Market Alert - Pre-Market

Futures vs FV: SP +10.29; DJ +85.07; NASDAQ +28.14

It really is all about the stimulus. Today more talk about the Japanese stimulus plan and the belief more stimulus is coming to the Continent is once again ginning up futures in the US and stocks around the world.

Japan: It is said Japan is to cut its 2016 GDP growth from 3.1% from 2.2%. More stimulus implications.

Bernanke: Thanks to his 'contributions' to TARP, Europe, and now Japan's renewed, ramped, runaway stimulus, David Stockman brands Bernanke as the 'most dangerous man walking the planet.'

China: UN says China has no claim to most of the South China Sea. Of course China is infuriated. Hey, it has 'China' in its name so it MUST be China's, right?

Earnings:
AA beats on the top and bottom line. Here is the trick: In GAAP terms AA's net income was -506M. Non-Gaap, adding in charges for the past 12 months, it reports a +495M net income. Magic.

STX increases its guidance AS it cuts 6,500 workers, 14% of its workforce.

As you can see, if you cut and thus raise your bottom line, your stock price rises. It is not about growth (though if you can make it look that way it helps, e.g. AA), it is about getting the numbers there anyway you can, and free money from 0% rates is a tool for companies to do so without too much effort and certainly not any capital investment.


OTHER MARKET
Bonds: 1.48% versus 1.434% 10 year. Selling back for a second day after the surge.

EUR/USD: 1.1089 vs 1.10588. Euro bouncing back.

USD/JPY: 104.259 vs 102.68. Dollar rallying on more promise of more Japan stimulus.

Oil: 46.16, +1.40. Rebounding from the selling. Will the early move hold today or fail again.

Gold: 1350.00, -6.60. Fading back even on the promise of more stimulus. Big run, taking a break.


So, again it is all about that stimulus. Stocks are set to gap higher with DJ30 ready to take on the 2015 all-time high. All indices will move higher of course as they take on the next resistance, e.g. NASDAQ.

The gaps make it a bit more difficult to get good entries but as we have seen they are still there. This move will also put some current plays in contention for targets and we will be looking to bank some money as well.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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