Futures vs FV: SP +1.25; DJ +6.83; NASDAQ +6.05
Futures are positive but off the early session highs. As figured, the debate has not overridden the predominant themes in the market. The betting odds gave Clinton the nod in the debate, something expected given you have a slick 30 year politician versus a bloviating businessman. That said, a command of the facts could have scored a lot of points for either side last night. Just a quick look at the headlines would have provided both sides ample facts to go after the other sides claims. That they didn't is how it works and thus the debate has a short half-life in market terms.
The debate does have the usual interesting fallout. Ford today tweeted regarding a claim that it was moving jobs to Mexico, saying that there would be no impact on US jobs because 2 vehicles would be built where one small vehicle would have been built at the plant in question. Ford's own statements condemn it further: sure it impacts US workers because THREE cars could be made in the US by US workers, not just two. It makes enough difference in employees that Ford is building another plant. It will have to staff that plant will it not? Ford did not say it was a totally automated plant. If it was, then surely it would be just as good for Ford to build it in the US because labor costs would be largely irrelevant.
A few main stories dominate this morning.
DB: A day after Merkel said no bailouts, DB gave up a rebound gain and has traded down 2.8%. Truly there will be no bailout because Germany played the anti-bailout force in all EU negotiations with Greece and other EU countries Germany felt were unworthy of its capital. Justice? Karma? As mountain rescue expert Hal said in the Stallone movie 'Cliffhanger,' gravity is a b**ch.
More German bank woes: Commerze Banc, Germany's second largest bank, announced 9,000 layoffs. That usually happens when all is going well, right?
Oil: Iran shockingly pours cold oil on any notion of a freeze agreement, wanting to increase production 4M bbl/day.
GS cuts its oil target to 43 from 50 on global glut forecasts.
VW: DOJ is reportedly ascertaining what size of fine it can levy against VW without bankrupting the company. Yes, that has had a market impact. When governments talk about possibly bankrupting companies and industries it matters to markets and economies. Just look at the coal business. Further, the emissions issues are now raising questions about its Audi unit.
OTHER MARKETS
Bonds: 1.556% vs 1.584 10 year. Bonds are bouncing as that recovery continues as things are not all that well with the world economies.
EUR/USD: 1.1203 vs 1.1254. Dollar recovering some.
USD/JPY: 100.28 vs 100.279
Oil: 44.61, -1.32
Gold: 1333.50, -10.60
Futures are at session lows as any bounce from the Monday pullback is over at the session start. NASDAQ, RUTX, SOX and their ability to hold the support and thus the trends since late summer is the upside key. Kind of neutral start yes, but the bids have faded from a pre-market bump.
Consumer Confidence is out at 10ET. Case/Schiller came in at 5.0% versus 5.1% prior. The report was hardly noted on the financial stations.
We will see how the upside leaders and plays hold near support and if DJ30, yes the Dow, can find some support for its names after lagging pretty hard Monday.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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