Futures vs FV: SP -
This is the calendar date anniversary of the 1987 Black Monday crash. DJ30 failed to hold 23K Tuesday then took it out on Wednesday's close. Today it is going to give it up on the open as stocks globally head lower.
The selling started in Hong Kong with a very late session drop over 2% before closing down 1.9%.
US futures are off the lows, rebounding over the past two hours though hardly ripping back to the upside.
Earnings are starting to flow more and they are trying to build them up on the financial stations given the poor response to results thus far. For example, VZ is getting pumped because it actually managed a revenue beat as it did not have as much subscriber churn. Much rejoicing.
Beats: TRV; BX; AXP VAL (BL); EBAY (TL); TSM; URI; WBGO
Misses: PM (T,B -- who smokes anymore?); SAP (TL, BL)
In Line: Ebay
Spain: Getting blamed for much of the market issues though this seems a stretch; more like a compilation of issues. Anyway, Spain threatens to enact article 155 whatever that is and try to overturn Catalonian autonomy. The thrashing around of a government losing control. Going to see more of that.
We are seeing it in some places though it is in an orderly legal process. Austria elects at 31 year old leader. New Zealand elects a 37 year old labour party PM. Populism era is reborn in 2016 and is spreading.
Philly Fed, Oct: 27.9 vs 20.0 exp vs 23.8. Best since 5/17 (38.8)
AAPL: Perhaps as much as any story, the one about AAPL cutting orders to suppliers is impacting the market. Business Week and others report that companies feeding AAPL parts are receiving notice to lower delivery amounts. AAPL has supposedly cut production orders by more than 50% for the balance of the year. Think about it. You have a perfectly good product that is working fine and doing all you need. You put out the next version that starts incorporating the new technology you are developing, BUT you also tell everyone that the next release will be the ONE that really uses that new technology and is the bomb. Do you buy the interim phone or do you save your money and wait? I guess AAPL found out THAT answer. In other words, AAPL cannot put out poop and sell it as filet mignon.
OTHER MARKETS
Bonds: 2.314% vs 2.341%. A bid in bonds with the weak stocks
EUR/USD: 1.183 vs 1.17995
USD/JPY: 112.47 vs 113.01
Oil: 51.24, -0.80
Gold; 1288.00, +5.00
Futures are at the top of the morning range, but that still has them opening with a significant drop, especially after DJ30 hitting 23K Wednesday. That has kind of negative overtones does it not? Hit 23K on the close, break out the hats, then down over 100 points on the futures at the lows.
Stocks are coming back and that shows there is not an all-out dearth of bids in favor of sell orders. It does add another block to the notion that the rally is having issues maintaining itself at these levels.
We will see if stocks can continue to rise off the morning lows when the bell rings. I would not be surprised to see stocks sell off again after opening, but if the rally is running out of gas, these tops take a bit of time to form. I would suggest they have been doing that with the slow, no volatility crawl higher the past two weeks and now the volatility on some of the indices. That is almost laughable is it not? Volatility? Just shows how low volatility has been that a bit of an upside tick is a 'jump' in volatility.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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