Market Alert - Pre-Market

Futures vs FV: +17.86; DJ +181.76; NASDAQ +33.09

It is funny watching the financial stations try to explain why the market is higher after 2 lackluster sessions heading into the State of the Union. Sure the President did not lay out specifics; none do. Sure you also had some Fed speakers saying the time is now for rate hikes, benefitting financial stocks. Fact is, the market was worried about what would be said or not said. When the President hit the right tone and still touched on his key election points, the market loved it.

Now there are calls for SP500 at 2450 by BAC (the company whose big clients are selling out of the market), citing bear capitulation to drive the market. Some of that reverse sentiment I noted on the weekend: high bullish sentiment but enough skepticism and people selling out creates a pool of money to reinvest and provide the market more upside fuel. There you go.

Definitely no 'sell the news' effect on the President's speech.


Fed: Odds of a rate hike 80+% according to Fed Funds Futures. Two more Fed members come out in support of rate hikes sooner.


Personal Income, JAN: 0.4% vs 0.4% exp vs 0.3%

Personal Spending: 0.2% vs 0.3% vs 0.5%

Real disposable income: Fell to 1.5% year/year, a 3 year low.

Where the income was: Social Security transfer payments +9B; Services +22.5B. Goods-producing (manufacturing) just $4B.


Earnings beats: LOW, CRM, AMBA

Misses: BBY (TL, BL); WTW (TL); ETSY (BL); PANW (TL)


Auto sales: Ford -4.0% vs -3.4% expected. Did you know that manufacturers are for the first time in years having to lease land to store excess inventory?


OTHER MARKETS
Bonds: 2.460% 10 year as two Fed members talk hawkish.

EUR/USD: 1.0524 vs 1.0575

USD/JPY: 113.984 vs 112.816. Dollar running against yen

Oil: 54.25, +0.24

Gold: 1238.90, -15.00


Futures are running higher and higher into the future as the rally is going to gap higher after a 2-day somewhat hiatus. Staying power is important, but it is very likely going to hold given the circumstances. We will see what can be bought after this kind of gap. Will be looking to take some gain.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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