Market Alert - Pre-Market

Futures vs FV: SP -2.71; DJ -12.25; NASDAQ -5.90

After the first positive inauguration Friday in 50 years, stocks are starting lower. Why? Not a lot on the policy front yet coming from the White House, at least nothing unexpected. But, they did go to three balls Friday night so perhaps expecting too much for the weekend? The week is packed with activity in terms of the new President's plans, starting this morning with a meeting several manufacturing CEO's.

Trade: Trump is signing an EX-O to take the US out of TTP and calling for a renegotiation of NAFTA. For those who are not involved in trade, NAFTA sets 0 tariffs between Canada, US, Mexico for goods made in those countries. That is great. The issue is taxes on goods entering. The US has no tax on goods coming in from Canada and Mexico. Canada, for instance, has a 5% GST (Goods and Services Tax), a VAT, on all goods entering the country. So, by legislation, Canada has set a 'border tax' on goods entering Canada despite supposed 'free trade' with the US, and that makes it VERY difficult to sell US goods in Canada as the relative cost is such that people don't see it as a value and just don't buy. Thus importers don't import for resale and there is no real 'free trade.' That is why Trump talked of placing a 'border tax' on Mexico and Canada as a negotiation tool to get them to get rid of those taxes on US goods entering their countries. No mystery, no heavy-handedness, just trying to get true fairness in what is supposed to be free trade. Bad deal that allowed the countries to run around it by imposing taxes. Again, a bad deal.

Jobs: HLT to add 25K jobs, not just in the US but worldwide. Foxcomm, the huge China manufacturing company that is run by the government reports it is contemplating building a manufacturing plant in PA. Holy cr*p, that is huge. Huge. Why? Because China is taking a hard line in its official commentary regarding the Trump presidency. Then its actions are 'we better get in on this.' Did anyone say huge?

Earnings beats: MCD

Misses: HAL (TL)

Fed: No scheduled events this week. Hurrah! Hurrah! It is kind of like when Congress is not in session. Whew.


OTHER MARKETS
Bonds: 2.441% vs 2.47%. Bond rallying as no set policies or at least unexpected ones.

EUR/USD: 1.0731 VS 1.0702. Euro bounces.

USD/JPY: 113.41 vs 114.68. Yen strengthens as well. Dollar is making an important test, still at the 50 day MA's on this pullback.

Oil: 52.37, -0.85

Gold: 1212.40, +7.50


Futures down all morning but on the comeback trail into the open. AAPL suing QCOM over patent violations, China's Foxcomm talking about building a US plant, more jobs being announced. You know, you might think that companies were really NOT spending any money (as we repeatedly reported), instead waiting for a better risk/reward environment.

It could very well be that this weaker open gives way to green to start the week. We like that more as noted over the weekend: no big news to gap stocks, just letting the upside bias work with good low to high moves that give the opportunity to enter. We will see if there is that low to high move and if they can hold those gains. Lots of stocks with nice setups, but many of the setups depend upon them holding the moves.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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