Friday, February 01, 2019

Market Alert - Pre-Market

Futures vs FV: SP +4.60; DJ +63.33; NASD -35.09

Futures trended lower all morning until the jobs report. That JR actually moved the market as it came in much stronger than expected but was 'balanced' by December written down to 222K from 312K. Stocks rallied, flipping SP positive, moving DJ30 up from flat, and helping NASDAQ slice about half its AMZN-related losses.

Fed: It helped that James Bullard, a voting member, was on CNBC. He indicated he was pleased with the rate level and that the Fed was now at a point where there were no rate hikes 'penciled in,' that the Fed had no presumption one way or the other regarding rates.

Bullard noted the rest of the world (EU, Japan) had negative rates and growth issues while the US was 'normalized' at 2.25% to 2.5% and had ongoing growth. He said that acted as a buffer of sorts for the US not having to do anything.

What Bullard DID NOT say that was SCREAMING out at this time of many in the US pushing socialism, indeed some cases communism, is that the REASON the US has growth and could let rates rise is because the US once again adopted pro-growth strategies and policies in 2017. That is the difference. Another real world, live example of what capitalism does versus the socialism of the EU, Japan, Venezuela or the totalitarianism of Saudi Arabia, Russia and . . . China. I know everyone thinks China is so strong. China could be a monster if it was free enterprise. As it is, it chooses communism and a crappy economy that has to steal to 'advance.'

Yet, you have people such as senator Warren chiding Howard Shultz, born dirt poor, who saw the opportunity with Starbucks and after years was able to convince the original owners it could be big. Even then they sold out to him because they didn't see it. He had nothing but intelligence AND a system that would allow him to be great and he made it. Warren calls him a freeloader. SERIOUSLY?

But, I digress.

Jobs: 304K vs 160K exp vs 222K Dec (from 312K)

Unemployment: 4.0% vs 3.9%. That is to be expected.

Wages: 0.1% vs 0.3% exp. 3.2% year/year, not bad

Participation: 63.2%. Nice

Average week: 34.5 vs 34.4 exp vs 34.5 prior. Did not drop during shutdown.

Govt says limited shutdown impact as Federal workers will get back pay. Makes sense.

Leisure: 74K
Construction: 53K
Healthcare: 42K
Retail: 21k

Trade: No deal for now. Waiting on Trump/Xi meeting

Earnings beats: AMZN; MRK; CI; HON; YUMC; CY; DECK; SYMC

Futures are off the lows but stumbling some again as the bell approaches. First day of February but Friday. Some money perhaps, likely more on Monday. Today could be another day digesting the upside, but bids likely return.

Jon Johnson, Chief Market Strategist

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