Monday, January 07, 2019

Market Alert - PreMarket

Futures vs FV: SP +2.26; DJ +49.84; NASDAQ +2.33

After the big Friday surge futures are flattish, not surprising after a big move. Definitely not getting sold off, just has the look of bids being retooled as market makers push prices a bit lower to get their inventory of stock back up. Overall that means that to start the week there is no challenge to the Friday reversal from the Thursday selloff. Of course, it is the 'rubber match' session, 1 big downside day, 1 big upside day -- today shows if the Friday move has any serious sellers or continues the relief move off the selloff lows.

Not much news this morning but a lot of news to come.

Trade: US/China trade meeting starts anew today. China says both sides want a deal. Some US news outlets say the stock market volatility may 'force' Trump into a trade deal, but if you look at the relative strength of the two sides, China holds the short stick. Xi's collapsing economy IS forcing him to the table. Wilbur Ross did not necessarily help matters (he is the Commerce Secretary) when he said that the US tariffs are pressuring China jobs and thus giving rise to social unrest.

China has sent its top economic official to the trade negotiations, something that was not expected.

Also not expected, the US just started today a new naval operation in the South China Sea. Obviously a show of strength, some hard-nosed negotation tactics, and of course the Chinese are said to be incensed by it. The games continue . . .

Fed: Chairman Powell speaks again this week after talking sweet to the markets Friday, managing to tap dance away from his October 'hike no matter what' commentary that helped trigger a massive stock selloff. Such confidence in the Fed! Can he reprise his 'I'm listening,' wise sage impression from Friday? Only the markets know.

Eight other Fed speakers are talking this week. The Minutes are also out from that last 'hike until something breaks' meeting. It will be interesting to see the commentary (if not grossly altered for public consumption) and how hawkish it was and thus how far the Fed has backtracked in the interim.

Upgrades: AMZN (target set to 1920, around 20%); GM

Bonds: 2.637% versus 2.668% 10 year

EUR/USD: 1.1453 vs 1.1398. Dollar struggles continue

USD/JPY: 108.28 vs 108.517

Oil: 49.04, +1.08

Gold: 1293.90, 8.10

Futures are bouncing some closer to the open as the sellers are not stepping in. Thus far very much just a soft open after a very strong move, and soft opens are not bad for the move in place, i.e. the Friday surge that looks to continue the relief move off the lows.

Jon Johnson, Chief Market Strategist

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