US Indices on Tuesday’s close: SPX: (+1.07%), NDX: (+1.97%), Dow: (+0.65%) and RUT: (+0.87%)
Health Care, Communications Services, and Technology led the tape while Materials and Industrials put a drag on the Dow.
SPX paused at about 2612 and the downtrend line that is anchored at early Nov and does not take into account the late November false break out. SPX 20 day moving average is flattening. The NDX flirted with and then closed above its flattening 50 day moving average. Futures and indices came off the intraday highs on the news that 432 to 232 UK lawmakers voted against PM May's un-amended Brexit deal. A no confidence vote is planned for Wednesday but the PM is thought to be safe barring extreme events. The Dow backed off and then closed above the June intraday low that has been providing resistance for the big industrials. In short -- the dips were bought. ESH19 futures profile will show the action that led to an ES high of 2613.75, a point of control at 2608.50 and a close of 2604.50.
The USD (95.922 or + 0.33%) backed off its highs and offered GCG19 gold a bit of a respite to settle at 1287.85/oz or (-0.30%) while CLG19 light crude settled at 51.92/bbl or (+2.6%).
Market Internals
NYSE A-D lines: +819. NYSE breadth: +1.62:1 and NASD breadth: +2.8:1. NYSE cumulative TICK was muted, flat but positive. TRIN: 1.11 -- indicating a bit of selling pressure. NYSE MOC: saw a large buy of about +1.2B in the last quarter hour of trade and finished +105M. Of that number, Health Care saw the most buying. SPX volume: 2.294B. SPX composite volume: -0.61%. NYSE composite volume: -2.04% and NYSE total volume: -2.49%
Implied Volatility: VIX: 18.60 or -2.46%, VXF19: 18.82 or -2.11% and VXG19: 18.82 or -3.36%.
Debt
US Treasuries were mostly unchanged today even as they experienced some volatility during the Brexit vote. The 2-year (unchanged at 2.52%) to 10-year (unchanged at 2.71%) spread is still at 19 bps and the 2-year to 30-year (+1 bp to 3.07%) spread grew to 55 bps.
More of Today's Fed Speakers
13:15 -- Fed's George (voting member and hawk): She says the Fed should pause on rate hikes in the absence of inflation and that we could be on the cusp of undesirable inflation. The farm sector's downturn is made worse by tariffs.
13:27 --Fed's Kaplan: Global growth is decelerating. US growth can diverge from the rest of the world but not indefinitely. He said the US economy faces risk from global growth, interest rate sensitivities and tightening financial conditions. He said the high yield credit situation has made him concerned about the impact of tightening credit access. Kaplan also says the Fed would be wise to go into wait mode. He says we are in uncertain times and the Fed should wait and see how things unfold. He mentions the impact of the partial government shutdown. He said that as the effects of fiscal stimulus recede, we could see slowing growth and that even with the tight labor market; the Fed can be patient because of low inflation - which he expects to remain under control. His caveat for the call for patience was that he doesn't mean the Fed should stop raising rates completely. Then...he says the Fed's need for patience should not stop! He says household consumption is strong but patience on rates should be a matter of months, not weeks. On the balance sheet runoff, he says that the Fed must be ready to make adjustments based on data and market liquidity.
13:45 --Fed's George Again: She says the Fed always has to be ready to pivot and that the Fed needs to constantly reassess how its balance sheet [reduction] is affecting the economy.
Incoming
Wednesday we have MBA Mortgage Applications at 07:00 ET and then Import Prices excluding oil and Export Prices excluding agriculture for December at 08:30 ET. The NAHB Housing Market Index for January is out at 10:00 ET. EIA Crude Oil Inventories are released at 10:30 ET. Fed's Beige Book for January is out at 14:00 ET. Finally the Net Long-Term TIC Flows are out at 16:00 on the closing bell. Most of the above is low impact data. I hope you all have a great day!
(20min delay)
