"Do not take life too seriously. You will never get out of it alive." -- Elbert Hubbard

The Policy Meeting Before the Policy Meeting

Fed Chair Janet Yellen and the rest of the FOMC may go into their policy meeting next Tuesday with intent on a policy change to be announced on Wednesday, but the European Central Bank will make a policy announcement this morning. This may not be a non-event. It's no secret that eurozone headline inflation hit the central bank's 2% y/y target in February. Though largely due to energy prices (EMU core inflation remains 0.9%), it would seem prudent for the ECB to change its forward guidance a bit.

The benchmark Minimum Bid Rate now stands at 0%, the deposit rate at -0.4%. Negative rates have been terribly harmful to European banks, and have long stood in the way of economic growth. Markets will need some lip service today, and going forward if Mario Draghi wants to open up his options moving forward on this issue. I doubt anything more than words will transpire as far as rates go, as crude prices appear to be anything but stable this week. It would appear that headline inflation could easily revert back toward core, rather than dragging the core along with it.

The ECB has already made plain its plans to start tapering the existing quantitative easing program in April. I doubt you'll hear anything more than a confirmation that this plan will move ahead in today's press conference, but you could. Aside from the already mentioned data on inflation, manufacturing PMIs are at multi-year highs across the region. Eurozone GDP is running in line with what we see in the U.S. (Hardly something to brag about, but the Fed is about to continue tightening.) The hawks -- a vocal minority within the Governing Council -- will probably push for some kind of message relating an intention to contract the program further if the economy continues to look better.

Mario Draghi has always been one of the most effective public speakers among global central bankers, but usually his words are aimed at softening the euro against its competitors. This time, he may have to set out on a different trajectory. Watch the euro, and watch the big banks such as Deutsche Bank (DB) , and Credit Suisse (CS) . CS is on my personal watch list.

Crude Breakdown

I wrote about crude in last night's Market Wrap; I wasn't really intending to go there this morning. However, this became necessary when WTI crude futures rolled off a table just a little after 5am (ET). What now? The commodity has broken through that $50 level technically. Stop orders made short work of taking WTI below $49 a barrel. If the $50 level is not quickly regained, this could allow WTI to trade as low as $46, or even $44. The already-mentioned ECB policy meeting may be the oil bull's best friend this morning, as long as the press conference has a negative impact on the U.S. dollar.

Without this, you are likely to see risk managers forcing net long prop traders to do things they would otherwise be resistant to do ahead of tomorrow's rig count number. Could this be the time to get long? I don't have a crystal ball. Outside of a swing trade, I also know that sometimes it is better to navigate around trouble. This action will obviously negatively impact the energy sector further, and likely act as an anchor tied to the broader indices in today's early going.

Something Amiss in China

Odd things are happening in China. First the government seems OK with a slightly lowered target for GDP. Then the trade balance comes in sideways on a contraction for exports, and a massive surge for imports. All those imports, largely commodities, should have signaled improving demand at home. You would think. But last night, China's National Bureau of Statistics released its February inflation data. What did it show? An almost catastrophic lack of consumer level inflation, that's what. A print of 0.8% year over year, down from 2.5%. The month-over-month print was outright negative. Domestic demand? Hopefully, as we push out further from the Lunar New Year, any skews in the data will work their way through the system. If not, there may be a couple more uninhabited cities and bridges to nowhere on the way.

Macro

08:30 - Initial Jobless Claims (Weekly): Expecting 237,000, Last Week 223,000. We used to keep track of the consecutive weeks that this item printed at less than 300,000. The series just keep dwindling. This week, we look forward to what will likely be the sixth consecutive week under 250,000. The four-week moving average now stands at 234,250. Markets will not react significantly to this item.

08:30 - Import Prices (February): Expecting 0.1%, January 0.4% m/m.

08:30 - Export Prices (February): Expecting 0.2%, January 0.1% m/m. This is no longer considered a reliable measure of cross-border demand, unless you look at imports ex-energy and exports ex-agriculture. Last month, imports prices increased 0.4% m/m, but contracted by 0.2% m/m if fuels were omitted from the data. Stagnant oil prices in February have removed that particular skew from today's numbers. A perfect world would see today's prices moderately supportive of continued inflation.

10:30 - Natural Gas Inventories (Weekly): Expecting -40 billion, Last Week +7 billion cubic feet. The miniature inventory build last week ended up breaking a 14-week run of consecutive (and sometimes sizable) contractions. Not a big deal yet, but natural gas has hit stiff resistance at $2.94 and change three times now in March; something to keep an eye on.

Sarge's Trading Levels 

These are my levels to watch today for where I think that the S&P 500, and the Russell 2000 might either pause or turn.

SPX: 2382, 2374, 2366, 2360, 2351, 2344
RUT: 1384, 1378, 1371, 1362, 1355, 1349

Thursday's Earnings Highlights (Consensus EPS Expectations)

Before the Open: (SFUN) (-$0.02), (IGT) ($0.52), (SIG) ($4.01)

After the Close: (PAY) ($0.20), (ULTA) ($2.13), (ZUMZ) ($0.67)

At the time of publication, Stephen Guilfoyle was short SIG put options, although positions may change at any time.

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