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Tuesday, May 8, 2018

Market Alert - Pre-Market

Futures vs FV: SP -2.98; DJ -10.37; NADSAQ -3.92

Futures lower all morning but on a steady recovery toward the open such that the momentum is actually higher. This is a good lower open, the kind of soft open that in an upswing leads to buying. It has already led to buying pre-market.

The Iran deal decision is at 2:00ET from what is reported. Supposedly Friday Pompeo told EU allies that the US was basically going to walk on any further negotiation attempts and pull out. Europe wants us in the deal purportedly because of the intrusive oversight of Iran's nuclear program is something that would be lost, but just what kind of information is being provided? How intrusive is it with reports of wholesale avoidance? The truth: Europe wants to sell things to Iran to get paid in oil money. Germany, France and others that lobbied Trump to stay in the deal have big companies with huge contracts with Iran, and if the US pulls out, that threatens those contracts. Business is good, but blind business is not good.

In any event, oil is off today on the day of the announcement after running through 70/bbl for the first time in 3 years. Sell on the news? Saw some of that Monday with the oil stocks surging out of the gates then fading that move big time.

China: Trump is on the phone with Xi this morning and says good things will come of trade with China. That seems to help as well as Trump turns to the next chapter in his book about softening the talk a bit -- before you hit them with a renewed attack.

M&A: CMCSA is to bid for FOXA entertainment assets to try and steal the deal DIS has with FOXA.

Takeda is buying Shire. Gee, that was not telegraphed.

Fed/Powell: Powell fairly bluntly refuted the notion some floated Friday that the jobs report should make the Fed reconsider three rate hikes this year. "Markets should not be surprised by our actions if the economy evolves in line with expectations." In other words, if the economic activity holds up, the Fed is on for the full quota of hikes in 2018. At least.

Earnings beats: DF; Z; AMC

Misses: DISH (TL); HRZ (BL); MOS (BL)

Bonds: 2.963% vs 2.952%. Wow, bonds sold fairly aggressively from the test of resistance.

EUR/USD: 1.1864 vs 1.1922

USD/JPY: 109.10 vs 109.08

Oil: 70.08, -0.85. Selling some on the recent rally gains

Gold: 1311.50, -2.60

Futures steadily recovered off the morning lows in a decent sign for the 2-day move upside to catch its breath and continue. We want to see some stocks that are up 4-5 days and are at a prior level to take a short 1-2-3 break. Okay, that is the future, but with DJ30, SP500, SP400 at resistance, NASDAQ and RUTX as well at the April lower highs, that is a possibility. Others can step up, however, during that period and we are going to be looking at those.
Jon Johnson, Chief Market Strategist
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