"I don't like that man. I must get to know him better." -- President Abraham Lincoln

Let that one sink in, gang. Always worked for me.

Immediate Risk

Amazon (AMZN) , Alphabet {Google} (GOOGL) , Western Digital (WDC) . Take 'em, take 'em, take 'em. Intel (INTC) , Microsoft (MSFT) , and Starbucks (SBUX) . Hmmm. Might have to think a little bit on those names. Not to mention that big oil reports this early morning. Know what else traders are going to have to ponder today? The Federal government's ability to fund itself, and the growth of the home team economy. Booooo. Nobody likes to think about these things. These items are certainly not as easy to analyze as are equities, and they certainly are not sexy in any way. Truth is, without them we don't even have a field to play on. So, put on your deuce gear. We're going in.

Forget traders, people in general don't like to think about government shutdowns or gross domestic product all that much. These items are not part of the every-day risk assessment that most folks, even in this business, run through as they mentally prepare for a day's work. As for the public, they probably don't think about this stuff at all. So, why the hubbub? Healthcare reform appears to be off the table for the moment (maybe forever?), putting off a longer-term budget deal. As House Speaker Paul Ryan has told you (ain't he grand?), even if both sides suddenly agreed on all issues, the House would need three days to vote on a proposed bill because they would need to read said bill. (Guess pulling an all-nighter may be asking a bit too much from this crew.)

Regardless, this will all make a congressional vote necessary today in order to pass that one-week funding bill that we mentioned in yesterday's morning note. Without this stopgap measure, the federal government's funding will expire at 12:01 tonight, or should I say tomorrow morning. If passage of the one-week bill starts to look shaky this afternoon, there will be a certain level of risk priced into both equity, and debt securities. Gold will go the other way, and gold futures will likely be watched today as a short-term indicator. Then, gang, we can do this again in a week.

We do not love first quarters here in the United States. I mean, generally speaking, we're just not good at them. Either we, as a nation, are just unable to crank up the economy in the wake of the holidays, or our seasonal adjustments for the winter months are simply incorrect. Either way, I think it's obvious that consumer activity has slowed, and will continue to be the most focused upon player in this economy. The Atlanta Fed's GDPNow model is forecasting a print for today of 0.2% quarter over quarter, seasonally adjusted and annualized. Most private economists are a bit higher than that, with the majority of them in between 1% and 1.5% on this item.

The fact is that the FOMC is watching. We all know that they want to sneak in another increase for the target of the fed funds rate in June, and then maybe another later on, or tackle that balance sheet that nobody can agree on how to manage. That all goes away with an especially weak measure of national economic growth, as does the banks' aggregate ability to make their full-year numbers. Such a scenario also puts much more focus on the second quarter and on stalled administration policy goals aimed at stimulating growth. This print matters to you today more; so than does the NFL draft, gang, so shake out the cobwebs.

The Friendly Skies

What was that? A pay raise! Thanks, boss! American Airlines (AAL) beat expectations yesterday for earnings per share, and revenue. Then the stock took a swan dive off the high board, down a brutal 5.2% after hitting a low that was 8.6% off of Wednesday's closing price. AAL proposed a health pay raise for its flight attendants and pilots. This comes years prior to when the firm might be forced by expiring union contract to make such a bold move. What gives? Well, while this will likely make for a happier labor force within the firm, shareholder value was dragged lower across the industry. Down went Delta (DAL) , down went United (UAL) , down went Southwest (LUV) , along with JetBlue (JBLU) , Alaska Air (ALK) , and down goes Frazier.

One thing is certain. The industry changed with this news. The airlines are part of the growth story. Already rising labor costs are a problem across the business. Does this change the story for the "long and wrong" crowd? I remain long DAL and LUV myself, and I received more reader e-mails on this topic last night than any other.

You saw what going to a higher pay scale model did for Walmart (WMT) , but they did take an immediate hit when they went through this in 2015, and these are not easily comparable businesses to boot. I truly think this story requires vigilance. If you're not willing to manage your positions in the space, the space might be better avoided for now. For those who remain long, like myself: know your levels. Panic points remain necessary here, as they are for all positions. The long-term story likely remains intact, especially if medium-term fuels costs break support levels. Long-dated put options will buy you protection, but simple stop-loss orders will save you some money over that choice. If elected, you can always buy back the shares.

