Market Alert - Pre-Market

Futures vs FV: SP +1.98; DJ +17.77; NASDAQ +5.53

Futures are holding quite modest gains, rebounding from the Thursday selling, but nothing convincing at this point. Basically more of the same from Thursday in terms of news and earnings, so the early bounce is somewhat dubious, a possible hope bounce that gets tested.

Earnings
Beats: AMD, up 2+%; GE beats but another funky accounting move as orders in the Power (-27%), equipment (-30%) and aviation (-37%) show a weakening trend across the board.

Misses: SKX; HON (TL); VFC (TL, lowers 2016); SBUX (TL, weak SSS)


Japan:
Kuroda: Reiterates no helicopter money
PMI: 49.8 vs 48.3 vs 48.1

EU PMI: 51.9 VS 52.0 VS 52.8
Germany: 53.7 vs 53.5 vs 52.8
UK: 49.1 vs 47.8 vs 52.1

Listening to CNBC, which over the past 3 months has thrown whatever vestige of impartiality overboard, the economy is great and there is just a lot of fear mongering taking place. Sure the economic data headlines are better, but as we have pointed out, the underlying data is not, and seasonal adjustments 2x or 3x the norm render the data so subjective as to be useless.

Moreover, 2016 is showing the same pattern as 2015: 2015 was stronger after a slow start, moving up in spring to summer, but it was a false rise as seen so many times in this economy. It weakened again and fears of recession resurged late year and early 2016. Now the cycle is repeating.

That is what happens in these systemic slowdowns. The economy cycles between bad times and not so bad times, all the while output remains at a very reduced level. Recall our talk years ago and a few months ago about the 'dumbing down' of our view of what is a strong economy?

This happened in the 1970's and history has repeated thanks to the regression back to the same failed ideas and policies that led to that systemic slowdown. You have to wholly change the policies to get out of this cycle. As Einstein said, or something close to this, doing the same thing over and over is the definition of insanity. I guess we suffer, as a nation, bouts of recurring insanity when we think we can regulate, tax, appropriate, redistribute, etc. our way to prosperity.

But, I digress.



OTHER MARKETS
Bonds: 1.594% vs 1.558%. Looked as of bonds were ready to bounce. Not today.

EUR/USD: 1.1014 vs 1.1021

USD/JPY: 106.12 vs 105.73

Oil: 44.58, -0.16

Gold: 1324.80, -6.20


Again, futures are holding modest gains toward the open, but you have to question just what the staying power is. Certainly a rebound from the Thursday selling but not based upon much. There is that dichotomy ongoing: we want a better economy and the data teases at improvement, but at the same time it is wholly not strong enough to support strong stock prices. Thus the market needs the central banks: every time they pull back, stocks plummet (January, June): all it takes is one so-so shock and boom, they are lower. So, there is this push/pull, and when the central banks pull back or talk about it, the market takes pause, almost subconsciously, because it knows it has to have the central bank backing.

Today we will see if anything presents itself. With the market showing a bit of test in its blood after the new highs, we would prefer to let that settle out and then move in. That said, stocks such as AXAS yesterday looked great and CYTK still looks pretty good among others. We will see how they unfold.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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