Some Economic and Futures Fixations The trading range was a little wider on Thursday, yet the outcome was pretty much the same as the major indices eked out modest gains with a late burst of buying interest. At the moment, the stock market is indicated to open on a flattish note. Thursdays afternoon bounce was catalyzed by two items that hit the tape in the final hour: (1) Minneapolis Fed President Kocherlakota (an FOMC voter) saying he does not see inflation hitting the 2.0% target until 2018 and (2) Reports that oil services company Halliburton (HAL) is in talks to acquire Baker Hughes (BHI). The Kocherlakota remark, of course, was jumped on as suggesting there is a possibility that the fed funds rate is going to remain stuck at the zero bound for longer than most are now anticipating. Meanwhile, the M&A buzz in the energy sector had participants thinking more deals may be forthcoming if oil prices continue to sink. On Thursday, crude futures dropped below $75.00/bbl as a batch of soft data out of China kept the selling trend intact. They are up 0.6% this morning to $74.62/bbl. Overnight action in the S&P futures market was a bit whippy as buyers and sellers alike lacked conviction. Just before the October Retail Sales report was released, the S&P futures were little changed and signaling a flattish start for the cash market. The Retail Sales report helped a bit, but not a whole lot because it was mostly in-line with expectations. Total retail sales increased 0.3% (Briefing consensus +0.3%) while sales, excluding autos, jumped 0.3% (Briefing consensus +0.2%). There was no revision to the overall sales number for September, yet retail sales excluding autos were revised up to unchanged from a previously reported 0.2% decline. The October gain was driven by increases across most retail categories. The only exceptions were electronics and appliance stores (-1.6%), which eased after an iPhone-induced 4.7% gain in September, gasoline stations (-1.5%), and department stores (-0.3%). Core retail sales, which exclude auto, gasoline station, and building material sales, rose 0.6%, which is a positive indication for the PCE component of the fourth quarter GDP report. In other economic developments of note, the eurozone GDP and CPI readings were generally better than feared. For the third quarter, eurozone GDP increased 0.2% quarter-over-quarter. Germany, meanwhile, posted a 0.1% increase. It wasnt much, yet it defied budding concerns that the German economy might show its second consecutive quarter of a negative GDP reading. Separately, the October CPI reading for the eurozone showed a 0.4% year-over-year increase that was unchanged from September. European bourses were tracking modestly lower, but have since picked up and are now either close to unchanged or modestly higher. Thats about how the U.S. market is expected to open. After a 12% gain since mid-October, thats not bad at all and undoubtedly drives the chagrin of sidelined participants anxiously waiting to see lower prices.
Posted on: Fri, 14 Nov 2014 14:03:01 +0000
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