Market Alert - Pre-Market

Futures vs FV: SP -1.61; DJ +17.45; NASDAQ -0.76

As you would expect after a surge to new highs in response to a State of the Union address, stocks are flattish. Ho-hum right?

FED: Another FOMC member, Brainerd, says it is appropriate to hike rates near term. Define 'near term,' please. It has been appropriate for years; it's the near term that is the question. FFFutures are taking it seriously with expectations moving even farther above 80%.


Earnings beats: KR, BURL; BOX; AVGO

Misses: ANF (TL, BL), JOY (TL)

Sales: LB's Victoria's Secret brand sales -10% versus -4.7% expected. Not a lot in those bras right now. Perhaps they need a more of a miracle bra?


Oil: EIA says inventory +1.5M bbl to yet another new inventory record. Oil is off significantly, still finding impermeable strata at $54 - $55.


That is about all the news. Jobless claims were lower than expected, but who cares as this stat has held no weight for years now. We are still paying people not to work, and as long as that happens there will be almost 100M working aged people not working. Somehow on CNBC they have morphed, apparently on the Trump hope rally, that the jobs market is now gangbusters though there are 'pockets' of trouble in areas such as retail. Interesting given retail has been, all through the Obama years, the stalwart of job creation. Along with waiters and bartenders and of course those are a direct offshoot of retail.


The epitome of sloth: McDonald's proposes delivery. Laying on the couch, texting/snap chatting/whatever, watching QVC and/or Oprah, an irresistible urge for a Big Mac, super size fries, and of course a large DIET Coke. You don't have to get up and wreck your momentum by getting your butt up. Surely nirvana has been reached.

Politics: AG Sessions facing calls for his resignation by such staid, calm types as Nancy Pelosi after the WaPO says he met with a Russian ambassador twice during the Trump campaign. Of course he was head of the Armed Services Committee and met with something like 25 ambassadors as well. The issue: he didn't say he met with Moscow in response to a confirmation hearing question whether he met with 'Moscow.' Not a major revelation but in this hyper school playground 'are not, are too' environment this becomes a 'scandal.' Republicans wanted to investigate everything and now the democrats want to investigate everything. Ah, status quo in DC.


OTHER MARKETS
Bonds: 2.472% vs 2.46% 10 year

EUR/USD: 1.0514 vs 1.0532

USD/JPY: 114.358 vs 113.951

Oil: 52.89, -0.94

Gold: 1239.50, -10.50


I suppose you can say it is a win that futures are flattish after investors shot up so much ammunition on the opening day of March. No immediate selloff, no surprise. Still no sellers except perhaps those BAC clients who sold but are now buying back in like crazy. A market built on 8 years of QE asset price inflation then another several trillion dollars on top of that of a 'hope they can cut taxes, repeal the ACA, roll back regulation, spend a trillion on infrastructure, a 100 billion on defense, and not ramp the budget' rally. What could possibly go wrong?

Today, not much. Reckoning? Some day, perhaps when the programs are passed in Congress it will be a sell on the news kind of event, but even in history when that has happened, with the right policies, that selloff was time to buy. There will be a test of this move, but there has to be sellers for that to happen.

We will see if this softer open leads to bids returning. SNAP IPO's today at $17/share, above expectations, even with retail shares having no voting rights. This is being taken to absurd extremes, i.e. limiting shareholder rights. But it is 10x oversubscribed as the lemmings rush to get in on what the kids are using now. Perhaps it will provide the excitement for the bids in other stocks to return and continue the new break higher.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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