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Tuesday, January 16, 2018

Market Alert - Pre-Market

Futures vs FV: SP +14.96; DJ +237.81; NASDAQ +40.71

Dow 26K is in play as futures started higher in the early hours and have held the range all morning. Not the low to high rise in the pre-market, but the gap upside that always makes you (at least me) wonder if the sellers will take shots THIS time. Thus far, however, no one has been interested in taking that side of the trade.

Lots of news, some meaningful, a lot amusing.

GE: Takes a $6.2B charge and will eliminate the GE Capital dividend paid to GE.

Japan: Sees ever so slight growth. The amount is almost a rounding error, but after 30 years of contraction, ANY sign of green shoots is noteworthy. So, I note it.

Jobs: WMT is cutting 1K corporate jobs. This is the same pattern WMT has shown over the past three year: raise front-line wages, pay for it by cutting corporate staff. Not saying that is bad because for WMT its main contact with people is the front line. Cutting perhaps unneeded overhead at corporate is not a bad step.

Earnings: C, UNH beat

Blow off? ore articles discussing this. This morning CNBC ponders if this 2018 start is part of the 'overshoot' phase (another way of saying blow off). Good! Let's have a LOT of skeptics. The more the better for the market.

Empire State PMI, Jan: 17.7 vs 19.0 exp vs 19.6 December (from 18.0). Lowest in six months as employment, hours worked and orders fall.

China: Downgrades US credit to BBB+ from A- and warns 'US insolvency' could trigger next crisis. Is China serious? Not about the US credit rating but about creating the mindset of US weakness and thus promoting its new yuan based petro currency.

Government: Shutdown talks if no immigration deal. Okay, who says there MUST be an immigration deal? Only a few people who want certain things. A federal court ruled Trump's DACA executive order was unconstitutional (the ultimate irony since DACA was CREATED by EO) and thus DACA is still the rule and there is no need to rush because no one is being blocked.

Sam Zell: Says market is showing irrational exuberance and that he is mostly in cash. That is MUCH easier for a billionaire to say and do because he can afford to miss out on 30% upside and be no worse off. Those trying to build wealth need to get as much of the fat of the moves as they can.

Bonds: 2.533 vs 2.55% 10 year

EUR/USD: 1.2209. Euro continues rising against dollar

USD/JPY: 110.69. Dollar bounces from Monday, but still lower overall

Oil: 64.00, -0.30

Gold: 1333.20, -1.70

Futures are off the highs but holding in the morning range. Just another day upside right? No reason to change what we are doing because the market certainly is not changing right now. Have new plays to look at that are not extended, will see if this early gap higher does indeed hold.

Jon Johnson, Chief Market Strategist
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