Market Alert - Pre-Market

Futures vs FV: SP -5.45; DJ -44.05; NASDAQ -8.81

Once again an up session is met with weakness. The question is whether the early weakness is just that, early. Will bids return and actually allow the indices to put in a pair of good upside sessions back to back or will it be the same action, i.e. up but 1 step higher, half a step back?

Dollar is getting hit hard everywhere with the yen jumping and Japan stocks, along with Asia, lower.

Housing Starts, July: +2.1%, topping expectations
Permits: -0.1%, missing expectations

CPI, July: 0.0 vs 0.0 ex vs 0.2 prior. 0.8% year/year

Core: 0.1 vs 0.2 vs 0.2. 2.2% year/year vs 2.3 exp vs 2.3 prior. 8 months over 2% on a year/year basis.

Industrial Prod, July: 0.7 vs 0.3 exp vs 0/4 from 0.6
Capacity Utilization: 75.9 vs 75.7 vs 75.4

Fed: Dudley appeared on Fox Business and, surprise, said that the Fed sees the economy improving in the second half. Wow, that has been the Fed's line EVERY year since 2009, the old 'wait until next year' tired mantra.

Dudley stated the Fed was 'edging closer' to the day a rate hike will actually happen. Asked if September was possible, he replied 'yes.' While he did answer 'yes' to September, his theme was he sees a rate hike by the year end.

In sum, the same as we have heard before from the Fed: things are or will get better, hikes are coming based upon that better data. Yet, the most recent data is, outside the jobs report, crappy, heading back down. the Fed could be in the position of hiking rates based on jobs reports at are 1) lagging data, and 2) are so grossly skewed by subjective adjustments as to be at the least questionable (as the comparison to productivity we made pointed out).

AET: Pulling out of 11 of its 14 ACA markets as the ACA further implodes into a single payer system under Clinton. Rates are set to rise, on average, 24% ahead. This has been an unmitigated failure. Designed failure, of course.


OTHER MARKETS
Bonds: 1.541% vs 1.558%. Follow the bouncing bond. Started at 1.517% with a solid move but then fell on Dudley's comments and economic data. Still back and forth session to session.

EUR/USD: 1.1273 vs 1.1185. Dollar hit across the board as euro, set in its pattern to bounce, is now bouncing.

USD/JPY: 100.12 vs 101.229. Falling here as well.

Oil: 45.60, -0.14

Gold: 1352.20, +5.70


Okay so futures are bumping around the session lows hit early on in the morning session. Asia down, Europe down, US going to start down as it takes back some of the solid Monday gains. Still leadership in the market, lots of negativity, lots of nervousness. It is an election year that tends to steady things. Indices at new highs. That is enough to have everyone nervous.

We like the leadership and that is the key for us. It would be nice to have the bids return and those leaders step back up. They will have to weather another down open first.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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