Friday, November 30, 2018

Market Alert - Pre-Market

Futures vs FV: SP -0.84; DJ -31.84; NASDAQ +10.10

A second day of sluggish action was on tap as futures opened lower and sold off. Then Mr. Lighthizer from the administration stated he would be surprised of the Trump/Xi dinner did not result in a success. That jumped futures higher to trade closer to flat to slightly positive. To recap last night, we anticipate a second, even a third session of pause before the upside resumes.

Trade: The statement from the administration, and from one that saw the prospects of a deal slim, indicates that there is at least a framework to a deal in place heading into the Saturday dinner. What kind of a deal is the question with many opining it is perhaps simply a timeout on the implementation of more tariffs or even impacting some of the current tariffs. No one seems to believe anything major will happen. Remember, the US wants China to act grown up now and stop the process of stealing IP. This even as China still claims it is a poor country and in need of such theft. Here is the bottom line: China is a communist country and those have a very hard time producing new tech because the incentives are not there. Thus, just as the USSR, it expends most of its efforts on stealing tech. Getting it to stop means China must come up with a method for creating its own tech and that takes a long, long time if it is even possible under a communist regime. I posit it is not. THAT is the dilemma, the irreconcilable issue.

Fed: New York Pres John Williams echoes the chair and vice chair that the FFR is just below neutral.

Kashkari says rates should not increase when job creation is strong and inflation tame.

Earnings beats: HPQ, GME (but lowered its outlook); WDAY; VMW; AMBA; PANW

Misses: PVH (TL)

Upgrades: UA (WFC)

Downgrades: GS (BAC)

Bonds: 3.017% vs 3.032%

EUR/USD: 1.1355 vs 1.1387

USD/JPY: 113.51 vs 113.42

Oil: 50.61, -0.84

Gold: 1226.40, -4.00

Futures holding the recovery bounce to near flat, trading laterally the past hour. Sluggish but flat start, not a bad continued consolidation of the move up off the October low test. A good stair-step move keeps the yearend advance refreshed.

Jon Johnson, Chief Market Strategist

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