.
Trouble in Gaza has sent Oil (/CL) back to $88.50 this morning and that’s $93 on Brent so that’s a short – the same one we regretted missing on Monday, when Oil quickly fell back to $87, for a $1,000 per contract gain.
Gaza doesn’t have any oil so, unless the war expands to include Iran and other countries who actually have oil – there’s no reason for this burst back over $85. After showing a build of 12.94M barrels last week, API showed a 4.4M barrel draw this week but last week’s (11th) EIA Report showed a 10.2Mb build and you can see the damage that did so it’s very possible Oil bulls will once again be disappointed at 10:30, when the new EIA Report is released.
Speaking of Energy, the Balticonnector Natural Gas Pipeline, which connects Finland and Estonia, was sabotaged last week, causing a major disruption in the gas supply and communication in the Baltic region. The pipeline and its associated telecoms cable were damaged by explosives and are expected to be offline until April. The attack is suspected to be linked to Russia, which has been opposing Finland’s decision to join NATO and has been trying to undermine the diversification and integration of the European gas market.
The pipeline outage could have significant implications for the natural gas (/NG) prices in Europe and should increase demand for US LNG exports. The Natural Gas ETF, UNG has been a dead fish all year and it could be fun to add a bullish trade to the Short-Term Portfolio (STP), the March $5 calls are only $2.55 and that’s just 0.37 of premium while ShelBot tells us /NG prices could rise as much as 44% so even 22% would take UNG to $8.61 and that would be a $1.11 (43.5%) gain so that’s our goal but I’d take a quick buck off the table if we make it on at least half. Let’s buy 20 UNG March $5 calls for the STP for $5,100.
Hurricane season has been a big bust for /NG traders but the Stark’s say “Winter is Coming” – though maybe not with Global Warming…
8:30 Update – Oil back to $87 already! When you make $1,000 per contract that quickly it is certainly smart to take at least half off the table and put stops on the rest at $500. That way you lock in $750 in profit overall. Then, for each additional $500 you make, raise the stop by $250.
In earnings news today, we got misses from State Street (STT), Travelers (TRV), Northern Trust (NTRS) and Citizens Financial (CFG) and it’s way too early to see this many bank misses so BE CAREFUL!!! USB hit their numbers but guided down and UAL guided lower last night – trouble in Paradise with 90% of the S&P 500 still waiting to report.
Here’s a rundown of some other news from ShelBot 🤓:
- Biden meets with Netanyahu amid Israel-Hamas conflict and Gaza hospital blast. The U.S. president expressed solidarity with Israel and suggested that the explosion that killed hundreds of people at a Gaza hospital was caused by “the other team, not you” 1. Oil prices rose as the geopolitical uncertainty increased the risk of supply disruptions 2.
- China’s growth beats forecasts as consumer spending strengthens. China’s GDP grew 4.9% year-on-year in the third quarter, higher than the expected 4.5% 3. Retail sales expanded 5.5% in September, indicating a recovery in consumer demand 4.
- UK inflation holds steady at 6.7% in September, above the Bank of England’s target of 2%. The inflation rate was unchanged from August, as lower food and drink prices offset higher fuel costs 5. The Bank of England is expected to keep interest rates unchanged at 5.25% in its next meeting 6.
- Brazil offers jobs to Venezuelan migrants in growing crisis. Brazil has relocated more than 114,000 Venezuelans, mostly to the wealthy south, where they work in agribusiness and other sectors 7. Brazil’s approach has been praised as a model for the region 8.
- House speaker vote continues after Jordan fails to get majority. Republican Rep. Jim Jordan received 200 votes, short of the 217 needed to win the speakership, while Democrat Rep. Hakeem Jeffries received 212 votes 9. The House went into recess after the first round of voting and it is unclear when the next round will take place 10.
- Morgan Stanley, Netflix, and Tesla to report earnings this week. Morgan Stanley is expected to report revenue of $24.3 billion and EPS of $1.28 for the third quarter 11. Netflix is expected to report revenue of $8.54 billion and EPS of $0.91 for the third quarter 12. Tesla is expected to report revenue of $24.9 billion and EPS of $0.73 for the third quarter 13.
- U.S. health insurance premiums rise by 5% in 2023, outpacing inflation and wage growth. The average annual premium for employer-sponsored health insurance rose to $23,980 for family coverage and $7,470 for single coverage in 2023 14. The increase was driven by higher costs of medical services and prescription drugs 15.
- Extreme weather creates an “invisible water market” worth billions of dollars. Droughts, floods, and wildfires have increased the demand for water rights and water infrastructure in the U.S. and globally 16. The market for water-related assets is estimated to be worth $1 trillion by 2025 17.
Consider this the hint of the century
Consider this the slip
That brought me to my knees, failed
What if all these fantasies come
Now I’ve said too much” – REM