Futures vs FV: SP -14.96; DJ -105.12; NASDAQ -47.44
Futures started lower and have remained lower all morning though a very slight rise from the opening low. Four days upside, near resistance, the 'good' news is getting worn thin (trade, Fed). Worn thing particularly in light of the retail numbers released today.
After starting with a strong Black Friday and accompanying weekend, stores such as Macy's say that the consumer dried up. M, LB, KSS reported sales less than expected, LB off 6%. M stock is the downside leader, off 18% in the premarket. Upside: TGT (5.75%), BBBY raising its full year guidance (even with lower same store sales).
Travel is also weak: AAL cuts its 2019 outlook.
Ford: cutting thousands of jobs in Europe in a major restructuring. Europe going strong as well. Not.
So, the economy is not as strong. Gee, we have only harped on that during the past few months as the FOMC hiked rates. We noted a slowdown starting in the summer, talked about it, said it was a normal ebb in an expansion. But then the Fed kept hiking and Powell destroyed confidence with his 'hike past neutral regardless' October comments. That turned a normal slowdown into another threat of a Fed-induced recession. Now the Fed is all dovish but likely, as usual, too late.
Powell does speak today, once more attempting to tap dance for the markets. BUT, they are sitting on a 4-day rise from Friday when Powell did the first dance. Likely won't be nearly as dramatic a response this time.
Indeed, Fed Brinker spoke today saying that economic growth continues but at a slower pace. No kidding brainiac. The question is the pace of slowing and whether that will outstrip the 'continuing growth' Brinker sees. It is not a snapshot of the economy, but trends. Again, a normal slowdown in an expansion was turned into a serious slowdown by the Fed action. The trend is not up -- retailers just showed that -- despite the Fed's belief and the Fed citing the jobs report as 'proof' the economy is expanding. Incredible yes, given jobs lag. That is like a football team down by four TD's with 5 minutes left scoring a TD and saying 'see, they are still in it.'
Trade: China says progress was made on forced transfers. Much rejoicing. Yeah.
Upgrades: TWTR; BA
Bonds: 2.71 VS 2.712%
EUR/USD: 1.1523 vs 1.1554
USD/JPY: 108.17 VS 108.13
Oil: 51.80, -0.56
Gold: 1292.30, +0.30
OKAY, futures are off rather modestly, but after 4 upside days, nearing resistance, and a swath of not great economic stories this morning is triggering some profit taking. We have of course already banked quite a bit on this move. We will see how this early weakness is treated and if necessary take the rest off.
Jon Johnson, Chief Market Strategist
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