Pre-Market

You'd really think the biggest story overnight would be the F_O_M_C, but it's a continuation from last night and the night before, CHINA. What is known as "Hot Money", excess liquidity produced by the F_E_D and the BoJ has to find its way in to some market to try to generate a return and that market has been China, because China already has an inflation problem they can't fight back by engaging in liquidity providing/QE operations, in fact they are doing the opposite and draining liquidity from their system to soak up all the extra cash sloshing around driving housing prices to crazy levels.

It seems this has become a brewing crisis and this is the real reason China and Japan have been at each other's throats overtly, but over seemingly unconnected events like the Senkaku Islands which are little more than rocks in the East China Sea, well whatever sea it is depends on which side of it you live on.

The CNY benchmark money-market one-week repo rate was 138bp higher overnight to a 2 year
high of 8.15%. The 7 day Interest-Rate swap rose for a record 13th day in a row jumping +10 bps to 4.08%, the highest since September 2011. China sold 10 Year bonds at a 3.50% yield, above the 3.47% expected, and at a bid to cover of 1.43 which was the lowest since August 2012. Moody’s commented that local government financing vehicles (LGFVs) pose significant risks to Chinese banks. LGFVs
accounted for 14% of loan portfolios at end-2012 according to Moody’s.

As for ES overnight, one might say, "Slightly Cloudy with a Chance of Rain", a very choppy session overnight. The USD/JPY is stuck in the same chop and looks more likely (stronger signal) to go down in the immediate future as in before the F_O_M_C or around that time.

That means the market should follow.

Bloomberg shows the F_O_M_C announcement as being 2 p.m., but often that is the press conference with the announcement at 12:15, I'll have to double check their schedule, all I can say is make sure your computer is cleaned up, your browser fast and be ready to move quickly.

More than anything, REMEMBER ELMOST EVERY F_O_M_C OR F_E_D ANNOUNCEMENT PRODUCES A KNEE-JERK EFFECT, IT IS STRONG AND CONVINCING, BUT ALMOST ALWAYS WRONG, IT USUALLY SHIFTS WITHIN SEVERAL HOURS TO A COUPLE OF DAYS.

This is where 3C will be most crucial. One time we found a leak 2 hours before as smart money all shifted 2 hours before, I'll be watching closely which means I'll probably be slow on email responses.

Good luck, stay frosty.