Futures vs FV: SP +4.55; DJ +37.53; NASDAQ +25.03
Futures up all morning, holding gains through a shooting of republicans at baseball practice (no fatalities) and dismal US economic data. It would appear that perhaps the market is anticipating the Fed raising but perhaps not doing much more after that.
The data:
Retail sales, May: -0.3% vs 0.1% vs 0.4% April. Biggest drop in 16 months.
Ex-autos: -0.3% vs 0.2% vs 0.4% (from 0.3%)
Control Group: 0.0%
Electronics -2.8%, gasoline -2.4%, department stores -1.0%
CPI: -0.1% vs 0.0% vs 0.2% prior. Year/year: 1.9% vs 2.2%
Core: 0.1 vs 0.2 exp vs 0.1. 1.7% year/year, weakest since 2/15
2 of 3 months down overall
RBC says this data suggests 'slow-flation' and could mean the idea of a Fed 'one more and done' in 2017 takes hold.
Certainly bad data for the Fed's recovery scenario.
OTHER MARKETS
Bonds: 2.124% vs 2.209% 10 year. Bonds rallying on the news
EUR/USD: 1.1273 vs 1.12085
USD/JPY: 109.30 vs 110.060. Weaker dollar.
Oil: 46.11, -0.35
Gold: 1278.20, +9.60
Futures jumped up and down on all of the news and has struck a happy medium heading toward the open. Looks as if the recovery move will have a second day, in part because of the weak economic data and the view the Fed can go softer.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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