Demand For Debt

Enough moving parts for you today? I don't mean to bore the stuffing out of you, but there are days when you just need to carry more ammo in your rucksack. Sorry, gang. Treasury yields are showing some volatility this morning. As I've been banging on this laptop over the last few hours, 10-year paper has gone from giving up 2.285% to 2.308%. This selling comes after yesterday's very strong seven-year note auction. For the numbers nerds, that auction spit out $28 billion worth of paper to a bid to cover of 2.73 (best since 2012), and with a yield awarded of 2.084%. On top of that, indirect bidders took down 82% of the issue. Can you say foreign demand for yield? Today's events will be felt in this space. May not be the "Honeycomb Hideout" this afternoon. Will foreign accounts continue to ride in from the hills? Let's rock.

Macro

08:30 - GDP (Q1-adv): Expecting 1.2%, Q4 2.1% q/q SAAR. The big enchilada. What to expect. Economists I follow are all over the map on this one. Some are just below 2%, and the Atlanta Fed's model is scraping along the Interstate. Why this matters? Policy. It's that plain, and simple. Everything from the desire to raise interest rates to the urgency that the administration pushes its agenda on Congress will be impacted by the print today, as likely will the marketplace.

08:30 - Employment Cost Index (Q1-adv): 0.6%, Q4 0.5% q/q. This measure of what it costs your employer to keep you around had been steadily growing. We have not really seen a negative impact on hiring due to this fact as of yet, but that could honestly be just a matter of time. In 10 of the last 11 quarters, the cost of employing an individual has increased by between 0.5% and 0.7% on a quarter over quarter basis. That means that most of you are getting expensive, and it's probably why your benefits simply rot in comparison to what you remember.

09:45 - Chicago PMI (April): Expecting 56.6, March 57.7. For March, this wildly volatile data point actually printed within 0.5 of what was expected prior to the number hitting the tape. That was the nearest miss since August of 2015, in a series that defies the very idea of even having expectations. You can really only expect that business conditions in the Chicago area did indeed expand in April. The general marketplace no longer reacts to this print as it once did.

10:00 - U of M Consumer Sentiment (April-rev): Flashed 98.0. Though there have been signs over the last two months of this series starting to crack, again consumers remain optimistic. Two weeks ago, that 98 flash was up from 96.9, and well above consensus. Can the soft data stay as strong as it has? Not forever is what I think, unless there is a policy breakthrough that provides actual growth in this economy. I think I'm less confident in this than is the American consumer. I hope they're right.

13:00 - Baker Hughes Rig Count (Weekly): Last Week Total 857, Oil 688. As the market price of crude continues to near what we expect to be support just above $47, you may see the growth in this space slow down a bit. Active oil-producing rigs only grew by a count of five last week. However, as long as WTI can stick here in the mid $40s, growth in the Permian will persist.

13:15 - Fed Speaker: Federal Reserve Governor Lael Brainard will be in Evanston, Illinois to discuss the "Future of Finance". Brainard is a former dove, like most of the FOMC, who is now a hawk. Brainard, along with Jerome Powell, have at least temporarily picked up supervisory responsibilities regarding Wall Street and the banks that were previously overseen by the retired Daniel Tarullo.

14:30 - Fed Speaker: Philadelphia Fed Pres. Patrick Harker will speak from Washington, DC. We have not heard a lot from Harker of late. Last we did hear, Harker (a voting member of the FOMC) was on board with two more rate hikes this year. The audience will have the opportunity to ask questions at this event.

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: 2404, 2398, 2391, 2383, 2377, 2369
RUT: 1436, 1429, 1420, 1414, 1408, 1400

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: (CVX) ($0.89), (CL) ($0.66), (XOM) ($0.87), (GM) ($1.46), (GT) ($0.63), (LYB) ($2.36), (ROP) ($1.99), (RCL) ($0.92), (WY) ($0.19).

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At the time of publication, Stephen Guilfoyle was long AMZN, INTC, DAL, LUV, WMT, although positions may change at any time.

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