A.M. Observations

Well so far it seems the biggest (or at least for me the most anticipated) news regarding China's recent tightening phase passed as you know with an injection of $13b Yuan last night, it seems fears of rising money market rates and a cash crunch were starting too mount (at least that's the official media spin). The initial move was up +1.4%, but the market closed down .2%

The Reserve Bank of India increased its key interest/repo rate to 7.75% from 7.5% amidst high inflation and lowered their Marginal Standing Facility to 8.75% from 9% (I'd still love to have my money in that facility at +8.75%). The CB also eased tightening measures aimed at propping up the Rupee. Inflation in India is high, specifically in food, the Y.O.Y. increase is 18.4% on the whole, but a staple of Indian food being onions are up 322%, soon they'll be like Dutch Tulip bulbs; I'll never forget the story during the Dutch Tulip Craze of a man having a very rare bulb shipped to him that was worth the equivalent of a home-say $200k today only to find out a sailor mistook it for an onion and was comping away at it! Back to India, the benchmark inflation index was up at a 7 month high at 6.46% with weak economic growth.

While Chinese Banks had a decent overnight session (mostly closing +2-+4%), not the same for European, at least not some of the bigger ones. UBS was hit by Swiss banking regulators with an order to increase set-asides for litigation expenses by an extra 50% while DB dropped as Q3 income dropped -94% on rising litigations costs and set-asides along with their debt trading unit being hit hard by "the global slowdown", hmmm... we're hearing that a lot lately.

In the U.S. SPX futures had a slightly favorable response to the 8:30 PPI and Retail Sales, both very minor, well perhaps not.

Case Shiller beat which contradicted yesterday's Existing Home Sales print, it came in at +.65% @ +.93% or 12.84% Y/Y.

PPI was close to in line, there was a small dip of 0.1% below consensus and ex-autos dipped a similar 0.1% below consensus.

ES opened 3 points above yesterday's 4 p.m. print. We do have intraday 1 min negative divergences in all Index futures, NQ is a good example...

After confirmation most of the overnight session, 3C goes negative at the highs for the week around the open and sends NASDAQ 100 futures lower.

I'm going to poke around some of the more boring futures and see if anything is out of place. 

AS I ALWAYS WARN BEFORE AN F_O_M_C policy statement (tomorrow @ 2p.m.) "BEWARE THE KNEE JERK REACTION!" It is almost always wrong and reversed within a couple of hours to a couple of days, the last one in September was reversed the next day.

Have a great day.