Futures vs FV: SP +0.78; DJ +7.25; NASDAQ +7.30
The market is going to try the upside for an open after a pair of negative opens though Monday futures were rallying into the open and continued higher from the bell.
Today a higher open will be tested. Remember, when a market is selling, higher opens are shooting targets for the sellers. This higher open will provide a bit of a gauge as to sellers' strength after 2 of 3 downside sessions.
The backdrop remains the Fed and central banks. The Fed is in its quiet period so there should not be public news from the Fed though the private channels remain open even if reputedly illegal. Keep in mind the central banks have stepped in on every selloff so ultimately, as long as Yellen and Draghi are in charge, the central banks will do what they can to prevent a market selloff in general, and specifically before the November election. Kind of a hard thing to accomplish as September into the first half of October are historically weaker times for the market. But as I said before, anything is possible near term in markets if the central banks all act in concert.
Household Income: Census Bureau reports it is up 5.2% in 2016. Good news and it sounds good, but details, details. The gains are in the lower 1/5 of the spectrum. Again, that is good, but the reason for the rise in that group is of course higher minimum wages. So, despite all the hype and hyperbole Tuesday on this data, the reason incomes rose was not a demand, market based reason but because of decree. To borrow a phrase on the campaign trail, huge difference.
WFC: CEO appeared on financial stations and the bald headed guy's show and said he would not resign and that the programs at WFC did not create an incentive for the massive fraud that occurred. No, I guess Wells just hires a bunch of derelict thieves. Oh, THAT is a good explanation. At least blame the system dude. But oh, that would mean HE, the CEO, was responsible for the company. In the New America that cannot be the case. Of course Mr. Stumpf's history is impeccable: he is the one who lied several times about Wells Fargo's small business lending. It was all a lie. Just look at its small business loan percentages over the past 10 years versus the prior 20. No comparison because the more recent period shows close to zero.
Export prices: -0.8%
Import prices: -0.2%. 0.0% ex-0=oil
EU PMI: -1.1% mo/mo, -0.5% year/year versus 0.7% last
M&A: Bayer buying MON for $66/share. It will be blocked as all other deals have been blocked by the DOJ.
Luxury goods: Hermes, Richemont issue extremely gloomy forecasts for the rest of the year as the European luxury goods sellers suffer. Now HOW good is Europe CNBC? Luxury is the last to fade and the first to recover. That it is fading is a very bad sign for Europe.
Japan: Reuters says BOJ wants to make negative rates its centerpiece stimulus of the future. Great. Japan's economy has been in depression for 20 years now and it is just going to go all in. It will have to outlaw cash and gold, no big deal as Japan goes full frontal socialist. Oh, that is coming to the US as well, one reason I really would like to see the Fed actually hike rates several times. You know, we might just see higher rates for money HELP.
OTHER MARKETS
Bonds: 1.72% versus 1.718%
EUR/USD: 1.1221 versus 1.1218
USD/JPY: 102.78 vs 102.602
Oil: 44.42, -0.48
Gold: 1324.30, +0.60
Futures rolled over the past half hour and trade at the pre-market lows. The sellers appear not to be completely dead. Still, have to watch to see if the bidders take a shot and if the sellers respond.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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