T3’s Take 3: King Dollar Rises Like a Phoenix


1) King Dollar!

The US dollar rose again today as the case for an FOMC rate hike continues to strengthen.

The ISM Services Composite report came in at 57.1, blowing away the 53.0 consensus. We also saw better-than-expected ADP Employment Change, Markit PMI, Factory Orders, and Durable Goods data.

This extends the recent streak of positive US economic data.

Also today, Richmond Fed President Jeffrey Lacker said there is a strong case for raising rates rapidly, and that he sees signs of inflation heating up.

In reaction, the US dollar continued its winning streak and US Treasuries kept falling.

Fed funds futures show that traders now see a 64% probability of a December rate hike, up from 60% last week.

2) Stocks Rise

US equities continued rallying today on today’s solid economic data and continued strength in oil.

The S&P 500 rose 0.4% to 2159.73, while the Nasdaq rose 0.4%.

Crude oil rose on yet another better-than-expected inventory report, which fueled (pun intended) a 1.5% gain in the S&P Energy ETF (XLE).

Gold miners fought back from today’s huge down day, while biotech staged a nice little rally.

We also saw continued relative strength in financials on the rise in Treasury yield. On the flip side, sectors that benefit from low rates (like utilities and real estate) slumped.

3) Twitter Games

Twitter (TWTR) rose another 5.7% to $24.87 today up as takeover rumors continued to circulate.

In recent days, Google (GOOGL), Disney DIS), Microsoft (MSFT) and Salesforce.com (CRM) have all been identified as potential buyers, and the chatter kept on flowing today.

CNBC hosted an interview with Salesforce.com (CRM) CEO Marc Benioff based almost entirely around whether Salesforce would take over Twitter.

Benioff smartly declined to comment on any specific rumors.

And after the close, Reuters reported that Twitter may decide whether it will sell by October 27.

Incidentally, that is the date of Twitter’s third-quarter earnings report, so mark your calendar!

Thursday’s Trading Calendar

US Economics (Time Zone: EDT)

07:30 Challenger Job Cuts YoY (Sep): prior -21.80%
08:30 Initial Jobless Claims (10/1): exp. 256k, prior 254k
08:30 Continuing Claims (9/24): exp. 2081k, prior 2062k
09:45 Bloomberg Consumer Comfort (10/2): prior 41.6
10:30 EIA Natural Gas Storage Change (9/30): exp. 71, prior 49
10:30 EIA Working Natural Gas Implied Flow (9/30): exp. 71, prior 49

Global Economics

02:00 EUR German Factory Orders m/m
07:30 EUR ECB Monetary Policy Meeting Accounts
08:30 CAD Building Permits m/m


Before Open:

Advanced Drainage Systems (WMS)

After Close:

Ruby Tuesdays Inc (RT)