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Thursday, September 13, 2018

Market Alert - Pre-Market

Futures vs FV: SP +8.73; DJ +104.08; NASDAQ +36.44

After a sluggish WED on AAPL product release day, futures are solidly higher, gapping modestly upside early and then trending steadily higher toward the US opening bell. Asia led higher and the other world markets followed. Finally a bit of a bounce in Asia, eh?

CPI, August: 0.2% vs 0.2 exp vs 0.2 July. 2.7% yr/yr vs 2.8 exp. Compare with PPI at +2.9% -- producer prices are rising faster than CPI, meaning a profits squeeze. There are already predictions of declining profits for 2019, and this is some evidence of that theory being correct.

Core CPI: 0.1 vs 0.2 exp vs 0.2 prior. 2.2% year/year vs 2.4 exp.

WSJ: Reports real wages are up solidly while poverty rates are down to levels not seen since 1972. This after poverty levels spiked from 2009 to 2014. I often talk about real time textbook examples of economics, e.g. Venezuela as another example of socialism 'nirvana,' in utter collapse. This new data compilation shows how the big government, high regulation, high taxation, market control policies of the Obama administration are clearly a drag on economics, wages, and standard of living. Removal of even some of the regulation, cutting tax rates, and giving businesses and people more control of their spending and the results to the upside are almost immediate. Cause and effect as the Frenchman on 'The Matrix Reloaded' would say.

AAPL: GS cuts profit forecast

Fed: Says it is possibly being too successful at beating unemployment. Oh come on. 95+M working age people out of the workforce, retirement age people still having to work at Wal-Mart to survive and you say you beat unemployment? As I discussed last week after the jobs report, we are PAYING PEOPLE NOT TO WORK. THAT is the issue. The Fed has not beat unemployment: we are PAYING TO HAVE unemployment.

ECB: Cuts EU outlook officially. Says QE to end by 2019, Rates unchanged until end of summer 2019.

BONDS: 2.95% vs 2.979%

EUR/USD: 1.1675 vs 1.1604.

USD/JPY: 111.41 vs 111.59

Oil: 69.54, -0.83

Gold: 1214.70, +3.80

Okay, a positive open with AAPL and others rebounding. A bounce, a pause, and now a resumption. We will see if it holds but we like the action and will look to add positions.

Jon Johnson, Chief Market Strategist

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