Thursday, January 31, 2019

Market Alert - Pre-Market

Futures vs FV: SP +-2.70; DJ -121.86; NASDQ +30.59

Futures are mixed in the aftermath of the FOMC decision and more earnings.

Earnings: The market is looking at its best January since 1989 in the rebound from the December selloff. For the most part, however, earnings do not support the move. More stocks are missing than beating, and they are missing on the top line as sales contract in the economic slowing. A few big names are making tons of money: big banks (saved in the financial crisis), big tech (FB, GOOG), big retail (read AMZN), BA. Even MSFT, INTC are sputtering some.

Beats: FB, V, PYPL (but lower guidance)

Misses: DDP (TL); HSY (TL, BL); UPS (TL); MSFT (TL); QCOM (TL); TSLA (BL); WYNN (BL); GE (BL); BLK (BL)

The misses are a who's who of big time US companies.

Fed: There are two main questions. First, is the Fed on pause or is it done? Second, what does this mean for markets? A Fed that is now working on a case by case, day to day basis keeps a cloud over the markets. What about markets finding prices based upon markets? You know, capitalism, free enterprise? Our system now has 12 unelected people setting the parameters of our capitalism. I call that another -ism, i.e. communism. Why would a free system that rewards a person's skill, intellect, timing and guts then turn the keys over to a group of ivory tower 'never done that' self-proclaimed experts?

Sure, the markets are placated near term, but there will be more showdowns ahead, not based on what the economics are markets are doing, but what the Fed believes. As it utilizes economic theories disproved by actual history, that is a certainty. At least, as Art Cashin commented today, it is "pretty obvious" the Fed is moving to the market's whims.

Trade: Trump tweets there is no final deal until he meets in person with Xi on the stickier issues. Surprise! That meeting is said to be sometime in February after Trump meets with NKorea. A trade deal deferred . . .

EU: Italy falls into an official recession. Brexit still a mess, but if the UK is smart it will pass a good deal for the UK then tell the EU 'this is this.' The EU will capitulate on the eve of Brexit.

Jobless claims: Of course they jumped over the shutdown.
253K vs 220K exp vs 200K prior (from 199K)

Question: should federal employees receive unemployment? Just asking before the hate mail floods in.

Bonds: 2.67% vs 2.679%

EUR/USD: 1.149 vs 1.4927

USD/JPY: 108.55 vs 108.96

Oil: 54.36, _0.13

Gold: 1329.10, +3.60

Futures are off the highs the past hour as the trade news filtered out. Nothing major to the downside, and quite frankly normal after the gorge upside WED. A bit of a pullback after such a move is not a bad thing at all as it lets the froth dissipate and then some bids to return.

Jon Johnson, Chief Market Strategist

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