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As far as I can tell AAPL is driving everything. It's no longer risk-on/risk-off for the entire week, it has been AAPL-on/AAPL-off. As a result of AAPL earnings, stocks around the globe are reacting positively. Spanish 10 year bonds dipped below 5.70% at one time today, and CDS was 25 bps tighter, all the way to 465. Both are fading, and as far as I can tell, the move was a giant short squeeze as it outperformed Italy and it is hard to see any news out of Spain that would justify that sort of news.

I can't really remember many days where a single company's earnings could move the entire global market in all risk assets (though there may have been a day when GS earnings had a similar impact). So it is hard to figure out how real this is, or what it means. Clearly good earnings, clearly a big part of the index, but this seems like a very large move. It looked like many pros were selling AAPL volume into the earnings. Lots of comments on Twitter in particular about how the break-evens on strangles covered a 7% move.

Well, right now it looks like it's a 10% move. Whenever there is so much talk about volume and such a big move overnight in a thin market, it is hard to tell how real that is. I won't touch AAPL up here, but I think once some of the volume sellers have covered we will see the stock drop back decently below 600. That would drag the indices, especially NASDAQ, down with it.

Durable goods at 8:30 seems to be about the hardest number to predict. It is all over the place, and to the extent it has any correlation with housing data, then it is even harder than usual, as housing data has jumped all over the place with some major revisions. Yesterday's housing numbers were a case in point. The markets rallied on the home sales data, but it was hard to tell whether the rally was because of 7.1% decline, making QE more likely, or because of 40k positive revision to the prior month, making the building sector a potential real driver of growth? Case-Shiller data, although lagging, wasn't nearly as strong, I personally I trust their methodology more, so I remain dubious that housing is having any real bounce, and that the good numbers remain heavily influenced by great weather.

So, then all eyes will turn to the Fed and the Fed statement. I think we get a slightly more dovish statement. More language that the economy shows signs of weakening and that the Fed is vigilantly watching the data to determine if additional actions are necessary. No change in low rates for an extended period, though maybe there they soften the language, further hinting that it could go on longer than 2014 if moderate economic growth continues.

I don't think they will say anything new on inflation, though they might try to hint that it is moderating in their eyes, again, paving way for more QE. So I suspect a dovish statement, but no QE. I think the market will initially like that, but we will see the enthusiasm wane as that seem very well priced in, and without QE, and once AAPL stabilizes, we can get back to focusing that on the whole the data here has been weak, and that the situation in Europe is deteriorating rapidly.

Source: Apple-On, But Will Ben Drink The Calvados?