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Friday, April 6, 2018

Market Alert - Pre-Market

Futures vs FV: SP -22.74; DJ -236.22; NASDAQ -70.09

Futures were down on the Trump tariff proposal increase of $100B. China threatened to retaliate immediately if he pursued it, and said they could not negotiate in this climate. Bluff on bluff.

Interestingly, the yuan is off 300 pips overnight since Trump floated out the extra $100B. Devaluing the yuan is one area the Chinese can respond . . .

Jobs: 103K vs 178K exp vs 320 prior (from 287K)

Unemployment: 4.1% vs 4.0% vs 4.1% prior

Wages: 0.3% vs 0.2% vs 0.1% prior. 2.7% year/year

**159K were unable to work due to weather. That makes up the miss.

Workweek: steady at 34.5 hours

Participation: 62.9%

Labor Force: -158K vs +806K prior

Manufacturing: 22K

Healthcare: 22K

Professional/Business: 33K

Retail: -4K

Construction: -15K

AMZN: More Trump talk, saying he wants to 'level the playing field.'

Powell: Speaks at 1:30ET discussing the economic outlook. Some speculate that the Fed will have to be more dovish given the jobs report, but the weather factor likely means the Fed will not be that worried. February up, March lower, overall better.

Economy: I wrote about a slow patch in the economy and this is what we are seeing. The stock market, as it does, showed these issues with that February drop and the current attempt at finding a bottom. As I have noted, the resolution of this current pattern is dependent upon the economy. In other words, how this pattern resolves, up or down, will tell the next 6 months or more re the economy.

As of yet, the market has not resolved the pattern. Weak bounce on internals and so-so leadership is getting thrown back -- some -- at the open. Futures are well, well off their lows. They are still down significantly and can still disrupt the bottom pattern attempt, but some did buy yet another tariff related dip.

An interesting aspect of the blow back on the tariff proposals. Many in apparel and other sectors are saying general tariffs are bad, that they should focus on the areas where harm is being done. But how do you bring pressure on China when it requires the submission of IP in order to do business there? There is no 'target' for that -- it covers ALL business. The talking points are trotted out and swallowed whole by the financial station drones without questioning the lack of association with reality.

Bonds: 2.816% vs 2.812%

EUR/USD: 1.222 vs 1.2247

USD/JPY: 107.38 vs 107.13

Oil: 63.13, -0.41

Gold: 1332.80, +3.80

Futures remain holding a bounce off the lows but have stalled in their upward movement. Still, the action shows the market is not just rolling over and shriveling up. That means we may very well get some buying off of this before the session is over.

Jon Johnson, Chief Market Strategist
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