Market Alert - Pre-Market

Futures vs FV: SP -75.45; DJ -555.07; NASDAQ -164.33

World markets are of course lower because they wanted and anticipated status quo. That will not be the case and it will naturally take some time to digest the momentous UK decision. It will be volatile.

Futures are off their lows though it is up and down. Circuit breakers will not kick in based on the early reads, but it could be a situation where there is volatility today and into next week. Again, that is natural after a significant historical economic move.

The BOE, ECB and other world banks are promising massive liquidity to float the markets over the near term effect. The UK did not leave earth, it is just leaving a corrupt, dictatorship that is not what they agreed to be in. The EU was not a suicide pact where members had to stay to the death.

The pundits everywhere are talking about the 'disaster' of the British vote to leave. E.g. how the UK will no longer be a financial center (Switerland is not a member but it is still a major financial center), how it is turning to isolationism, etc. Good grief. They sound like the loyalists in the American Revolution, unable to see history and the change in the world that General Cornwallis saw taking place, change that would change everything in a positive way. It is the establishment wailing, gnashing their teeth, and donning sack cloth and ashes, talking doom. For them perhaps.

Now the EU has to worry about Italy and other countries ready to 'Italexit.'


Durable Goods Orders, May: -2.2% vs -0.6% exp vs 3.3% prior (from 3.4%)
Longest slump that was supposedly not in a recession.

Ex-transports: -0.3%
Business Investment: -0.7%
Ex-defense: -0.9%

Terrible data.


OTHER MARKETS
Bonds: 1.539% versus 1.74%. That is a drop.

EUR/USD: 1.1039 vs 1.1432

USD/JPY: 102.156 vs 105.998

Oil: 47.53, -2.58

Gold: 1331.00, +67.80


Futures are hanging around the lows. It is important not to assume the first low is the low. These days can show a lot of back and forth currents and may extend into next week. Thus while we will be looking for stocks that hold support even in all of this maelstrom, picking up new positions won't be wholesale. Watching oil, metals, and other recent winners versus necessarily turning to the old big names that were not working that well even before the vote.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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