Market Alert - Pre-Market

Futures vs FV: SP -0.19; DJ -13.76; NASDAQ -8.55

All morning futures have hovered just off the flat line, trading in a range that sports modest losses. Well within striking distance for DJ30 to put in a 12th straight record session. Much rejoicing. Yeah.

CNBC is engaged in its annual 3-hour Warren Buffett wisdom dispensary where the venerable old grandfather of us all sprinkles his intellect down upon us. Gag me. He is rich, he got that way by taking advantage of every angle and chance he had, and then convincing everyone they needed to follow what he did so his investments would be pushed higher. Genius and kudos to him. Shame on the media that slobber down their shirts and blouses as they lap up the book he talks.

That said, Buffett says the US stock market is not in a bubble, that shares are historically undervalued. That is his opinion. I am working on an analysis that looks at the rise in stock values during the Obama administration when the Fed pushed them higher with QE while there was indeed no growth. Now the markets have surged trillions post-election. How can they be accurately pricing in stocks that doubled, tripled and more during the FOMC QE inflation sans growth, and then piled on the post-November gains? Hmmm. If a crash comes, IF, it will be a humdinger.

Buffett bought 120M AAPL shares in 2017. Okay, go buy them. AAPL is up 0.4% this morning . . . He says it on the TV, his share values increase. Brilliant!


Durable Goods Orders, January: 1.8% vs 1.8% expected vs -0.8% (from -0.4% FEB)

Core Durables: -0.2% vs 0.5% vs 0.9% (from 0.5%). Oops. Military aircraft +59%, civilian aircraft +69.9%.

Okay, so no real durable goods orders in the rest of the economy. That is why they take out aircraft because 1) it is tremendously variable, and 2) the unit cost is so high it is really an outlier in any report.


Debt ceiling: David Stockman, who with all respect sadly looks more like a carnival barker of late, says that everything will shut down on March 15 as the US will hit its debt ceiling. The US is burning $75B/month and then on 3/15 Congress would have to authorize more spending, the cycle continues, voters are PO'd, etc. So, Stockman says "everything will grind to a halt" on that day. Just as it did on January 1, 2000. Maybe he is right.

I note with some humor that many farther left people particularly those domiciled in California are calling for withholding income taxes from the government to prevent it from implementing policies they don't like. Heck, that is along the lines of what Ronald Reagan wanted when he said that the most patriotic thing you could do was make a lot of money and keep as much from the government as possible. They have a lot more in common than they believed.


OTHER MARKETS
Bonds: 2.33% vs 2.31%. Backing off some from last week's rally.

EUR/USD: 1.0589 vs 1.0538

USD/JPY: 112.432 vs 112.169

Oil: 54.48, +0.45

Gold: 1256.70, -1.60


Futures are edging up toward the open. In reality they are just modestly lower, a rounding error at these levels. Also, there is that need to push DJ30 higher. With the retail investor now hitting the ETF's hard with new money, there is late rebalancing in the indices each session, particularly ahead of weekends. So, if the market is moving higher, the rebalance is put off until the close and then the market ramps on that rebalance activity. If the market ever breaks trend and starts trending lower, you can see the same action downside.

That makes you want to see where current positions are closing versus necessarily acting right away as they test support; many times they recover. As for new positions, that suggests buying early if they hit their entry points, but there is still enough volatility in individual names to have that come back on you. Still like to see where the buys close, but if they are already making the move based upon the prior close, then we can step in if they still look solid.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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