Futures vs FV: SP +1.15; DJ +27.37; NASDAQ +6.91
Futures have recovered to positive given a surge upside the past hour. Futures opened lower and traded below fair value until this ramp.
Great news? Not really. The economic data remains so-so. Trade news is limited and what is out there continues to be reports that Trump will throw all of the careful maneuvering of China with the tariffs, etc. in order to push a market rally. Well, if all Trump gets is more purchases in dollar amounts, then the market response will be muted.
As for China, one economist says its GDP drops to 2% in the coming decade as its growth curve necessarily flattens. Also, other countries are taking jobs as their labor is cheaper.
Trade Deficit: Hits an all-time high on goods with China despite tariffs. I have said it so many times before: when the US economy is good, we buy a lot of domestic and foreign goods.
Interesting point: Prices for 40 foot container costs for shipments from China to US have dropped dramatically.
In discussing deficits on CNBC, Art Laffer made an interesting comment refuting a democrat now complaining about deficits. You have to look at the cost of borrowing AND what you do with the money. Is it used for improving the investment and growth climate in the US or is it used to pay people not to work, etc.?
ADP jobs, Feb: 183K vs 175K exp vs 300K prior (from 213K).
Mortgage applications: -2.5% vs +5.3% prior. After two weeks upside, they are down again as rates bounce back
Earnings beats: ANF; DLTR; URBN; BJ; ROST; AMBA
Misses: THOR (TL, BL); NIO
Downgrades: GE; TRIP
Transports: More talk about how they are lagging and presaging a decline.
Have you noticed how now CNBC.COM is almost identical to Bloomberg.com? Just saying.
Bonds: 2.715% vs 2.715%
USD/JPY: 111.80 vs 111.88
EUR/USD: 1.1303 vs 1.1307
Oil: 56.01, -0.55
Gold; 1285.80, +1.10
Stocks certainly have caught a bid over the past hour, pushing futures decently positive from negative. The indices remain just below resistance but not selling off. FB, GOOG started upside, other big cap techs have rallied and some are testing, setting up to help push again. Thus far the lack of selling has allowed stocks to test, rest and then push higher again. We will see if that continues, but also watching software as they are undergoing selling; will this group calm down, hold near support? Other groups are holding up, so for now the bias remains upside with a question mark or two.
Jon Johnson, Chief Market Strategist
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