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Wednesday, May 16, 2018

Market Alert - Pre-Market

Futures vs FV: SP -2.35; DJ -36.41; NASDAQ +1.71

Futures range-trading all morning in a mostly negative range though NASDAQ is more or less flat. Not a bad start at all given the pullback, the doji action Tuesday. The question is whether the bids return today.

Housing Starts, April: -3.7% vs -1.4% exp vs _3.6% March (from 1.9%)

Permits: -1.8%

The key here: again there are very nice positive revisions to the prior data, showing the soft patch is ending. Economists never catch turns. They are late to rein in their bullishness and are slow to catch up to recoveries. Always. That is what is happening now.

Mortgage apps: Hit a 10 year low. Gee, what a surprise as rates spike from absurdly low levels.

Retail: Generally higher on M beat in earnings, SSS. But the rub: 2% of the 4.2% was an accounting change. Another chunk was from the friends and family sale that was moved up this year. So, 1.7% is what the real increase is. That is what you call quite a difference. Good headlines, however, and algos read the headlines and trade accordingly, and thus retailers are bid higher.

Industrial Production, April: 0.7% vs 0.6 exp vs 0.7 March (from 0.5)

Capacity: 78.0 vs 77.6 March (from 78.01). That makes April the highest since 3/2015.

Again, the revisions are not bad though capacity was written lower.

EU: First GDP drop in three years

NKorea: Diplomat says if the US continues trying to back NK into a corner it would not discuss nuclear disarmament, will end meetings before they start. Also had some comments about Bolton's statements. Reports on the ground, however, say the summit is going to happen, NK is just doing its best Trump imitation regarding expectations ahead of a meeting.

MU: Upgraded at RBC, up about 1.50 pre-market.

Bonds: 3.059% vs 3.069%. Holding over 3%

EUR/USD: 1.1769 vs 1.1827. Dollar continues its surge.

USD/JPY: 110.05 vs 110.31

Oil: 71.04, -0.27

Gold 1286.50, -3.80

Futures are on an upswing in the range as the bell approaches. After a modest pullback (when you average in both Monday and Tuesday) you have a decent setup, but it might take a third session and make that 1-2-3 pullback we really like in uptrends. Watching how the bids return on leaders such as NOW, DATA, ULTI and the like. HD will be interesting as well, trying to bounce just under $1 pre-market.

Jon Johnson, Chief Market Strategist
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