Market Alert - Pre-Market

Futures vs FV: SP +7.5; DJ +53.63; NASDQ +12.78

Futures were up ahead of the morning data and are a bit higher afterward. The usual rise into an FOMC meeting appears to be working again as the market is set for a 25BP rate hike and then, according to those who 'know,' look at the dot plot, i.e. where the FOMC members see rates over the next year. That supposedly gives an idea as to how many hikes in 2017. That is laughable; they change their views on a literal dime if the data softens.

Retail Sales, Feb: 0.1% vs 0.6% prior (from 0.4%)

Ex-oil, gas: 0.1 vs 0.2%

Control Group: 0.1% vs 0.8% prior (from 0.4%).

Motor vehicles -0.2%, gasoline -3%, Department stores lower


New York Empire PMI: 16.4 vs 14.5 exp vs 18.7 prior.

Remember how it was not many months ago that these regional reports were horrible?


CPI, Feb: 0.1%; 2.7% year/year versus 2.5% prior. Highest in 5 years

Core: 0.2%; 2.2% year/year vs 2.3% prior. 6 months of 2+% core.

Some are saying this shows stagflation. It all depends upon whether tax cuts, deregulation, and healthcare reform get implemented. If so, supply can grow and stave it off.


Oil: API saw a draw of 0.53M bbl and that supported price. EIA comes at 9:30CT.


Mortgages: +3.1% versus +3.3% prior week


Wages: Real Weekly Wages fall for second straight month. This is not a healthy signal and indeed is one reason Bernanke ramped up more QE. Times are different, however. The Fed is on a rate hike move now and no amount of bad data will stall it. There will have to be a calamity.


Analysts: NFLX upgraded. AAPL price target raised.


OTHER MARKETS
Bonds: 2.580% vs 2.602%. Curious that bonds are up after stronger economic data and with the Fed set to hike rates this afternoon.

EUR/USD: 1.0620 vs 1.0607

USD/JPY: 114.70 vs 114.728

Oil: 48.55, +0.83

Gold: 1199.60, -3.00


Futures are at the top of the morning range. They started higher and have traded up and down in a narrow range. That shows that yes the bids are holding, but it does not show a steady build toward the open. The latter is the better signal. Nonetheless, stocks tend to rise some into an FOMC announcement. After that, depends upon the Fed.

FOMC at 2:00ET and will announce a 25BP rate hike, all watching the statement and how many 2017 hikes the FOMC members see. I don't expect any surprises here. The Fed was loathe to hike rates and now that it is doing so it wants nothing to lead to speculation outside the parameters the Fed has crafted.

Dutch election is also out this morning and it is expected the 'Trump' candidate will win a plurality but will not be able to put together a government. Of course the 'never-populist' journalists are saying he won't even win a plurality. Okay, expect a win and it could be big enough to take over the government.

As for us, you know we see the index pullbacks as rather normal as well as good setups in leaders. Therefore we will watch the reaction to the FOMC, but unless there is a trend changing move starting, we will continue looking for upside plays.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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