Frank Fahey: Market News for the Prepared Mind: 7.10-7.17.2017

July 10, 2017

“Chance favors the Prepared Mind.” – Louis Pasteur

“I don’t necessarily agree with everything that I say.” – Marshall McLuhan

“There are things known and there are things unknown, and in between are the doors of perception.” – Aldous Huxley

“There’s nothing I hate more than nothing. Nothing keeps me up at night. I toss and turn over nothing. Nothing could cause a great big fight.” – Edie Brickell

 

The shortened trading week was marginally positive. The movement in equity indexes was perhaps better described as less than nothing. Intra-day volatility gave rise to the hope that maybe something would happen in the equity markets.  These hopes were dashed with a return to nothing.

Korean ICBMs, stagnant wage growth, no inflation, Central bank interest increasing, great job numbers and nothing happens.  Is there anybody out there?

Here is an overview of the US market behavior last week and for 2017:

Data Source: OptionVue8

The VIX continues the theme of nothing.  Managed a significant gain on Thursday, yet it ended the week higher by 0.01. The disconnect for the week was a gain in the VIX futures.  This disconnect is apparent when the CBOE Short-term Volatility Index (VXST) loss is compared to gains in the longer term CBOE volatility indexes (VXV and VXMT.)  This disparity may be an early harbinger of a pause in the bull market.  It will be interesting to see if this volatility relationship continues next week.

Here is an overview of last week for the VIX and related products:

Data Source: OptionVue8

The beginning of the week will be spent waiting for Janet Yellen’s testimony before Congress on Wednesday and Thursday.  Inflation will take the lead on Friday with the release the Consumer Price Index.  A lack of growth in wages and consumer spending could lead policy makers to second guess curtailing economic stimulus.

Earnings will start in earnest this week, with major financial entities reporting at the end of the week, The traditional start of a quarterly earnings season is the earnings announcement by Alcoa (NYSE:AA).  This announcement will take place after the market close on  Wednesday, July 19, 2017. Confirm the date and time of any company’s earnings announcement before trading any earnings announcement strategy.  The most accurate source of this information is the company’s investor relations website.  Earnings highlights for the coming week include Helen of Troy, WD 40, YUM! Brands, AAR, Pepsico, Fastenal, Delta Air Lines. Wells Fargo, Citigroup, JPMorgan Chase, and PNC Financial Services.

 

Advice to stimulate your imagination:

“Don’t wait. The time will never be just right.” – Napoleon Hill

“Always go too far, because that’s where you’ll find the truth” – Albert Camus

“A point of view can be a dangerous luxury when substituted for insight and understanding.” – Marshall McLuhan

“If you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted 10 minutes” Peter Lynch

 

Monday, July 10:

Economic:  Labor Market Condition Index – 10:00, TD Ameritrade IMX – 12:30.

International Economic: Germany Merchandise Trade – 2:00AM.

Other: San Francisco Federal Reserve Bank President John C. Williams to speak about “Speed Limits and Stall Speeds: Fostering Sustainable Growth in the United States” in Sydney, New South Wales, with audience Q&A – 11:05PM.

Earnings: None meeting criteria.

 

Tuesday, July 11:

Economic:  NFIB Small Business Optimism Index – 8:00, Redbook – 8:55, JOLTS – 10:00, Wholesale Trade – 10:00.

International:  Japan PPI = 7:50PM.

Other:  Federal Reserve Governor Lael Brainard to be the keynote speaker at the Conference on Normalizing Central Banks’ Balance Sheets in New York City – 12:30PM, Minneapolis Federal Reserve Bank President Neel Kashkari will be speaking at a moderated Q&A at the Minnesota Women’s Economic Roundtable event in Minneapolis, with audience Q&A – 1:20PM.

Earnings:

 

Wednesday, July 12:

Economic:  MBA Mortgage Applications – 7:00, Atlanta Fed Business Inflation Expectations – 10:00, EIA Petroleum Status Report – 10:30, Beige Book – 2:00PM.

International Economic: Japan tertiary Index – 12;30AM, Great Britain Labour Market Report – 4:30AM, Eurozone Industrial Production – 5:00AM, China Merchandise Trade Balance – 10:00PM.

Other:  Federal Reserve Chair Janet Yellen opening statement for her testimony to the House Financial Services Committee will be released in Washington – 8:30AM, Federal Reserve Chairman Federal Reserve Chair Janet Yellen will give her semiannual monetary policy testimony before the House Financial Services Committee – 10:00AM, Kansas City Federal Reserve Bank President Esther George to deliver a speech on the economic outlook and the Federal Reserve’s balance sheet in Denver, with audience Q&A – 2:15PM.

Earnings:

 

Thursday, July 13:

Economic:  Weekly Jobless Claims – 8:30, PPI-FD – 8:30, Bloomberg Consumer Comfort Index – 9:45, EIA Natural Gas Report – 10:30, Money Supply – 4:30.

International Economic:  Germany CPI – 2:00, China Producer and Import Price Index – 3:15AM.

Other:  Federal Reserve Chair Janet Yellen to testify before the Senate Banking Committee in Washington – 10:00AM, Chicago Federal Reserve Bank President Charles Evans will deliver the keynote address and speak about current economic conditions or monetary policy at the Ninth Annual Rocky Mountain Economic Summit in Victor, Idaho, with audience and media Q&A – 11:30AM,

Earnings:

 

Friday, July 14:

Economic:  Consumer Price Index – 8:30, Retail Sales – 8:30, Industrial Production – 9:15, Business Inventories – 10:00, Consumer Sentiment – 10:00, Baker Hughes Rig Count – 1:00.

International Economic:  Eurozone Merchandise Trade – 5:00Am,

Other: Dallas Federal Reserve Bank President Robert Kaplan to speak at a moderated Q&A session at the Conference on the Federal Reserve and monetary policy hosted by the Center for Economic Studies of the Private Sector in Mexico City, with audience and media Q&A – 9:30AM.

Earnings:

 

Monday, July 17:

Economic:  Empire State Manufacturing Survey – 8:30AM

International Economic: No major announcements.

Earnings:

 

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