Market Alert - Pre-Market

Futures vs FV: SP +1.67; DJ -10.28; NASDAQ +7.06

Dow futures were -105 ahead of the morning data, but when the Personal Income, Spending, and PCE data hit the futures started to recover. Futures looked ready to start a third day of selling, and they may still do that, but the price data appears not to support the notion of four rate hikes. Three okay. Four no go and a market selloff. That appears to be the breakdown.

Personal Income: 0.4 vs 0.2 exp vs 0.4 prior

Spending: 0.2 vs 0.2 vs 0.4 prior

Real spending: -0.1 vs +0.2 prior


PCE: 0.4% vs 0.4 exp vs 0.1 prior. 1.7% yr/yr

Core: 0.3 vs 0.3 exp vs 0.2 prior. 1.5% yr/yr


Earnings beats: BBY; KSS; BID; CRM; BOX; LB

Misses: MNST (TB); WPP


Still to come at 10:00ET: ISM, Construction spending, Michigan Sentiment


At 11:00, the White House is going to make an announcement on tariffs, and it is expected to announce 'stiff' tariffs on aluminum and steel. You know, I have to say, we cannot use Chinese aluminum in many applications. The thicker sheets are not as malleable and crack when bent into shapes. It is hard to find quality aluminum because of the Chinese cheap AL dumped on everyone. Thus our products are not as good as a result. Food for thought before some complain about protectionism. Do we want a lot of cheap crap to go into our products and indeed limit our products, or quality materials more readily available? Again, food for thought.


OTHER MARKETS
Bonds: 2.837% vs 2.875%

EUR/USD: 1.2174 vs 1.2185. Dollar a bit stronger.

USD/JPY: 106.83 vs 106.73. Ticking higher against yen

Oil: 61.19, -0.45

Gold: 1307.00, -10.90


So maybe it is all about interest rates. Certainly that is part of it. The market fears an active Fed in terms of rate hikes because the Fed's history in crashing markets.

Thus, the 'tame' inflation data is allowing futures to recover. Not a surge higher, but better than they were. As noted last night, NASDAQ, SOX are in position to bounce after what in other circumstances would be a normal pullback. SP500, DJ30 are at the lick log at the 50 day EMA. RUTX and SP400 are selling off. It will be up to the NASDAQ, SOX and large caps to make a difference.

We will see if there is a continued recovery into the bell and first hour. At that point and then at midmorning the indices will receive their gut checks. Of course, then again at mid-afternoon.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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