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Sunday, January 20, 2019

China: reminiscent of Reagan/Gorbachev nuclear negotiations?

Trade: China is offering purchases of $1T in US goods as a trade deal enhancer. China is at a point it has to deal. 1T yuan in liquidity injected into its financial markets last week in a desperate effort to get its economy going again. Rates for shipping commodities into China plunging, indicating China is not importing nearly the same quantities. Tariffs crushing its economy. 

Now the key is what Trump does. This is very reminiscent of the Reagan/Gorbachev nuclear negotiations. Gorbachev knew his economy was imploding as the USSR could not keep up with the economic engine Reagan restarted and used to fund the US military. So, Gorbachev offered everything the US had said it wanted to that point. At that juncture, Reagan's belief was confirmed -- the US was winning the economically and thus militarily. He turned down Gorbachev's offer. Why give up the benefits of a winning hand? We all know the outcome.

Jon Johnson, Chief Market Strategist 

Tuesday, October 2, 2018

Market Alert - Pre-Market

Futures vs FV: SP =2.34; DJ -35.21; NADSAQ -11.95

Futures are on a slow crawl back toward positive after over the past 4 hours after an early morning bottom. World markets are lower though not crashing, just their same sluggish trade. US futures are even picking up the upside speed toward the bell.

A relative dearth of news for a market flooded with news of late.

IMF: Lagarde comments that the clouds on the horizon she saw several months back have turned to 'drizzle' as it appears that 'growth has plateaued.' Yep, that is the situation. Not sure about the drizzle analogy. Europeans seem to have a fixation on drizzle.

AMZN: Raises minimum wage to $15/hour. 250K employees will be impacted.

NFLX: GS says Wall Street is underestimating NFLX' growth rate.

Ford: Sales -11% vs -9.1% expected

Have you noticed how so many financial websites, stations are not covering nearly as much financial news? Just throwing that out there. More and more politics and non-financial stories are included. Interesting. And annoying -- if I want the other news I will go to those kind of sites and stations.

In any event, somewhat a dearth of news today, a lull in a fairly busy week leading to the Friday jobs report.

Bonds: 3.071 vs 3.087 10 year

EUR/USD: 1.1537 vs 1.1578. Dollar continues to strengthen.

USD/JPY: 113.77 vs 113.94

Oil: 75.38, +0.08

Gold: 1201.40, +9.70

Futures on that steady albeit slow rise to the opening bell. They picked up the pace then backed off, but the trend heading into the bell is a slow steady recovery. Thus, we could easily see the modest negatives at the open turn to positive.

NASDAQ, SP500, DJ30 are at or near the prior highs after a pretty good week upside, more if you look at their leaders. As noted last night, a bit of a test would be normal and not bad. Either a doji pause or a 1-2-3 type pullback. Would prefer the latter as a better ramp upside, but the market will do what it does.

We will still look at well-positioned stocks and if they can deliver moves we will participate.

Jon Johnson, Chief Market Strategist

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Monday, October 1, 2018

Market Alert - Pre-Market

Futures vs FV: SP +14.07; DJ +166.69; NASDAQ +43.13

Q4 starting with an upside gap. USMCA (US-Mexico-Canada-Agreement) is to replace NAFTA. US steel, aluminum tariffs to remain in effect for now. Deal mostly works with autos and of course there was the dairy issue with Canada. I am not sure just what small businesses outside of dairies got -- Canada still has that GST that makes US goods look so much more expensive in Canada than in the US. That is a 'shadow' tariff on US goods exported to Canada. There is a real problem that US goods look more expensive in Canada than in the US, and that 'perceived value' issue causes US small businesses to lose out. That kind of issue was not addressed. Gee, what a surprise. You know it was a con job when Wilbur Ross came on Fox Business, was asked what the deal did, and his first few minutes of comments were spent on crowing that NAFTA was gone. Not the 'great' parts of the new deal, but badmouthing the old deal. That is a red flag.

TSLA: Magical settlement after Mus rejected a settlement, saw his stock price implode Friday, had a change of heart. If this was an average person the SEC would have said 'sorry, you rejected the deal' and continue suing you to make an example. If you have $20M and can give up a token position while still remaining in control of your company, you have a deal! I am sure the common man in the US feels so much safer today than last week. Just look at the futures; all must be well!

Chips: Suffering through more downgrades as INTC is downgraded to underweight by Barclays.

