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Tuesday, January 2, 2018

Market Alert - Pre-Market

Futures vs FV: SP +11.14; DJ +130.78 NASDAQ +23.47

Stock futures are trading at morning highs, rising steadily off a gap higher to start the pre-market session. Asia up, Europe lower; can the US strong open hold or is this just a start of the year reallocation that is done once the money is put to work?

Not a lot of economic news to start this week but it is a heavy week of data culminating with the December jobs report Friday.

Geopolitics has the most headlines. Iran protests continue though the Iranian Guard is killing people in the streets and who knows how many are 'arrested' then terminated. Trump administration tweets support for the protestors, Obama and his minions (e.g. Kerry, Rice) tweet that supporting the protestors hurts the protestors, wanting the US to stay neutral. Kerry tweeted it was Iran's affair, not the US'. Well, it is Iran's but freedom from an oppressive regime is what the US should want to happen, and supporting that outcome is something the US has always done except when thousands were slaughtered the first year of the Obama administration when it backed the regime. Two different views are on display, but I fear the result will be the same.

North Korea oil sales in violation of UN sanctions continue as SKorea holds another vessel selling to NK. Kim Jong Un says he has a nuclear button on his desk at all times. I am sure he does. Whether it works or not is the question.

Pakistan responded to Trump tweet regarding the country's terrible support for the US despite hundreds of millions in aid. Suspended $284M in aid for now.

Wages: New minimum wage goes into effect in 18 states. No, not the raises announced as a result of the tax reform, just states saying they know best what a wage for a particular job should be. So, less jobs ahead in those cities as Seattle shows as the most recent major city to give it a shot. Good luck with that.

Bitcoin: Over the weekend Australia was talking freezing bitcoin accounts. Have not heard anything further on that.

As usual, upgrades and downgrades dominate a new year news feed.
Upgrades: LEH, ABT, LB, JWN

Downgrades: JNJ, ALL, DECK

Bonds: 2.431% vs 2.405%. Bonds down as yields rise as the bond rally fades a bit.

EUR/USD: 1.20561 vs 1.2007. Dollar remains weak

USD/JPY: 112.12 vs 112.690

Oil: 60.26, -0.16

Gold: 1314.80, +5.5

Futures continue their rise into the open in a clear upside move for stocks. We will see if it is an even allocation or favors some areas over others. Also have to see if the move sticks -- in some areas or others or all. The first of a year can show some head fakes. New money is put to work but then does it stay working or is the upside used to sell? Watching for how the good movers hold up; if they do, we can put some upside money to work again.

Jon Johnson, Chief Market Strategist
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