Market Alert - Pre-Market

Futures vs FV: SP -1.77; DJ -22.21; NASDAQ +0.21

The world braces. Stocks are slightly lower, waiting. Can the world handle the day? Can the markets withstand a SECOND 25BP Fed Funds Rate hike in 13 months? Will Yellen spontaneously combust as her core being rejects any tightening? What drama.

Yeah, right. The Fed hikes 25BP, the market not only expects it, it requires it. What the Fed says afterward matters but then again, its statements are usually so full of CYA, possibility hedging BS that they are worthless as well. So, unless Yellen's heart (or stupidity?) grows 3 sizes today, the Fed hikes, says the risks are balanced, and will watch the data to determine its next hike.

Retail Sales, November: No Ho Ho Trump as they miss.
Retail: 0.1 vs 0.2 exp vs 0.6 October (from 0.8%)
Control Group: 0.1 versus 0.8% prior. Hello? GDP write-down department?


PPI: Getting a bit warmer in the kitchen.

PPI: 0.4% vs 0.1% exp vs 0.0 prior. +1.3% year/year

Core PPI: 0.4% vs 0.2% exp vs -0.2% prior. 1.6% year/year


Industrial Production: -0.4 vs -0.1 exp vs 0.1 prior
Capacity: 75.0 vs 75.1 vs 85.4 (from 75.3). Quite a drop, the second lowest of the year (March was 74.8)

Yes, the media is touting what a 'great' economy Trump is inheriting, trying to take credit for gains that will be made by rolling back the very regulations and taxes the Obama administration dumped on the economy to produce the first 10 year period of average GDP below 3% every year of those 10 years since the Great Depression. Happens every election.

OTHER MARKETS
Bonds: 2.433% vs 2.478% 10 year

EUR/USD: 1.0639 VS 1.0628

USD/JPY: 114.96 vs 115.109. Giving back some gains

Oil: 52.23, -0.75. Trying to hang onto the breakout even with higher inventories.

Gold: 1164.10, +5.10


Futures are sliding lower and lower into the open as investors are waiting and seeing ahead of the Fed. Expect the small and midcap indices to be softer and still testing overall while the large cap indices likely continue their leadership before and after the FOMC decision this afternoon.

The market is primed to fade after such a strong run and getting the FOMC out of the way and logging a rate hike. The fly in the ointment is that DJ30 has not reached 20K. If it had it would be very likely. It would be ironic if the market faded without it hitting 20K this time.

We will look at some positions if they show good moves, and will see how this dip is bought, i.e. if the bids return.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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