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U.S. equity index futures slightly green: Nasdaq 100 up
~0.3%
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U.S. Nov CaseShiller 20 MM -0.5% vs -0.6% est; YY in-line
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Euro STOXX 600 index off ~0.4%
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Dollar ~flat; gold slips, crude down; bitcoin up
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U.S. 10-Year Treasury yield falls to ~3.49%
Welcome to the home for real-time coverage of markets brought to
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MARKETS IN FOR A SUCKER PUNCH? (0912 EST/1412 GMT)
The S&P 500 has bounced back nearly 5% in the first month of
2023, the question is - does this rally have legs?
J.P.Morgan global strategists believe the year-to-date rally
is likely to fade as recession risks are merely postponed and
not diminished.
"Fundamental confirmation for the next leg higher might not
come, and instead markets could encounter an air-pocket of
weaker earnings, activity, and capex," JPM strategists, led by
Marko Kolanovic, wrote in a note.
This week is packed with catalysts - including the U.S.
Federal Reserve's rate-setting meeting, earnings from mega-cap
companies Apple , Alphabet and Amazon.com , and the pivotal monthly jobs report - that could
dictate market moves in the near-term.
Positioning in options markets isn't pointing to a very
bright outlook either, according to analytics firm Spotgamma.
The recent market climb has been driven by the short dated
options trade and short stock covering which generates a lot of
pretty 'breakout charts' as it adds to an illusion of
fundamental strength, said Brent Kochuba, the founder of
SpotGamma.
Traders were net sellers of U.S. equity call options last
week, with most of the flow concentrated in very short dated
activity, Spotgamma noted.
"There seems to be a perception that this giant bull market
is about to launch, but we feel a lot of that is ultra-short
term momentum," Kochuba added.
For example, traders buying calls in Tesla are in
for the daily momentum chase and therefore closing positions
shortly after buying. Traders do not appear to be trying to
position for the second quarter and beyond, Kochuba explained.
Further, it appears the tail that is not being hedged is
hawkishness from the Fed, Kochuba added.
"From an options positioning perspective the market seems
prone to a real sucker punch. This does not mean (Fed Chair
Jerome) Powell delivers one, but it seems that outcome is
underpriced."
(Medha Singh)
*****
CRUDE OIL FUTURES: IS TRADER JOE STILL EYEING HIS FILL?
(0857 EST/1357 GMT)
The U.S. House of Representatives passed a bill last Friday
limiting the ability of the energy secretary to tap the
strategic petroleum reserve (SPR) except in emergencies.
Republican backers of the bill said the Biden administration
acted recklessly in selling 180 million barrels from the reserve
last year, in the biggest release ever. That drawdown and others
Biden approved have pushed the level of the SPR to its lowest
level since 1983.
The Biden administration had said it acted to counter high
gasoline prices in the wake of Russia's invasion of Ukraine.
Earlier last week, energy Secretary Jennifer Granholm said that President Biden will veto the bill if it ultimately passes Congress. On December 9, NYMEX crude futures hit a low of $70.08 before snapping higher. A week later, on December 16, the U.S. Energy Department said it would begin buying back oil for the SPR. More specifically, last October, The White House said it would buy back oil at or below about $67-$72 per barrel. On December 9, the futures bottomed at 1.09x the value of their 200-week moving average (WMA). Since the early 1990s, this long-term moving average has acted as a powerful magnet in crude sell offs:
Crude futures are now trading around $77.00, with the disparity at 1.17x.
It may remain an open question whether crude hits President
Biden's buy level. However, traders are still focused on whether
the 200-WMA, which now resides just below $66.00, and is rising
around 5-10 cents per week, will continue to work its magic as a
powerful magnet.
Meanwhile, the S&P 500 energy sector is just over 7%
below its 2014 record intraday high.
(Terence Gabriel)
*****
FOR TUESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
