Tuesday, December 04, 2018

Market Alert - Pre-Market

Futures vs FV: SP -7.42; DJ -91.43; SP -31.38

Futures are well off the lows after starting with a significant drop. Steady though choppy recovery toward the open has cut the losses and shows a bid is still there, though after over a week of gains we will see if the move is a bit winded.

Bonds: The biggest story of the morning is the yield curve and whether the 2 year/10 year will hold an inversion. Monday the 2 and 5 year and 3 and 5 year yields inverted. Will today see a close with an inverted 2/10, considered a reliable recession indicator?

Some are getting caught up in the moment. On analyst on CNBC stated that "normally" he believes the "bond market people are geniuses but not today. Does it [bond market] really think a recession is coming? I don't think so." And there you have the reason people get killed in markets: they substitute their gut feelings and believes for what historically accurate indicators tell them. This fellow says the bond market is genius, then elevates his own views over that of what he calls genius. It is another form of the 'it's different this time' statement.

Thus, we wait and see if any 2 yr/10 yr inversion holds on the close.

AAPL: Downgraded again due to saturated market concerns. No kidding? I said that a year ago when it announced that $1,000 phone but put out the 8 a couple of months earlier? AAPL became too arrogant and was taught a marketing lesson then, and now it is learning another one about prices and market saturation.

Economy: Ross says the media is overblowing the economic slowdown. Whew. I was getting worried with that yield curve inversion . . .

EU: France delays the fuel tax that had people rioting in the streets.

An 'independent' EU court said the UK could cancel Brexit without getting another vote. So the people DON'T matter any longer in Europe. Suspected it but now it is confirmed.

Earnings beats: TOL; DG (TL); MOV (watches); HDS (Plumbing supplies); AZO (auto parts); RH (high priced furniture)

Guidance cuts: CRUS cuts Q3 due to slowing cell phone demand for its chips.

Bonds: 2.959% VS 2.979% 10 YEAR

EUR/USD: 1.1387 vs 1.1347

USD/JPY: 112.88 vs 113.63

Oil: 53.64, +0.69

Gold: 1244.50, +4.90

Okay, a bit of softer start as stocks try to digest the gains of the past week with the Monday surge on top. That is a lot to swallow in one session. So, we see if this starts the lateral rest/test that would work to refresh the yearend rally for a sprint to the New Year.

Jon Johnson, Chief Market Strategist

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