Market Alert - Pre-Market

Futures vs FV: SP -2.29; DJ -19.52; NASDAQ -1.86

The economic data again turns for the less than great. Futures were up then the data hit and futures turned down. Thus the break higher Thursday out of the 3-day pullback will have to fight back from a weaker open. Frankly, that is a better scenario, lets buyers start buying what they wanted Thursday at a bit better price.

Retail Sales, July: 0.0% vs 0.4% exp vs 0.8% (from 0.6%)
Ex auto: -0.3% vs +0.2% exp vs 0.9 prior (from 0.7). Autos helped bail out sales.

Ex-auto and gas: -0.1% vs 0.3% prior. Gasoline was a drag as well, a good drag.

Gas stations -2.7%
Sporting goods -2.2%. No sports in summer?
Department stores -0.5%. Hmm, don't tell Macy's, JWN as their earnings were pretty good.


PPI: -0.4% vs 0.0 exp vs 0.5 prior
Core PPI: 0.3% vs 0.2% exp vs 0.4 prior

Combining the data, perhaps the price deflation is impacting retail sales. Remember, retail sales are not the number of units sold but the amount of dollars spent. Some price deflation would mean lower retail sales. Okay, what is the reality of that? Prices for the consumer are NOT falling and inflation is much higher than the way the government calculates it reflects. Ask anyone: other than a bit lower gasoline prices (and not as low as they should be when you factor in the actual cost input) prices for what you need are not going lower.

China data was weak
Industrial Production: 6.0 vs 6.2 vs 6.2 year/year
Retail sales: 10.2 vs 10.5 vs 10.6 year/year
Fixed asset investment: 7.1 vs 8.9 exp vs 7.7 prior year/year

Earnings beats: JWN, ACIA


OTHER MARKETS
Bonds: 1.495% vs 1.56% 10 year. Bonds bounce right back up after the bad US data. China too.

EUR/USD: 1.1198 VS 1.1137

USD/JPY: 101.07 vs 101.92. Dollar weaker on the data.

Oil: 43.75, +0.26

Gold: 1357.60, +7.60


As noted, futures are weaker and going to open the market at the weakest of the morning. Good break higher Thursday though index volume was mediocre and only the large cap indices really moved higher. The leaders, however, were the key as they rallied sharply on good volume. They will be the key and we are watching the NASDAQ big names and chips to see if they reengage similar to Maverick in 'Top Gun.'

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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