Market Alert - Pre-Market

Futures vs FV: SP +3.61; DJ +55.32 NASDAQ +6.14

Futures up all morning, holding steady the past 2-3 hours. That can be an issue as seen last week when futures gapped higher just to be sold. But, let's be positive this morning and note that NASDAQ, SP500, DJ30 will be trying for new highs again as they attempt to make good on the recovery from the gap up/gap down from 2 weeks back.

There are several stories but the theme on Bloomberg, CNBC, Fox Business, and many websites is the issues and delays surrounding the ACA repeal and replacement and tax reform. The real problem is how they feel they have to accomplish tax reform, i.e. in reconciliation. That only requires a 51 vote majority in the Senate but the rule is a bill has to be revenue neutral. Why? Because economic imbeciles in the republican party do not understand the history of economics and do not want to let go any of their spending power. So, we have rather insane notions of a border tax that only raises our costs both for consumers and businesses (and thus consumers) and does nothing to solve, for instance, the ability of US producers to sell to Canada given its 5% VAT for goods entering that country. So, unless they slays individual rates to 15% and cut corporate taxes to 0% so we don't have to pay for artificially high priced goods and services, most people, as under the Bush tax cuts, will get no benefit from them. It is all setting up again.

Okay, there you have it. All you need to know tax wise.

Earnings: still the same
BEATS: GM, CNC, MNK, MOS, TSO

MISSES: KORS (TL); ADM (BL); BP; CAH (TL)

GPS: raises outlook. As if Gap is the bellwether for the economy.

China: CNBC finally reports on the massive outflows of cash out of China. It is still ongoing and thus China has to continue selling US treasuries to raise money. It also just so happens China is PO'd at the US so it is glad to sell them, but it is doing so because it HAS to.

Bankruptcies: Don't tell anyone, but personal bankruptcies are the highest since 2008. There is a very real possibility that there will be another debt bubble burst in the next four years. Why? Because the intellects in charge of the country during the financial crisis tried to cure a debt crisis with debt. That is like trying to put out of fire with more of the wood that is burning.

EU: Merkel is behind in her election. When the people discover you are a tool, they get rid of you.


OTHER MARKETS
Bonds: 2.439% vs 2.41%

EUR/USD: 1.0665 vs 1.0752. Dollar posting a solid rebound.

USD/JPY: 112.46 vs 111.679. Snapping back here as well

Oil: 52.66, -0.35

Gold: 1230.60, -1.50. Giving back a bit of the Monday gain as all markets revert somewhat.


Futures are hanging in, even bouncing off a dip heading toward the open. It is still the same game plan, i.e. playing those stocks that are in good patterns making good moves, keeping an eye on leaders and how they perform.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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