Market Alert - Pre-Market

Futures vs FV: SP +14.07; DJ +166.69; NASDAQ +43.13

Q4 starting with an upside gap. USMCA (US-Mexico-Canada-Agreement) is to replace NAFTA. US steel, aluminum tariffs to remain in effect for now. Deal mostly works with autos and of course there was the dairy issue with Canada. I am not sure just what small businesses outside of dairies got -- Canada still has that GST that makes US goods look so much more expensive in Canada than in the US. That is a 'shadow' tariff on US goods exported to Canada. There is a real problem that US goods look more expensive in Canada than in the US, and that 'perceived value' issue causes US small businesses to lose out. That kind of issue was not addressed. Gee, what a surprise. You know it was a con job when Wilbur Ross came on Fox Business, was asked what the deal did, and his first few minutes of comments were spent on crowing that NAFTA was gone. Not the 'great' parts of the new deal, but badmouthing the old deal. That is a red flag.


TSLA: Magical settlement after Mus rejected a settlement, saw his stock price implode Friday, had a change of heart. If this was an average person the SEC would have said 'sorry, you rejected the deal' and continue suing you to make an example. If you have $20M and can give up a token position while still remaining in control of your company, you have a deal! I am sure the common man in the US feels so much safer today than last week. Just look at the futures; all must be well!


Chips: Suffering through more downgrades as INTC is downgraded to underweight by Barclays.


Recession: Bloomberg reports that 2/3 of the US 'Business' economists predict a recession by 2020 end. Okay, I guess that means the economy is just fine through that time. When Reagan was President and the economy surged on his tax reform and regulation cuts the predictions were for massive inflation and crushing recession. And they . . . never came. If the growth foundations are based on reforms that unleash the US economy then the growth is not a 'sugar high' but lasting. It makes so much sense, but you have to realize that of those 2/3 of economists, most are Keynesian educated, meaning educated fools. Their theories are wrong so their predictions are wrong. Also, what kind of prediction is this: the old 'some day there will be a recession' prediction. Anyone can make that prediction, economist or not.


India: Nationalizes a 'shadow bank' that held $12.5B in debts. There are issues in the rest of the world economies . . .


OTHER MARKETS
Bonds: 2.074% vs 3.061%

EUR/USD: 1.1608 vs 1.1605

USD/JPY: 113.92 vs 113.67

Oil: 73.38, +0.13

Gold: 1195.40, -0.80


Futures gapped higher and have held that level pretty much the morning though they are off the highs. Gaps higher such as this are always problematic as they can sell later session. This one being the start of Q4 with new money coming in likely holds for the day.

We will see how stocks that have struggled into the end of Q3 hold support and if new money comes back to them OR the new money is focused on just a few areas as discussed this weekend. Today is important in seeing where the new money coming in is going, and that will show up in how those stocks testing support bounce or not.

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Jon Johnson, Chief Market Strategist
InvestmentHouse.com

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