Two reports at 8:30 this morning. Weekly jobless claims expected to have declined 9K were up 10K to 293K, the highest claims in the last six months. The 4 week average increased to 285K frm 278.50K. January Philadelphia Fed business index, expected -4.0 frm -5.9 originally reported for Dec at -5.9; as reported the index was at -3.5 but Dec was revised to -10.2. The new orders index is improving, at minus 1.4 for the best reading since September. And shipments, for the first time also since September, are positive, at a strong 9.6. The six-month outlook, down 5 points to 19.1 for the softest level since 2012, the decline in inventory build is defensive and intentional.
ECB’s Mario Draghi this morning commenting that inflation is way down the line; he said there is no end to what the ECB will do to improve the outlook. Blowing in the wind; as we have noted recently central banks regardless of what they will or could do are becoming more impotent every day in the context of driving economic growth. Draghi said the bank needs to review its policy stance at its next meeting. The ECB left its key interest rates unchanged, but Draghi hinted the bank will review its stimulus at the March ECB meeting. The inflation rate in Europe was expected to pick up from the 0.2% recorded in December and average 1% this year, rising further in 2017. But Mr. Draghi said it is now possible that prices will start to fall again over coming months.
At 9:30 the DJIA opened +18, NASDAQ -2, S&P +1 after trading higher in the pre-market futures this morning. The 10 yr note yield at 9:30 -1 bp at 1.97%. FNMA 30 yr 3.5 coupon +11bps frm yesterday’s close and +9 bps frm 9:30 yesterday.
Corporate earnings and forward guidance generally have been missing their targets; US economic outlook weakening from what we look at and expect. The advance Q4 GDP will be reported a week frm tomorrow, estimates are being revised lower but economists are likely to overestimate growth again.
Crude oil Feb contract expired yesterday, now March is month markets will track; the oil price below looks like oil increased, the price over $28.00 but actually prices have slipped a little.
As the clock ticks so far this morning the equity market is losing the early morning highs; the stocks have only lost about half of their valuations frm what we anticipate. Traders will sell into every attempt to rally, although the technicals are now in oversold levels. In this kind of sentiment swing though technicals take somewhat of a back seat.