Recession: Bloomberg reports that 2/3 of the US 'Business' economists predict a recession by 2020 end. Okay, I guess that means the economy is just fine through that time. When Reagan was President and the economy surged on his tax reform and regulation cuts the predictions were for massive inflation and crushing recession. And they . . . never came. If the growth foundations are based on reforms that unleash the US economy then the growth is not a 'sugar high' but lasting. It makes so much sense, but you have to realize that of those 2/3 of economists, most are Keynesian educated, meaning educated fools. Their theories are wrong so their predictions are wrong. Also, what kind of prediction is this: the old 'some day there will be a recession' prediction. Anyone can make that prediction, economist or not.

India: Nationalizes a 'shadow bank' that held $12.5B in debts. There are issues in the rest of the world economies . . .

Bonds: 2.074% vs 3.061%

EUR/USD: 1.1608 vs 1.1605

USD/JPY: 113.92 vs 113.67

Oil: 73.38, +0.13

Gold: 1195.40, -0.80

Futures gapped higher and have held that level pretty much the morning though they are off the highs. Gaps higher such as this are always problematic as they can sell later session. This one being the start of Q4 with new money coming in likely holds for the day.

We will see how stocks that have struggled into the end of Q3 hold support and if new money comes back to them OR the new money is focused on just a few areas as discussed this weekend. Today is important in seeing where the new money coming in is going, and that will show up in how those stocks testing support bounce or not.

Jon Johnson, Chief Market Strategist

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Friday, September 28, 2018

Market Alert - Last Hour

It is a Friday on a Fed decision week and the market is going out basically flat. The leading techs have been up, now down a bit, just wandering outside of NVDA with its gap and run higher for a 13% gain. FB is down from its recent bounce as a 50M user hack is revealed, allowing control of accounts. What pejorative will Zuckerberg have about those 50M users?

With this being post-FOMC decision action, you hate to get very aggressive. Thus some positions are at the stop points, e.g. NEWR, LITE, C, but on these days it can very well be just a head fake as they are near support and a new week often sees the selling pressure relieved in those instances, particularly in an overall uptrend. And yes, despite all the negative comments, the indices are still in an uptrend.

That said, we like APC's action today and definitely do not like URI. APC is low volume but the move is good for likely a partial position.

Definitely a sluggish end to the week, the month, and the quarter. That is okay as there were bids on the week, but as noted they shifted toward the large caps and away from small and midcaps though the latter lead today.

SP500 -0.23, -0.02%
NASDAQ 1.99 0.02%
DJ30 5.24, 0.03%
SP400 0.36%
RUTX 0.28%
SOX 0.61%
NASDAQ 100 -0.07%

Jon Johnson, Chief Market Strategist

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Market Alert - Pre-Market

Futures vs FV: SP -5.95; DJ -58.93; NASDAQ -23.87

Stock futures opened flat pre-market then sold off on the Italian budget crisis that has sent its stocks and currency down hard and bonds up. Italy is pushing for a budge that is at odds with the EU dictatorship as Italy tries to save itself. It should Ital-exit but I guess the UK's horrible handling of its exit strategy made Italy take pause. The idea is good but the execution has been horrid.

Futures have recovered starting 8:00ET, but the move upside is very slow and not much behind it. There is a bid, however, and that can slow burn and lead to a continuation of the upside in US stocks from Thursday, though it very well could be just the large caps making the moves again as noted last night.

TSLA: Every station is talking about Musk turning down a decent deal from the SEC and thus the SEC suing Musk in return. TSLA is down 38 points. Oh well.

PCE Core, August: 0.0 vs 0.1 exp vs 0.2 July. Fed's favorite indicator softens so where is that inflation? Will the Fed be able to declare victory after a December hike. It could, but it won't because the Fed is the Fed and it never quits while it is ahead.

Personal Income, August: 0.3 vs 0.4 exp vs 0.3 prior

Personal spending: 0.3 vs 0.3 exp vs 0.4 prior.

Annual spending outpaced income for a seventh straight month. While the doomer websites cry how horrid this is, history says that this is a sign of confidence in consumers and is not most activity based upon confidence? You have to be confident to build a new plant if you are a business or buy a car or home if you are an individual. Otherwise the money just sits there.

Upgrades: AAPL (calls for an 11% price increase); LOW

Earnings: all misses today. MTN (TL); PRGS (TL). The early earnings show top line misses are very predominant. Noted this trend before and this is a real indicator of the economic and therefore market future. Will have to pay attention to this as the earnings season gets underway.

PFE: Once a day lung cancer drug receives approval.

Bonds: 3.031% vs 3.052%. A bit of a move to safety with the Italy currency, bond, stock moves re its budget.

EUR/USD: 1.1583 vs 1.165. Dollar continues its very recent upside against euro.

USD/JPY: 113.36 vs 113.37

Oil: 72.24, +0.12

Gold: 1188.10, +0.70. A feeble bounce after getting slammed Thursday

Futures stalled their recovery toward the opening bell, but still anticipating a slow recovery in the morning. Then we see if the bids really ignite or if the market heads into the weekend noncommittal.

