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Thursday, July 12, 2018

Market Alert - Pre-Market

Futures vs FV: SP +13.38; DJ +200.55; NASDAQ +32.52

After a day of 'bad legs' (Tour de France reference) in the stock market as 'trade war fears' predominated, now 'trade war fears subside' according to many news sources. What changed? The date on the calendar. Nothing else. For now the half lives of 'trade war fears' is still shrinking.

Futures are holding near session highs first hit 3 hours back, still trending higher overall versus a stagnant gap upside. This is always a better scenario, but the gap higher still gives sellers something to shoot at.

After a move to the prior highs in June, NASDAQ, SP400, RUTX faded back to test. Today it looks as if they are already gearing up for a move back to take on those prior highs. Again, we will see how the bids hold.

CPI, June: 0.1% vs 0.2% expected. 2.8% prior. Higher was 12/2011 at 3.0%.

Core: 0.2%. 2.3% year/year vs 2.2% prior. Matches 1/2017 but to get higher have to go to 9/2008 at 2.5%.

Average Hourly Wages: 0.0 for a second month. Prices rising, wages not. Great! The worst of all worlds for the average citizen!

COST: June sales +9.7% versus 6.9% expected. Okay, this is the old did you sell more in goods or was the gain because of increased prices (read inflation)? This is a big gain so not all would be inflation, but you can bet some is. I was shopping on AMZN for items I have purchased before. HP printer ink is an example. I paid $51 and change last year. This hear the same printer set is $64. 25% increase. Tariffs? Ink costs? Wage increases (nope)?

NFLX: Downgraded by UBS on valuation. Well, UBS better downgrade just about every leadership stock if that is its metric.

Bonds: 2.862% vs 2.853%

EUR/USD: 1.1672 VS 1.16762

USD/JPY: 112.46 VS 112.093

Oil: 71.17, +0.79

Gold: 1245.90, +1.50

Futures are shuffling around at the pre-market highs a day after the trade fears dominated and were blamed for the WED selling. We will see how the gap holds and what decent entries are available once the initial move settles in.

Jon Johnson, Chief Market Strategist

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