T3’s Take 3: The Fed Is Dead Ahead


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1) All Eyes on Yellen

Traders are eagerly awaiting Fed Chair Janet Yellen's speech in Jackson Hole at 10:00 a.m. ET tomorrow.

Fed officials have been very hawkish as of late, and today, Kansas City Fed President Esther George said on Bloomberg TV that higher rates were warranted since the US is near full employment with rising inflation.

Dallas Fed President Robert Kaplan also offered hawkish comments on CNBC,.

Traders are now pricing in a 55% chance of a December rate hike, up from 47% 2 weeks ago and just 9% after the June 24 Brexit.

However, keep in mind that the Fed has been fairly unpredictable this year.

So it will be interesting to see if Yellen gives the hawkish statements everyone is expecting.

2) Flat as an Ironing Board

The market once again went nowhere, with the S&P putting in its 34th day without a 1% move.

The index finished down -0.01% at 2172.47, and there wasn't much action in the other indices either.

Economic data mostly solid today, with jobless claims and durable goods coming in better-than-expected. The data supports the case for Fed rate hikes. This and all the hawkish chatter sent up regional bank stocks, and pushed gold lower.

And in a near-perfect repeat of yesterday, biotech stocks led in the early going before falling hard in the afternoon on pricing controversies.

The Nasdaq Biotech ETF (IBB) fell -1.2% to 282.87.

3) Jeff Cooper's Take on Biotech

Here's what Jeff Cooper had to say about the action in IBB:

Yesterday, I mentioned that the fall in the biotechs on the heels of Hilary's comments reminded me of the pop in the bubble in 2000 on Bill Clinton's and Tony Blair's comments on biotech and the genome.

A daily IBB chart shows yesterday's large range outside down day (LROD or Lighting Rod) on a large increase in volume.

Yesterday's lows nominally undercut the prior peaks from the spring and summer and the previous breakout pivot.

IBB is in a potentially weak position if today is a Pause Day prior to downside follow-though.

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US Economics (Time Zone: EDT)

08:30 Advance Goods Trade Balance (Jul): exp. -$63.0b, prior -$63.3b
08:30 Wholesale Inventories MoM (Jul P): exp. 0.10%, prior 0.30%
08:30 GDP Annualized QoQ (2Q S): exp. 1.10%, prior 1.20%
08:30 Personal Consumption (2Q S): exp. 4.20%, prior 4.20%
08:30 GDP Price Index (2Q S): exp. 2.20%, prior 2.20%
08:30 Core PCE QoQ (2Q S): exp. 1.70%, prior 1.70%
10:00 Fed Chair Yellen to Speak at Jackson Hole Policy Symposium
10:00 U. of Mich. Sentiment (Aug F): exp. 90.8, prior 90.4
10:00 U. of Mich. Current Conditions (Aug F): prior 106.1
10:00 U. of Mich. Expectations (Aug F): prior 80.3
10:00 U. of Mich. 1 Yr Inflation (Aug F): prior 2.50%
10:00 U. of Mich. 5-10 Yr Inflation (Aug F): prior 2.60%
13:00 Baker Hughes U.S. Rig Count (8/26): prior 491
13:00 Baker Hughes U.S. Rotary Gas Rigs (8/26): prior 83
13:00 Baker Hughes U.S. Rotary Oil Rigs (8/26): prior 406

Global Economics

04:00 EUR M3 Money Supply y/y
04:30 GBP Second Estimate GDP q/q
04:30 GBP Prelim. Business Investment q/q
All Day Jackson Hole Symposium


Before Open:

Big Lots (BIG)

After Close:

None of significance