The Morning Hammer: We Won’t Get Fooled Again?

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The bears had a great day yesterday.

SPX only fell -0.5%, but with Hillary Clinton's help, they sent biotech from first to worst in a matter of hours, and some key momo stocks like Twilio (TWLO) and Acacia (ACIA) took beatings.

Oil also fell on a very bearish inventory report and the VIX got a little pop.

Overnight, German business sentiment missed expectations, while Spain reported above-consensus GDP.

And Bloomberg is reporting that Chinese authorities may act to cool off Shanghai's surging property market, including restrictions on mortgages and development loans.

This morning, we're seeing some minor downside follow-through with SPX futures down 5 handles and crude oil off 30 cents.

We've got a big chunk of economic data coming today with jobless claims, durable goods, Markit PMI, and the Kansas City Fed on tap.

However, the big story is still FOMC Chair Janet Yellen's speech in Jackson Hole tomorrow.

Traders have been ratcheting up rate hike expectations, and Fed Funds futures now imply a 54% chance of a December rate hike, up from 47% a couple weeks ago.

That's been putting pressure on gold and US Treasuries.

I won't hazard a guess as to what she'll say because trying to game the Fed has been extremely hard this year.

Everyone was geared up for a big hawk move in June and Yellen came out dovish.

In fact, now that I think about it, there are two major parallels with June.

We're heading into a Fed event where everyone is expecting a big hawkish twist.
Funny, just as I wrote this, Kansas City Fed President Esther George (FOMC voting member) came out swinging the hawk hammer, saying the “time is right” for a rate hike and that gains in inflation give the Fed room to remove some accomodation.

And we're heading into an OPEC event where a lot of traders expect a production freeze or cut.

In June, the Fed and OPEC disappointed the masses.

Are we about to get fooled again?

I'm not going to make any predictions since I'm not rolling the dice on Yellen's speech. Just keep in mind that Mr. Market's primary mission is to fool as many traders as possible at all times.