Futures vs FV: SP +10.99; DJ +115.06; NASDAQ +23.18
A day after Chinese export data rattled markets and helped a selloff in equities, at least early session, Friday Chinese inflation data is helping boost world markets. China's PPI showed its first increase since 3/2012. Everyone is happy. People from my era abhor inflation and it is hard to imagining a world where inflation is a good thing. It is also hard to imagine a world where the central banks and powers that be so desperately want inflation but cannot generate it. Perhaps they should just let markets work? What a novel idea.
Futures rallied early session and have held the gains after dipping the past hour, now rebounding to morning highs as the US bell approaches.
Retail Sales, Sept: 0.6 vs 0.6 vs -0.2 (from -0.3)
Control Group: 0.1% vs 0.4% expected. 2.5% year/year is the slowest growth since 11/2015.
Gasoline +2.4% is a big component of the sales. That of course is not a very good thing, burning up disposable income for people who have too little disposable income as it is.
PPI 0.3 vs 0.2 exp vs 0.0 prior
Core: 0.2 vs 0.1 vs 0.1, +1.2% year/year
Final demand year/year: 0.7%, the biggest move since 12/2014
Fed: Yellen to speak today on 'Macroeconomic Research After the Crisis.' Standing room only for sure.
Earnings beats: JPM, C, WFC, PNC (bottom line), INFY (bottom line but lowered 2017). Beats, but not blistering beats.
Jobs: HPQ to lay off 3k-4k. DB laying off another 10K (20%).
OTHER MARKETS
Bonds: 1.768% versus 1.746%
EUR/USD: 1.1008 vs 1.1053
USD/JPY: 104.14 vs 103.63
Oil: 50.84, +0.40
Gold: 1253.00, -4.60
The Thursday morning drop looks pretty far away in the rearview mirror as stocks rebounded in the afternoon and given Friday morning's rise. Stocks again found buyers after rolling over to a new selloff low and there are still buyers pushing into the open.
It thus looks as if the market upside was saved again and we will see later (or not if the records are scrubbed) if this had to do with the central banks again coordinating market interventions. Be that as it may, the move is holding this morning and if it continues to hold the move and not reverse in a mirror move of Thursday, we will have to tend the downside positions.
Not too wild about entering new plays given it is Friday and the return of volatility, but there are still some good patterns that held up during the selling, showing strength. If they make a mover we will look at picking up some positions.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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