Market Alert - Pre-Market

Futures vs FV: SP +4.94; DJ +12.49; NASDAQ -4.92

Futures rallied nicely into 7:00ET but have since backtracked. Now the open, again, looks quite modest as the Papa Noel rally still fails to take hold.

No scheduled economic data and light, but important, news.

Korea: South Korea seizes a Hong Kong ship alleged to be delivering oil to NKorea in violation of UN sanctions. China, despite very clear satellite evidence, denies it is providing NK the oil. Of course China will claim the photos are altered, the first line of denial in a digital age. To quote the aircraft carrier captain in 'The Hunt for Red October,' this will get out of hand and we will be lucky to survive. Okay, that is overstating it, but NK will have to come to a head and be resolved one way or another in the nearer than many expect future.


Tax Reform: GS says it will cost it $5B in earnings. New York governor says the SALT limits are a 'penalty' on New York and other states, treating then unequally, and is therefore unconstitutional.

No. The SALT limits try to remove an EXISTING penalty on everyone who does not live in those states but is forced to subsidize those states' profligate spending when citizens of those states are allowed to deduct inflated state and local taxes (that are the result of unsustainable programs without the tax deduction) from federal taxes. In other words, these states can put any fiscally irresponsible program into play knowing it will be spread across the rest of the country via federal taxes as the rest of the country is forced to make up the difference for what they do not pay. There should be no deductions. No person from one state should have to pay for the programs another state that you cannot vote in decides to implement. The Constitution would NEVER have been ratified if that was the intent. This is just another reason why the Founders were so smart in stating that any income tax would have to be apportioned among the states. Of course we allowed the 16th amendment, and the balance between the states and the states and the government was forever skewed.


AMZN: down after the President says the USPS should charge more, that AMZN was making it poorer and dumber as USPS loses $1 to $2 on every package.

AAPL: to offer $29 battery replacements versus $79 as it tries to mitigate its PR gaffe.


OTHER MARKET
Bonds: 2.438% vs 2.434% 10 year. Bonds pausing after the upside surge Wednesday

EUR/USD: 1.1988 VS 1.1936. Euro continues its rise against dollar.

USD/JPY: 112.55 vs 112.74. Dollar still weaker against yen after a bounce early week.

Oil: 60.13, +0.29

Gold: 1302.00, +4.80


Futures are modest again as bids remain tepid. We will see what leaders break higher nonetheless.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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