Market Alert - Pre-Market

Futures vs FV: SP -3.78; DJ -49.93; -7.05

Futures are off the lows a bit and are improving into the open. Last night the appointment of a special investigator for the Russia link appears to have calmed things a bit. Makes one wonder if it will include an investigation of the ALL the claims, including the DNC hack that, as many claimed, was an inside leak, not a hack. These investigations go on forever, at least typically, and that means likely no quick answers, but the market appears to be dealing with this better.


Philly Fed, May: 38.8 actual versus 22.0 prior

New Orders: 25.4 versus 27.4 prior
Employment: 17.3 versus 19.9.
Two key areas were worse on this big jump.


Earnings beats: CSCO (but guides much lower, 1.1K jobs cut); WMT (online sales +69%); PLCE; BKE; LB

Misses: BABA (BL); HIBB (TL)


NAFTA: Back on for a renegotiation


Brazil: President in a scandal over 'hush money' payments. Real is getting smashed as Brazil government heads toward very shaky days ahead.


DB: DB is sued in Italian courts as an 'international criminal organization.' Yes, there is not much love for Germany and its entities in much of Europe. Hey, and DB and indeed other European banks, based upon reports of what they did during and after the financial crisis with LIBOR, gold prices to name just two, sure looked to be acting with some criminality.


OTHER MARKETS
Bonds: 2.209% vs 2.223% 10 year

EUR/USD: 1.1109 VS 1.11447. Dollar on a bit of a rebound.

USD/JPY: 110.81 vs 111.1677. Not so much here.

Oil: 48.53, -0.53

Gold: 1257.00, -1.70. Giving back some of the Wednesday knee jerk reaction.


Futures are showing some resilience as stocks such as NVDA bounce back though it will take more than the opening bounce in these stocks to recover what Wednesday lost.


This selling is based upon the pile of accusations against the Trump administration, many by anonymous sources, that threaten its agenda of tax cutting, healthcare reform, regulatory reform, geopolitical reform. It comes down to what investors believe will be gleaned from any investigations. I believe it is mostly an optics thing, that a politically inexperienced group is in the White House and handling business as they would in business and the loyal opposition is jumping on any potential appearance of impropriety as a major issue as the loyal opposition will. I know the use of that phrase makes some comment they are not so loyal, but for now you have to at least believe we are still all ultimately in this together. If, as is very likely, these are just overblown, then a selloff is a good opportunity.

That is why, we are still looking at STMP, DIOD and others, and will look at more as the selling winds down, for opportunity. That still requires good patterns, and we will see how the patterns hold up to this selling bout.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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