OIL: PUTIN ORDERS REVIEW OF LEGISLATION ON OIL, PETROLEUM PRODUCT TRANSPORT

• 4,000 FVF5 106.25/106.5 call spds, 1 ref 105-31.5
• 2,500 TYH5 106/111 strangles, 38 ref 108-10

The -6.0 reading for December's Philadelphia Fed's Nonmanufacturing current regional activity index (-2.4 expected) represented a steady outturn from -5.9 prior, and suggested a regional services sector that remained "weak", per the report. 

• Accordingly, weakness in the report was fairly broad-based on a regional basis, though expectations for activity 6-months ahead rose to a 37-month high of 48.8. Per the report: "The indexes for general activity, sales/revenues, and new orders were little changed from last month and remained low. On balance, the firms continued to report increases in employment; however, the indexes for full- and part-time employment declined. Both price indexes rose and indicate overall increases in prices. The respondents remained optimistic about growth over the next six months both for their firms and in the region."
• The recent spike in expectations (from negative as recently as August) can largely be attributed to optimism following November's elections. But the expectations index has been, at best, a coincident rather than a leading indicator - and even so, the it has consistently misled as to ongoing and future activity performance.
• The Philly Fed survey tends to mirror the national ISM Services survey more closely than the PMI Services. ISM has pulled back from elevated levels while the PMI equivalent has continued to rise (see chart). Like the ISM, the Philly reading is consistent with a softening rather than resurgent services sector, something that we have begun to see reflected from the demand side in national PCE reports.