Futures vs FV: SP -11.15; DJ -76.67; NASDAQ -20.78
The day after the FOMC is starting down, and rather sharply so. Futures are at the morning lows, basically the same level held since very early.
BOJ left rates unchanged, and while most expected that, nonetheless US futures dropped sharply on the news.
Meaningless jobless news: Claims
277K vs 269K expected vs 264K prior
CPI, May: 0.2% vs 0.3% exp vs 0.4% prior
Core: 0.2% vs 0.2% vs 0.2% expected.
Core year/year: 2.2%. Highest since February at 2.3%.
Apparel +0.8%, New cars 0.4%, gasoline +2.3%!!
Shelter: +3.4% year/year (highest since 9/2007). Home equivalent rent +3.3%
Philly Fed, June: 4.7 vs 1.0 vs -1.8. Second positive for 2016 (March)
Prices Paid: Pushed the gain as they rose to the highest level since 10/14
Prices Received: Fell hard
New orders: 4 month low
# employees: fell hard
TIC data: China a seller of US Treasuries AND US equities. Equity holding -38% from July 2015 to March 2016. China is clearly unloading US debt and other US assets. Why? So as to not be harmed when it takes action to usurp the dollar. China has always been less than feared because its holding so much US debt. If the US hurts, China's assets then hurt. By systematically reducing ownership of US assets, China frees itself to pursue the policies it wants that are contrary to the US economic well being. It is preparing for the future, we are floundering, staggering toward it under immense debt burdens.
Jobs: WMT to lay off more white collar workers just as it did when it raised its wage to store workers. Something has to give, and it is the full-time, breadwinner jobs. Story of the entire US economy.
OTHER MARKETS
Bonds: 1.56% vs 1.58% 10 year. The surge continues
EUR/USD: 1.1176 vs 1.1262. Dollar falling again.
USD/JPY: 104.33 vs 105.965. Dollar down as BOJ remained pat on rates.
Oil: 47.22, -0.79. Ever since touching 51/bbl, oil has been under pressure.
Gold: 1314.10, +25.80. Surging again.
It appears the day after is negative and if the indices cannot recover support, particularly the leaders in RUTX, SP400, then the market prognosis is negative. SOX is still well above support and the market has followed its lead on this move. We will watch how it performs as well. Initial look is not good, but we will see if there is any recovery off a weaker open.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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