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Wednesday, January 10, 2018

Market Alert - Pre-Market

Futures vs FV: SP -6.99; DJ -59.8; NASDAQ -34.44

Futures are off the 5:00am ET lows when the news from Bloomberg was that China is considering slowing or halting US Treasury buys. BBG quotes 'officials' saying China is considering these actions. BBG has reported news from 'officials' in the past that were not in the government and turned out to be full of hot air. Nonetheless, it is out there and impacting all world markets, debt, equity, currency, precious metals.

After the news hit, futures have trended slowly back upside, paring losses but still well off the Tuesday close.

Import Prices, Dec: Core prices (ex-oil) -0.2% mo/mo. That is driving the Phillips Curve clingers insane. US consumers love it even with a lower dollar.

Davos: It is time for the very wealthy upper crust and the wannabes to congregate for snow skiing, toddies, the world's best food and wine, and discuss how they can continue their vice grip on the world wealth. On the list (or not?) is President Trump. There goes the neighborhood, right? A working man's billionaire who will be passing out Trump ties as gifts no doubt. I would love to be there to watch, but alas, I do not qualify. Not even for the wait staff.

Immigration: A Ninth Circuit judge (surprise!) blocks Trump's DACA order. Okay, now get this. DACA was a creation of Obama actuated by executive order. Trump writes an executive order overturning it. Executive orders are not laws passed by Congress and can be overwritten by subsequent executives. Yet, now a judge says an executive order cannot be rescinded by the current executive, as if the prior executive had more power. Is our court system politicized? You think?

Earnings: LEN miss (BL), SVU miss (BL)

Upgrades: STZ, DE, TGT. After CAT was upgraded at a new high, I guess it is only right DE was upgraded at a new high as well.

Bonds: 2.59% vs 2.551% 10 year. Bonds continued to dive with yields surging past 2.50. Bill Gross says the bond bear market as officially arrived while others consider 2.62% as the tipping point for the equities market as well.

EUR/USD: 1.1991 vs 1.1935

USD/JPY: 111.57 vs 112.62. Dollar dives against the yen on the China news. Weak, now weaker.

Oil: 63.43, +0.47. A confluence of issues raising oil prices. A weak dollar of course is a driver along with the US economic surge along with a world recovery.

Gold: 1321.30, +7.6

Futures may be off their low but as noted, are a long way from flat. SP, DJ futures are in much better position than NASDAQ as the FAANG for example are off fairly briskly. Growth looks to lag so to speak, again. Or put another way, they will lead downside.

Have to watch and see how virulent this is. Perhaps it is just backing off from the bids and a pause, perhaps the sellers get aggressive given the important issues at hand. We will watch how aggressive this is. If stocks come back with fight, great. If they wait a day or so and the selling is mild, that is not bad and gives entries. If leaders roll over hard on sharp volume, that may start changing the game.

Jon Johnson, Chief Market Strategist
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