Jon Johnson, Chief Market Strategist

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Thursday, September 27, 2018

Market Alert - To the Close

AMZN, AAPL, NFLX are posting solid gains but a lot of stocks have faded moves (e.g. DE) as the session progressed. NASDAQ is decent, NASDAQ 100 better of course, but everything else is tepid with decent moves given back. RUTX, SP400 have not changed their relative positions, giving up gains and still below the 50 day MA's. SP500, DJ30 showing hammer doji at the 10 day EMA -- not bad action given the good patterns of many industrials, but those industrials were not ready to move today in those good patterns. Again, we picked up DE and it did not run like a deer; yet.

XLNX looks good today and there are stocks higher, don't get me wrong. CRM, TTWO, GOOG, FB. The overall action is remarkably sluggish, not much of a post-FOMC rebound, leaving the status suspect. RUTX, SP400 still below resistance, indicating the selling in those WED is taking a respite and the buyers are not confident to move back to those. That does not destroy the large cap setups, more an indication of the economic and market's expansion maturity.

SP500 8.87, 0.31%
NASDAQ 54.98, 0.69%
DJ30 66.74, 0.25%
SP400 0.08%
RUTX -0.03%
SOX 0.48%
NASDA Q00 0.97%
Jon Johnson, Chief Market Strategist

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Market Alert - Pre-Market

Futures vs FV: SP +5.03; DJ +44.27; NASDAQ +28.91

Futures rebounding from the late day slaughter post-Powell press conference. Futures slowly trending higher on the morning. Slow burns are good versus gaps upside. Helps with staying power which is of course the main question of the morning with futures higher after the late session plunge WED.

Lots of news.

GDP Q2 3rd: 4.2 vs 4.3 exp vs 4.2. Strongest since summer 2016.

Durable goods, Aug: 4.5 vs 1.8 exp vs -1.2 (from -1.7)

Ex-transports: 0.1 vs 0.4 vs 0.2 prior

Business investment: -0.5 vs _1.5 prior. Biggest drop since March.

Fed: Trump not pleased with FOMC rate hike. What President is?

Trade/tariffs: CNBC headline "more corporate giants warn" tariffs will lead to price increases. Yes they will, but studies of how much show it is virtually nothing. That answers the question of why bother due to the amounts: if it means little in terms of pricing, why not have the US have those jobs?

France: Macron says there will be no commercial agreements (trade deals) with any country that does not accept the Paris Accord. Good luck with that, leaving out the US, China, Russia, South America . . . enjoy trading with the EU only.

China: Demands that Trump "stop unceasing criticism and slander of China." Good luck with that China.

Downgrades: AMD
Upgrades: AMZN (Stifel says 30% surge to come); AAPL (JPM); CYBR

Earnings misses: BBBY (TL, BL); CAG (TL, BL); MKC (TL). Lots of top line misses continue. Not good, not good for economy.

Beats: ACN

Oil: S. Arabia says ready to produce another 550M bbl. Oil is up . . .

Bonds: 2.067% vs 3.048%

Oil: 77.36, +0.79

Dollar: bouncing

Again, the key is staying power and thus far futures are moving to higher and higher morning highs. Sellers will take a shot -- the Fed is now worried about asset prices. We will see how they fare after that.
Jon Johnson, Chief Market Strategist

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Wednesday, September 26, 2018

Market Alert - Last Hour

The stock market reacted favorably to the FOMC statement but not so to the Chairman's press conference.

Powell noted that current rates are where considers very near to the real rate. Nothing wrong with that.

The issue is when he started making comments that ALL chairmen eventually make when in a hiking mode, comments about asset values. They make these to supposedly make their job easier by getting asset values to decline a bit. Specifically, Powell said "some financial assets are in the upper reach of historical ranges," This from a chairman who supposedly has disdain for forecasts. Perhaps he is just looking at historical facts and drawing his conclusions, but the market knows history and how the Fed overshoots. Hearing the chairman with the echoes from the past is not what it wanted to hear.

Thus the market is in a full sell mode right now with the effect snowballing toward the bell as everyone hits sell buttons. DJ30 has reversed 200 points, NASDAQ 68 points and no bounce yet.

We will see how positions hold support heading into the close, a close not that far away.

SP500 -8.28, -0.29%
NASDAQ -12.97, -0.15%
DJ30 -112.87, -0.43%
SP400 -0.84%
RUTX -0.39%
SOX -0.86%
Jon Johnson, Chief Market Strategist

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Market Alert - FOMC Decison

No surprises with a 25BP hike and removing the accommodative language, indicating the Fed is on inflation watch. But, it does not see inflation as a problem.

