The collision of global markets and social mood

Friday, October 7, 2016

Friday -- GBP Flash Crash, NFP, Deutsche Bank

S&P E-mini Futures:
Down modestly considering overnight FX action.

GBP flash crashed 6% in two minutes last night in the thin "Dead Zone" between NY trading and the Asian session.

UK's "Hard Brexit" news is blamed for the crash. "Fat Finger" is blamed. Algos are blamed. Lack of liquidity is blamed. Whatever the reason reason, it happened.

My feeling is that maybe there's more going on with Deutsche Bank than is being reported. Bloomberg reported that DB is considering a capital raise. DB is a big deal, and a capital raise in the "strongest bank in Europe" is an even bigger one.

NFP payrolls 156K versus expectations of 172K, unemployment ticked up to 5%. Wages continue to accelerate (which the Fed secretly hates). August revised up to 167,000 from 151,000 and July reduced to 252,000 from 275,000.

The word Goldilocks was used by Bloomberg.

JPY strengthened with the GBP crash, and just did with NFP as well. CHF was also stronger overnight, as was the USD, yet USD took it on the chin with NFP -- AUD & CAD getting the benefit.

Volume continued to expand as prices slammed into their September swing points but is showing signs of abating. Prices could and should reverse. Stay tuned.

WTI crude fresh overnight high. June highs look ripe for test and possible trade above them. NG fresh overnight rally highs on volume.

Green but very little net benefit from overnight histrionics.

S&P Outlook:
The 2150.49 gap got filled nicely yesterday and price rebounded smartly, then stalled.

Yesterday's 2150.28 low is a hard stop in my world. Still like the 2177 and 2181.30 targets above.

Lower zone is still live too -- 2094.55-2103.25.

Tepid reaction to NFP thus far.

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