Market Alert - Pre-Market

Futures vs FV: SP +6.45; DJ +61.26 NASDAQ +19.39

Stock futures are up in the US and stocks are up sharply around the world. Is it new economic growth? Does it matter? No. It is central banks and the unending and indeed ever-increasing stimulus they are throwing at markets. It is almost a comedy, but history says it will end as a tragedy. But, not for today so who cares, right?

Bernanke had a 'secret' meeting with Kuroda in Japan on Friday. Over the weekend Abe won a landslide election. Almost immediately, Japan launched a 10T yen ($100B) stimulus program, intervening in the yen, buying assets, helicopter money, etc. The USD/JPY jumped over 102 aver trading just over 100.

UK: The Brexit PM candidate withdrew from the election, citing that Britain could not take 9 weeks of turmoil. That means the 'remain' candidate will assuredly win. Sterling soars, stocks do likewise.

EU: DB chief economist says EU banks will need 150B euro recapitalization funds. Even as Italy was reportedly denied the money it wants for its banks, the die appears cast: EU will have to ramp its stimulus higher and higher.

Earnings: Counter all of this with the 'official' start of earnings season tonight with AA's earnings. Expectations are for earnings to fall 5.7%, making it five quarters straight of declining earnings. That has not happened since . . . 2009. Hope springs eternal, with talk on the financial stations today about how the stimulus appeared to be working, how economies were better. Cramer is back at CNBC and has of course swung to the ebullient end of his bipolar personality. Europe is great, the US is great, the world is great -- it just needs trillions in stimulus to keep markets moving higher.

As noted Friday after that jobs report, why would companies be rushing to hire (though at 287K it is historically more of a movement versus a rush) when they are rushing not to make capital investments? Oh, but they are investing in people. The story is GOOG is training 2M in India. Wonder whose jobs they are going to take?


OTHER MARKETS
Bonds: 1.405 vs 1.36%. Bonds lose a bit of luster given all of the QE and stimulus, but that is just a short term thing as money is reallocated to equities to start the week.

EUR/USD: 1.1046

USD/JPY: 102.49. Dollar surges versus the yen on the massive yen stimulus.

Oil: 45.60, +0.19

Gold: 1354.40, -4.00. Off, but as with bonds, just taking a breather most likely. The stock surge is central bank based, not economically founded.

So, futures are basically at the morning highs as the central banks continue to not only promise but now produce more stimulus. Of course there is still promise of more stimulus as well to keep the crowd anticipating more to come. Glad we were buying last week.

The question today is getting entries. Futures are fading just a bit into the open so we will see what entries the market gives us.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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