Awaiting the NFP?

Few items of interest. The S&P / ES seems to be at a juncture. But. maybe its just the wait for the NFP that is poising it here.

All the recent bad/terrible/tragic news seems to have been pushed aside. A new earnings season is nearly upon us (still a week or so before it really kicks in in earnest). The oil price is high, and last night even higher. Commodity prices seem to be finally starting to feed into end-product prices (or are they? … it would seem logical that they do, but it is not obvious, yet). MENA bubbles away. Sovereign debt issues bubble away. The VIX … measuring all the fear … is falling.

(Actually, the VIX is a post all by itself. One I wont be posting, but just in summary note that it is a measure based on markets & market activity – the inputs to option pricing, most importantly implied volatility … but a full explanation of the VIX is not my goal here, plenty around on it – , and may not therefore entirely correspond with ‘human’ logic; ‘market’ logic is more applicable to it – this is a convoluted way of saying that, to my thinking at least, wild, seemingly inexplicable swings in the VIX are manifestations of market activity, with all its subtle, reflexivity- and feedback-laden, qualities. The recent plummet in the VIX after the spike may be a recognition that with what is seemingly solid bids under the S&P then volatility is going to be limited. I don’t know, but it is one likely source of the rapid contraction in implied vol. Or, maybe its simply saying the fears are overblown. Or, maybe the low VIX is, in fact, a mispricing of all the risks out there. ps. I don’t have the answer, just putting (no pun …) these ideas out there).

Anyway, here is a collection of news links that I found of interest today.

Wal-Mart CEO Bill Simon expects inflation One of my biases is to pay attention to practitioners, and this guy is a big one.

Fed expectations update
Fed Watchers Eye Dudley Speech Tomorrow All the chatter from Fed presidents have put me into a ‘where there’s smoke there’s fire” mode. The chatter just wont go away. Some of the things I am thinking: the US economy has been posting some reasonable growth numbers, but these have, of late and on balance, been tending to weakening … maybe it is just weather related … dunno … The vocal hawks on the Fed have been wanting to tighten, and have been using the ‘growth in the economy’ story to bolster their case. And, as I just said, I think this growth is weakening. So, I think there is a growing movement to tighten (or at least restrict further QE, I think QE2 will run its course, there is only a few months to go anyway), With the prospect of higher inflation becoming more likely, ceasing QE and possible tightening becomes more likely, but into an economy that is not as strong as they think.

Chicago PMI solid in light of macro news

Other: leading indicators possibly rolling over (posted earlier on this).
High, and persistently high, oil prices (posted earlier on this, too).

Hmmmm. Sometimes its just easier to look at price action.

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