The Morning Hammer: Those That Know Don’t Tell…


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The pound is rallying after UK PM Theresa May said that Parliament should vote on her Brexit plan. This implies a more deliberate approach to the UK leaving the building, which could soften the Brexit blow a bit.

Crude oil popped above $51 after OPEC said it has a firm commitment from Russia to participate in an output cut.

However, keep in mind that the oil newsflow is all over the place, and this story is truly not over until it's over. (you know what I mean)

As an illustration of how fluid the situation is, Bloomberg is reporting that Venezuela and Iraq are disputing OPEC's reported output data. I assume that having no consensus on where output is now makes it more difficult to decide on where output should be.

Meanwhile Goldman Sachs is out saying US oil explorers will boost activity with oil in the $50 – $55 range. I don't think the market disagrees with that, given that oil service names (OIH) have already rallied nearly 50% off February lows.

Samsung cut its Q3 operating profit forecast by $2.3 billion after halting production of the Galaxy Note 7, which is prone to catch fire.

The big item on today's agenda is the release of the September Fed Minutes at 2:00 p.m. ET.

Even with Friday's mediocre jobs numbers and the Fed's mixed message in the September rate decision, traders have been upping their bets on a December rate hike.

Fed Funds futures are pricing in a 67% chance of a December rate hike, up from 62% at the September rate decision.

Of course, the big question isn't necessarily “what will the Fed do in December?”

It's “how fast is the pace thereafter?”

Remember, at the September meeting, the Fed cut its own forecast for 2017 rate hikes to 2, down from 3 previously.

Some very smart people think there's a decent chance the Fed is one and done due to recession risk. I won't hazard any guesses. I'll just remind you of the 2 simple truths of Fed days:

1) Those who know don't tell and those who tell don't know

2) The first reaction isn't always the right one… and neither is the second

The hawk hammer has the dollar moving higher again this morning, while SPX futures are slightly red.

Yesterday, we had a nasty down day on a confluence of bad news (huge currency volatility, AA/DOV earnings, Samsung), and there was a clear risk-off flavor to the action.

The Russell 2000 and biotech (IBB) took huge lumps, and the VIX popped pretty hard.

I'd key off 4 things today:

1) Apple (AAPL)

Apple's gotten a nice boost from Samsung's Note 7 recall, which eliminates one of iPhone 7's main competitors.

Apple does a lot of heavy lifting for the indices, so I'd watch to see if there is some belated profit-taking.

2) Oil

Clearly, equities like strong oil.

And WTI crude looks like it wants to take out the 2016 high at $51.67. A power move through there could mean good things for the bulls.

3) Hot New Issues

ACIA, TWLO, TTD, ACIUPI, etc. are the new F.A.N.G.

These names are not looking healthy. It would be a clear plus if they regained traction.

4) The Usual Risk On/Off Suspects

As I said, the Russell and biotech got spanked pretty hard yesterday. I'd closely watch them, along with HYG.

And remember…

The Fed Minutes release means it's an anything goes day.

Good luck out there.

P.S. Don't forget to sign up for Doug Robertson's special options training session!