Friday, October 26, 2018

Market Alert - Pre-Market

Futures vs FV: SP -41.47; DJ -235.55; NASDAQ -231.64

The afterhours earnings are punishing the gains from Thursday, and other earnings out this morning are no match. GDP was better than expected top line and that helped bounce stock futures off some really ugly lows, but not changing the morning trend.

GDP, Q3 first read: 3.5% vs 3.3% exp vs 4.2% Q2

Consumer spending: 4.0%. Accounts for 2.69% of the 3.5% gain.

Inventories: Added 2.07% to the total. Inventories rose at the fastest pace since 2105, and that boosts GDP.

Imports: subtracted 1.34% from the total because imports are not made in the USA. BUT, we buy a lot of imports when the consumer feels good. And looking at the +4% gain in consumption, it is safe to say the consumer felt good in Q3.

Capital Investment: +0.8% versus +8.7% Q2. Big disappointment.

Earnings beats: INTC; CMG; (BL); SNAP (but users fell).

Misses: AMZN (TL); GOOG (TL); CL (TL); MDO (TL, BL); EXPE (TL); MAT (TL, BL); WDC (TL)

Again, TONS of top line misses. We are back to that sorry game and that shows there is no growth the past quarter in sales.

Fed: Mester on CNBC makes the case that while the markets are lower there is no problem in the markets as buying and selling is taking place, no panic selloffs, etc.

BONDS: 3.019% vs 3.126%. Bonds rallying.

EUR/USD: 1.135 vs 1.1375. Dollar up some

USD/JPY: 112.08 vs 112.41. Down here.

Oil: 66.67, -0.66

Gold 1236.00, +3.60

Good GDP news did produce a lift in futures, but that just goes to show how down futures were before the better news. Of course that news lags and the Fed looks at lagging data and applies incorrect theories to it to extrapolate what it should do. Thus the Fed will make the wrong decisions and that is why the markets are worried. Elections are out there as well.

Stocks will open lower, trying to come back some, but much of the Thursday rebound from the WED selling will be burned away. Basically, the market is still in the selling mode, still trending lower, still trying to find something to start building on.

Jon Johnson, Chief Market Strategist

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