We regret sounding callous when we say this, yet market participants don't really care that North Korea launched another test missile that flew over Japan or that London has been impacted by another terrorist incident on one of its subway trains.
Those are bad things, yet we're just lip-syncing when we say the market doesn't really care. It is the market's voice that is being heard.
To wit, the Treasury market was on the defensive, gold prices were down 0.1%, Japan's Nikkei had gained 0.8%, the CBOE Volatility Index was up just 1.9%, and the S&P futures slipped just two points in front of the Retail Sales report for August.
Those indications reflected a level of concern by the market for the aforementioned developments that was about as high as watching a 40-year-old cross a neighborhood street... at the corner... alone.
Market participants chose not to overreact because (1) the past has shown that it hasn't paid to overreact to test missile launches by North Korea and (2) the incident in London can be characterized as not having any material economic or earnings impact.
In turn, there hasn't been an overreaction either to an otherwise disappointing retail sales report for August.
Total retail sales declined 0.2% (Briefing.com consensus +0.1%) on the heels of a downwardly revised 0.3% increase (from 0.6%) for July. Retail sales, excluding autos, increased 0.2% (Briefing.com consensus +0.5%) following a downwardly revised 0.4% increase (from 0.5%) for July.
The key takeaway from the report is that it will temper forecasts for Q3 consumer spending as core retail sales, which exclude auto, gasoline station, building equipment and materials, and food services and drinking places sales, declined 0.2%.
The weakness in August was paced by a 1.6% decline in auto sales, which were impacted partly by Hurricane Harvey, as well as a 1.1% decline in nonstore retailers, which was an expected letdown after Amazon's Prime Day boosted July sales.
Clothing and clothing accessories sales fell 1.0% while sales at electronics and appliance stores and building equipment and materials stores dropped 0.7% and 0.5%, respectively. Gasoline station sales rose 2.5% and acted as an offset of sorts to the weakness seen elsewhere.
Separately, the New York Fed's Empire Manufacturing Survey for September checked in at 24.4 (Briefing.com consensus 20.0) versus 25.2 in August.
The Industrial Production report for August (Briefing.com consensus 0.2%) will be released at 9:15 a.m. ET and will be followed by the Business Inventories report for July (Briefing.com consensus 0.2%) and the preliminary University of Michigan Consumer Sentiment report for September (Briefing.com consensus 95.5) at 10:00 a.m. ET.
Thus far, market participants aren't showing a great deal of conviction on this quadruple witching day, which entails the quarterly expiration of stock index options, stock index futures, single-stock options, and single-stock futures. The S&P futures are down three points and are trading 0.1% below fair value and the 10-yr note yield is unchanged at 2.19%.
The expiration activity will lead to increased trading volume, but overall, there is no good sense right now if the market will care much about anything today or simply choose to go quietly into the weekend.