Futures vs FV: SP -13.62; DJ -133.37; NASDAQ -34.06
Nothing is ever status quo under the Trump administration. Over the weekend treasury secretary Mnuchin talked with 6 major bank CEO's to make sure they had sufficient liquidity. They all said they had. Then a letter stating the same was issued. That triggered the snowflake market from upside futures to downside to start another session. Also there are reports the President has discussed firing Powell. He is not the only one; many on Wall Street think Powell screwed up. The President was right about that one -- the Fed is turning a normal pause in an expansion into a bear market and recession.
Mnuchin is not done. He is to meet with the PPT (plunge protection team) today to see what needs to be done if anything re the markets.
Regardless, the market is set to open lower as the market is thrown more uncertainty and of course reacts negatively.
The talk on the financial stations is the economy is fine, fundamentals are great and it is just the market overreacting. Seriously? The market has it wrong this time. A gutsy call, some would say foolish. I know I am not smarter than markets. I know the Fed is not smarter than markets. I seriously doubt the anchors and guests on CNBC, Bloomberg, Fox Business are.
China: Its officials said over the weekend, and overshadowed by the Mnuchin story, that they are ready to resume negotiations to start January. I thought negotiations were ongoing . . . More to the point, China is cutting tariffs on 700 items in order to increase imports by $30T. THAT is some progress, BUT . . . the IP issue remains and will remain. China has to stop stealing.
Retail: WSJ reports retail sales are ending the year on a high note. Another story not getting much play given the major story today.
Bonds: 2.769% vs 2.788%
EUR/USD: .1414 vs 1.1367
Oil: 110.13 vs 111.21
Oil: 44.69, -0.90
Gold 1265.50, +7.40
Futures hit the lows -- thus far -- at 8:00ET and have recovered but just modestly toward the open. Definitely set to gap lower after they were solidly higher early session. Any Christmas to New Year's Santa rally is not going to be apparent at the open, but we will see if the market, in a pre-holiday cheer move, shakes it off. After all, the plunge protection team is meeting with the Treasury Secretary today. As Hans Gruber told Theo in 'Die Hard' as Theo said it would take a miracle to break the time lock on the Nakatomi safe, it's Christmas, the time of miracles.
Jon Johnson, Chief Market Strategist
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