Futures Commentary and Analysis

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E-Mini S&P 500: Choppy but range bound pre-inauguration!
DeWayne Reeves - IF - Wed Jan 11, 6:06PM CST

The post-election rally has supported the E-Mini S&P 500, and this month is full of speculation on just how much expansion and growth can one administration bring to the country! At this point, it is still unclear of the policies and the expansion that Presidential elect Donald Trump may bring to the office. Uncertainty is still the sentiment in the marketplace. The Dow Jones Industrial Average has still backed off and not penetrated that all-important 20,000 level. The sentiment may be cautious unless the Dow can penetrate the new level. President elect Trump accused Pharma for “getting away with murder” with their high prices thus creating a sell-off in the healthcare sector. The market took a bullish mode unless it is able to penetrate $2235.00. The range today for the (March) E-Mini S&P 500 was $2271.00 to $2255.00 an inside to lower day. Thursday’s range could be an inside to lower to outside day around $2270.50 to $2251.50. Actually, we need the DOW to penetrate $20,000 for the ES to move higher. The financial sector and the Retail Sales may weigh on the market. The MBA Mortgage Applications Composite Index for the week of January 6th was 5.8 % while the previous reading was -12.0 %. The Purchase Index was 6.0 % while the previous reading was -2.0 %. The Refinance Index was 4.0 % while the previous reading was -22.0 %. The Atlanta Fed Business Inflation Expectations for January were 2.0 % while the previous reading was 2.1 %.

The December Nonfarm Payrolls came in lower than expected at 156,000 while the previous reading was 178,000. The Unemployment Rate was up a bit to 4.7 % while the previous reading was 4.6 %. The Private Payrolls was 144,000 while the previous reading was 156,000. The Average Hourly Earnings was the bright spot at 0.4 % while the previous reading was -0.1 %. The Average Workweek was 34.3 hours compared to the previous reading of 34.4 hours. The International Trade Balance Level for November was -$45.2 billion while the previous reading was -$42.6 billion. Exports were down 0.2 % while imports were up 1.1 %. Factory Orders for November were -2.4 % while the previous reading was 2.7 %. The US Real Gross Domestic Product came in at 3.5 % above the forecast around 3.3 % for Q3f:2016 while the previous reading was 3.2 %. The GDP Price Index is 1.4 % unchanged. Consumer Spending which makes up about 70 % of the GDP only was 0.2 % in November below the 0.3 % forecast.

The EIA Petroleum Data Report showed Crude Oil inventories were up +4.1 million barrels. Motor Gas Oil was up +5.0 million barrels. API Petroleum Stock Recap for the Crude Oil was +1.5 million barrels. The Motor Gas Stocks was +1.7 million barrels. Kuwaiti officials announced that the production levels have been reduced to about 2.707 million barrels a day according to OPEC guidelines. There are projections of the US becoming an energy exporter, but details have not been released. Saudi Arabia is said to have cut production by 0.49 million barrels per day! Iran’s National Oil Company has been approved for a loan of one billion Euros from Vitol companies.

US President elect Donald Trump has investors believing in his “make America great again” slogan. His fiscal stimulus ideas to expand the economy has increased the positive sentiment of traders. His spending ideas could increase potential inflation, but that would add to the banking sector. Also his impact on banking regulations may spur the lending institutions higher. The Fed had previously mentioned that they do not see a great improvement in the unemployment rate. They forecast 4.5 % next year while November’s was 4.6 %. US President elect Donald Trump is to be inaugurated on January 20th and has claimed to introduce about $1 trillion in infrastructure investments with tax cuts for both individuals and corporations. The details have not been revealed to date but it will have to pass thru Congress. The next Fed meeting is January 31st 2017 in Washington. Yellen considers the current monetary policy as moderately accommodative. Fed Chair Janet Yellen is in Office until January 2018 and vows to stay her term until whereby the new administration may make changes or appoint a new chair. The sentiment toward Trumps election and office supports the US Dollar and may continue to do so. Export trade may be further impacted from the strength in the dollar.

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