Futures vs F: SP -7.42; DJ -126.05; NASDAQ -27.76
Futures started lower and are trading in the same range all morning, on the downside swing to the bottom of the range as the open approaches.
Not many different stories out this morning, thus the same sluggish action seen to end last week.
Bonds: Lots of bond worry commentary again, though the bond market is closed. Calls that Powell should be unwinding the balance sheet and leaving rates as is versus hiking rates. More are saying the economy is slowing and the Fed is hiking into it. Historically not an uncommon event, but the results of such campaigns justify the worries. We have discussed the ebb and fellow of economic activity, saying we are in an ebbing period. The Fed, if too aggressive, can take a normal ebb period and turn it into something far worse. Thus, the worry.
China: Renews its statement that it is not worried about a trade war with the US. Nice words. Over the weekend China cut bank reserve requirements by 100BP, effectively adding $750B worth of yuan to the banks to aid in lending in its crashing economy. Pompeo is in China to discuss trade and the Chinese are being asses about it. Surprise.
Italy: stocks and bonds tanking after the EU rejects Italy's proposed budget.
Autos: More foreign makes are shifting manufacturing operations to the US to avoid the Trump tariff drag on their business.
Chips: Raymond James cuts profit estimates for the group, saying it is too early to call a bottom.
BONDS: 3.233% 10 year; Bond market closed for Columbus Day
EUR/USD: 1.1461 vs 1.152. Dollar rallying again.
USD/JPY: 113.39 vs 113.67
Oil: 73.24, -1.10
Gold: 1188.40, -17.20
Futures continue weakening into the open, down to the bottom of the morning range. The same issues dog the market today, but I like the lower open for the week versus a rebound that is shot down. This way there is a better opportunity to get the selling out of the system and set up that October test bottom for a Q4 rally.
Jon Johnson, Chief Market Strategist
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