A positive end to the week was a refreshing change, but would have been better if indices weren’t still firmly range bound. S&P futures are at least in the upper end of the range, with 4200 on the S&P futures as the next resistance, though we’re also still keeping one eye on the 3900 support. Noteworthy that the move into risk assets hasn't just been in tech, a laggard this month (energy has been the month’s worst performer). In fact, the US tech ETF made a 12-month relative low, while the Consumer Staples/Financials ETFs made 3m relative highs. Possibly a sign of where money is being put to work. Separately, the formerly unstoppable DXY suffered its third straight day of losses, while the AUD enjoyed its 4th best up day in 2 years. And Gold stayed towards the lower part of the range from the past 2 years --- $1760, a key USD resistance. Today was light on the economic data front, but heavy in terms of Fed Speak. The members were not mincing words ahead of their unofficial quiet period which starts this weekend. Bullard reiterated his hawkishness early on and was followed in kind by Wallers and George. Nothing new was said per se, just reinforcement of their commitment to a "significant" hike in two weeks, which historically means 50-75bps. The good news was the “not new” comments were mainly ignored by the markets, and allowed for a nice little rally to end the week. Like the uber bearish BaML Fund Manager July survey that actually set the mid-summer low for the SPX, Lipper data showed another $12bn of outflows last week, following the previous week's $10b. Though there has been no real change to investor bearishness, major indexes find themselves trading again ABOVE their 50 and 100 day ma's. While next week will be quiet in terms of The Fed, there will be plenty to monitor -- notably CPI Tuesday and PPI Wednesday. Peeking at the monthly price of Crude on Bloomberg for August has it at $91.48, vs July's 99.38. And using our crude analysis (pun intended), would suggest another drop for the CPI (bbg ests m/m -0.1%). That said, a better than expected result could keep this equity rally going (and Dollar weakening), right into the Triple Witch Friday, and as dealers are forced to adjust their deltas. Say hello to the pain trade...
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