Market Alert - Pre-Market

Futures vs FV: SP -3.89; DJ -16.61; NASDAQ -9.49

Central banks are still active, doing more or less as expected in terms of more stimulus, but the world markets are disappointed.

Japan: Abe announces his 28T yen package, but it only contains 7-7.5T yen actual spending. Japanese bonds tank, yen surges.

RBA in Australia cut rates 25BP to 1.50% as expected. Aussie dollar rallies on the cut, the opposite of the usual moves on this kind of action. That means wholly priced in, indeed more was expected.

Personal Income, June: 0.2% vs 0.3% exp vs 0.2% prior. +2.7% year/year, the lowest since 12/2013.

Personal Spending, June: 0.4% vs 0.3% exp vs 0.4% prior. +3.7% year/year, highest since 5/2015.

A split between savings and income. That means it cannot go on forever without change in wages or curtailed spending.

Speaking of wages and thus jobs, comments earlier on CNBC discussed how the US economy only needs to create 70K to 100K jobs/per month to satisfy job demand. Holy cow. It used to be a minimum of 200K/month; GOOD jobs at that.

Once again, it is another indication of what I have written and talked about for years: the dumbing down of the US economy and our expectations. Or, if you want, the Europeanization of our economy as we get lower and lower output and numbers and view that as normal. An aberrant month that would have been mediocre under our former growth when we were not stifling it with taxes and regulations is now considered 'great.' It won't change until the policies change.

Earnings: Mostly good enough, but as with the economic data, given no one uses GAAP anymore, do they mean anything?

BEATS: PFE, PG, SODA, DISCA

Ford sales: -2.8% vs -1.7% expected. There is a glut of cars in the US. Used car prices are plunging and I mean plunging right now. Many people owe more on their car notes than their cars are worth.


OTHER MARKETS
Bonds: 1.566% vs 1.504% 10 year. Bonds, as are many around the world, selling hard today.

EUR/USD: 1.1202. Euro rallies against dollar

USD/JPY: 101.34. Yen surging again versus dollar, driving dollar down in its downtrend channel again

Oil: 40.39, +0.33. A bit of an oversold bounce and it is definitely in play

Gold: 1370.10, +10.50


Stocks will open down and a lot is being made of the Dow down 7 days straight. Yes, but a healthy move lower, setting up a move higher. Indeed, futures are off their lows and I would not be surprised to see DJ30 close higher.

How much higher? Well, there is no real catalyst. Nothing is pushing the market, or at least anything the market wants to use to move higher. Thus maybe it will just rally because it has sold enough. Hmmmm. We will see how the leaders move and if the big Nasdaq names can continue leading.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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