Market Alert - Pre-Market

Futures vs FV: SP -8.99; DJ -72.78; NASDAQ -19.46

Stock indices are lower around the world as the breakout from last week, tested Thursday and Friday, is not at risk of being thrown back altogether. That is the risk the move carried as noted the day it occurred (Wednesday).

The driver appears to be political with turmoil surrounding the 3-month immigration suspension from 7 countries. As an Administration insider said earlier today, out of 325K+ that entered the US Saturday, 109 were detained. All of those have already been cleared, and questions about green cards and visas moving forward are resolved. President tweets that there is nothing nice about searching for terrorists and it had to be done unannounced to keep terrorists from planning on beating the deadline. Some are very vocal in big immigration areas, much of the country 'shrugs' as one news agency put it. Get proper vetting in place that HSA this time says really works, moratorium lifted in 3 months or less. Question is, will the market see this after its initial reaction lower or does this take out the breakout?

Personal Income, December: 0.3% vs 0.4% exp vs 0.1% prior (from 0.0%)

Personal Spending, Dec: 0.5% vs 0.5% exp vs 0.2% prior

Real spending: 0.3% versus 0.2% November


Jobs: Fit Bit cutting 5% to 10% of workforce. SBUX to hire 10K refugees in 75 countries.

Analysts: DIS upgraded by MS; AXP upgraded

C: Leaving mortgage business by 2018

EU: Germany inflation 1.99% year/year, the fastest base in 3.5 years.


OTHER MARKETS
Bonds: 2.481% vs 2.48% 10 year. No real move here, indicating this is a political day in the market versus an earnings day.

EUR/USD: 1.0644 vs 1.0695

USD/JPY: 114.407 vs 115.094

Oil: 53.14, -0.03

Gold: 1195.40, +4.30


Futures are just modestly off the pre-market lows, but they hit new pre-market lows right before bouncing. As noted, this is a political reaction and we will see if the market snaps back from it, but there are larger ramifications some are looking at such as the Administration's more protectionist bias. That is no surprise given the campaign and election, and no more radical than the prior President's agenda though in opposite directions, but there is no way for the current administration to sugarcoat what it is doing. Thus the disruptions and we will see if the markets can handle it.

So, we watch how the gap open treats stocks, if they can hold near support. Will, as much as possible, give them some time to work through this in the morning and see if they can recover. If the market does hold and bounce there could actually be some buys, but the stocks are going to have to show it.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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