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Tuesday, June 12, 2018

Market Alert - Pre-Market

Futures vs FV: SP +4.50; DJ +37.69; NASDAQ +12.52

Futures on the rise toward the bell after a dip to a low at 6:00ET. The NK/US summit outcome was less than a market mover initially as there was no major announcement that NK would denuclearize in a year. Of course that was unrealistic, and as the letter agreement and other aspects soak in, futures are moving higher. Not surging, but moving back up. Consider that a year ago there were threats of war with NK, so yes, this is a better outcome and naturally anticlimactic. It is not VE or VJ day, after all.

Basically NK agrees to drop the nukes but it is very general (of course), the US will stop war games with SKorea, no sanctions dropped. Now the details process starts and it will take time. China is behind this whole process (as Trump and Xi no doubt have discussed in their meetings), and thus this is a done deal all but the details. These kind of events happen when the US demonstrates resolve in the face of other countries' resolve. Deals are made when that situation exists; conflicts become a possibility when there is acquiescence. History shows this time and again. Okay, enough soap box.

CPI, May: 0.2 vs 0.3 exp vs 0.2 prior. 2.8% year/year (highest since 12/2011)

Core: 0.2 vs 0.2 exp vs 0.1 prior. 2.2% year/year

Real Wages: 0.1%, 0.0% year/year

Medical care 0.2%. Prescription drugs 1.4%. Hospitals 0.5%
Medical care index: 2.4% year/year

New vehicles 0.3%
Education higher

Summary: Prices themselves are rising versus just the 'silent' inflation of providing less product for the same price. Now they are charging more for less product as well.

Small Business Sentiment: Highest in 34 years

ECB: Now the market will turn attention to the ECB meeting this week where it in theory will discuss ending QE in 2019. Or someday.

Bonds: 2.977% vs 2.952%. Bonds fade from the bounce, yields rise

EUR/USD: 1.1794 vs 1.1777

USD/JPY: 110.28 vs 110.17

Oil: 66.07, -0.06

Gold: 1299.00, -4.20

Futures are back at the Monday afterhours recovery level, putting them roughly on par with the market position just before stocks fell off at the end of Monday's session.

RUTX taking a pause. NASDAQ and SOX have slowed the upside, likely taking a pause. These were the leaders higher and a rest is fine. Now it is up to SP500, DJ30, SP400 to step it up. They are showing signs just as NASDAQ and SOX did before they followed RUTX. Time to start delivering and we will watch CLF, DE, CAT, HON et al to see if they can deliver on good patterns.

Jon Johnson, Chief Market Strategist
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