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Thursday, October 20, 2016

Market Alert - Pre-Market

Futures vs FV: SP -2.79; DJ -17.62NASDAQ -3.21

You can't please all of the people all of the time. If you are a central bank in this world economy and don't fawn over stimulus, QE, or waver like a pillar of jello at the thought of hiking rates, you can't please any markets.

There are other stories, but as with the debate, regardless of the substantive issues finally covered in a meeting between the 2 candidates, a sidebar dominates the stories. Such as it is with the markets.

ECB: Rates left unchanged. No surprise. Then there are the Draghi comments.

"ECB did not discuss QE extension beyond March 2017"

"Extraordinary policy won't last forever"

But he did throw markets a bone: "Abrupt end to QE is unlikely"

Stock futures were up modestly pre-ECB. They are now down modestly post-ECB.


Fed: Had to join in. Dudley says the Fed will raise rates in 2016 if the economy stays on track. I suppose that assumes the economy is on track right now. The Fed Funds Futures contract suggests a 69.5% chance of a hike in December, but, as with gravity, it is an extremely short distance force.


BOE: So did the BOE. It released a study finding QE effects are only temporary and it is best for plunge protection. Looking at the US stock index charts, that is somewhat borne out: each time a QE program ran out the markets started to roll over and were rolling over until the Fed was compelled to launch another program.


Philly Fed, Oct: 9.7 vs 5.5 exp vs 12.8. It is still positive so that has to be good news. 0.5 would be good news, so 9.7 must be super, right?


Earnings beats: AZP, TRV, EBAY (but really weak guidance)

Earnings misses: AAL (TL); VZ (TL); WBA (TL); DNKN (TL); MAT (BL)

Something of a familiar theme again emerging, the old tell tale of a still weak economy, the top line revenues (sales) miss.


OTHER MARKETS
Bonds: 1.75% vs 1.74%

EUR/USD: 1.0969 vs 1.0971

USD/JPY: 103.618 vs 103.617

Oil: 50.82, -0.76

Gold: 1271.10, +1.30


Futures are modestly lower toward the open, attempting a bounce off the post-ECB lows. The pre-market is not deciding anything but it usually does not. Stocks were trying to move higher pre-Draghi, so we will see if that bid returns. And if it does, just where the NYSE indices find resistance on this bounce. That along with NASDAQ and its ability to maintain its trend are the key -- er, important -- tells for the session.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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http://www.investmenthouse.com/alertkey.htm


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