Market ranging and empty calendar set up a very slow session

Market Review

After Janet Yellen and her board at the FOMC were surprisingly dovish Wednesday night the market had a quiet session yesterday. We expected the EURUSD to start a retracement and have to a certain extent been correct, though the currency pair has been moving quietly and has yet to get back to the levels seen before the meeting took place. A strong sterling is helping the upside, as correlation traders have tried to benefit from the cable rally on more currency pairs than the mentioned one. Our T-Notes prediction came true as it has been selling off since just after mid-day yesterday and has been trading around the bid area from Wednesday evening. S&P has kept its gains as Yellen’s stamp of approval was put on current levels, reviving traders energy for the 2,000 handle. No entries were taken on and considering the slow market we were content with the result.

Today's Fundamental View

Traders; brace yourselves. We are about to embark upon a very slow session. With the market ranging since yesterday and today’s data calendar completely empty the stage is set for the market to go nowhere. After decent earnings we saw Blackberry rally by some 12% yesterday, mostly due to not posting losses, which seemingly have become the norm for the struggling Canadian technology company. A few months back we issued a buy recommendation on this company (report available upon request) on the back of its huge cash pile meaning the company is worth only about $1.7 billion, which is low considering the assets and technology on its hands, even under an alternative scenario where the company no longer produces handsets. Equities as a whole will continue to drift higher today, and we assume treasuries to trade lower than the current levels at the end of the session. For crude oil, ISIS have taken control over an old military grade chemical weapons facility. As western leaders state this is not really an issue, reports are showing that there are massive chemical storages on the base that apparently there is a “low chance they can use”. To us it sounds a bit inane, believing the richest terrorist organisation in the world will not have the manpower, brains or capital to fully utilize this. If the original proposition of WMD’s not to be in the hands of terrorists was the reason to get in to Iraq, this means we can stamp mission fail on the file, 11 years after entering the country. At this point it would be better with Saddam in power, at least then there would be a leader who was too risk averse not to use it against the west. We believe there will be a step up in military activity and assume the base to be back on allied hands within a week, and continue with our long perspective on oil. The USD should continue to drift lower.