The high points:
2.25% +25BP. Removed language re accommodative policy.

Sees further gradual increases will be consistent with policy
12 of 16 for a fourth hike (up from 8 in June)

Going above neutral in FOMC forecast for at least 2 years (3.75% 2020-21)

Sees GDP above long run rate for 4 years

Economy: almost a carbon of the prior statement
Labor market continues to strengthen

Activity at a strong rate.

Household, business spending growing strongly

Core inflation 2%, risks balanced.

GDP forecast 3.1% for 2018; 3.2% 2019; 3.4% 2020

Stocks jumped up on the news, faded some of that gain in the next five minutes, now trying to rebound once more.

SP500 10.75, 0.37%
NASDAQ 42.19, 0.53%
DJ30 76.81, 0.29%
SP400 -0.11%
RUTX -0.22%
NASDAQ -0.08%

Financial stocks are still modestly negative on the session but are off the pre-FOMC levels and trying to bounce. They should bounce, but will see if they can do it and hold it.

Jon Johnson, Chief Market Strategist

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Market Alert - Pre-Market

Futures vs FV: SP +2.24; DJ +11.79; NASDAQ +10.06

Futures are up but steadily eroding all morning, now trading at the morning lows as the FOMC gears up for its 2:00ET rate decision announcement.

The FOMC dominates the economic news while world leaders are still at the UN managing that body's corruption. More accurately, the leaders bicker and then make grandiose statements and do nothing about the theft, rape, violence in its field operations. Just ask the poor people of Bosnia how great the UN is after that UN war. The aggressor Serbia got all it wanted, the people of Bosnia are living in a UN created prison. But, I digress. I LOVE the UN . . .

AAPL: RBC upgrades it on . . . demand for pricier phones, demand that we were all told on the date of the product announcement that would not be there.

Upgrades: IBM, GPRO. Yawn.

Earnings beats: NKE, CTAS

Misses: KBH (TL). Another top line miss.

China: Reduced imports on certain goods starting 11/1, something reported here last week. China says it will impact certain US producers and block access to China's markets and make those producers mad at Trump. Okay, so China 1) has tariffs already in place, 2) will manipulate them to get its way. How is the US doing what China is ALREADY doing somehow wrong but with China it is just fine? Hypocrisy. China is so hung up on losing face but its arguments cannot even pass the smell test. Gosh, China is hypocritical about its hypocrisy. Unlike Doc Holiday in 'Tombstone,' apparently China's hypocrisy knows no bounds.

Insider Trading: This September sees the most in 10 years. Hmmm. That marks the start of QE. Insiders selling more because the Fed is now out of the stimulus business?

Bonds: 3.085 vs 3.098

Oil: 71.85, -0.43

Gold: 1199.40, -5.7

Futures continue edging lower into the open. The modest bump likely goes to flat, then we see if bids return. Often stocks rise modestly into the FOMC, then some volatility as traders dissect the Fed's statement.

Jon Johnson, Chief Market Strategist

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Tuesday, September 25, 2018

Market Alert - Pre-Market

Futures vs FV: SP + 4.73; DJ +59.95; NASDAQ +2.25

Futures were higher an hour back with NASDAQ +12.50. Reports that QCOM is going to sue AAPL over the latter sharing QCOM IP with INTC, however, have dented the upside.

Other than that, the news front was rather quiet as the FOMC begins a 2-day rate meeting and Trump is to speak at the UN with Iran speaking as well. Could be entertaining.

M&A: KORS buys Versaci

Case/Shiller: Home prices in July rose at their slowest rate in 11 months as general slowing occurred everywhere. Again, no surprise. Housing is an early cycle leader that cools in normal expansions that are not juiced by Greenspan keeping rates a 0% long, long after they should have been.

Oil: Moving toward longer term highs for brent.

SBUX: Corporate shakeup with management reorg and layoffs.

FB: Instragram founders leave as Zuckerburg's phony public fa ade is not shown inside the company and the Instagram founders said he was trying to run that part more and more as a big part of FB's future. Recall Zuckerburg's words regarding people who put personal information on FB: 'they trust me. dumb f***s.' That says it all.

Earnings beats: INFO

Misses: FDS (tl, bl)

Bonds: 3.095 vs 3.085

Oil: 72.58, +0.50

Gold; 1205.40, +1.00

Futures up but off the highs over the past 1+ hours. Okay, not too strong upside, coming back some from the AAPL/QCOM story, we will see if again the bids return for NASDAQ names and how NYSE large caps are bid.
Jon Johnson, Chief Market Strategist

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