Futures vs FV: SP +1.23; DJ +7.08; NASD +7.42
Futures picked up steam around 8:00ET and continue moving higher, overcoming a much stronger than expected GDP report along the way.
GDP Q1, prelim: 3.2% vs 1.9% exp vs 2.2% Q4
PCE: 1.3% vs 1.8% prior
Prices: 0.9% vs 1.7% prior.
IP investment surges.
The usual commentary: will be revised lower, not sustainable, etc.
Also, the Fed is now in a box. Really? Growth with no inflation -- at least as the government measures it -- that is a very good box to be in. This notion you have to raise rates because of growth and inflation that MAY show up some day is the same one that the 1929 central bank used to crash the market and help precipitate the Great Depression. Idiocy, but it is hard to argue with history of the central bank. Powell is trying to change that by being a bit more proactive and ahead of the curve, but those rate hikes are still out there doing their damage. If this was a true 3.2% with those hikes there, it could have been 4+%.
Bonds and dollar: Weirdly, bond yields dropped as did the dollar on the stronger GDP number. Not believing it?
Earnings beats: AAL (BL); AMZN; F; INTC (weak guidance); MAT; SBUX
Misses: CVX (TL); XOM (TL, BL)
Downgrades: FDX; QRVO; WDC
China: Xi says he is committed to change, e.g. subsidies, IP rights. A subtle indication on the trade 'deal.' Remember, a delegation of 'top' US negotiators is on the way to China . . .
F: good earnings but the feds are opening a probe into whether it was involved in emissions tinkering.
Bonds: 2.50% vs 2.536%
EUR/USD: 1.115, +0.002
USD/JPY: 111.64, +0.02
Oil: 64.03, -1.18
Gold: 1285.00, +5.30
Futures are flat but that is not bad given the INTC guidance that is hammering some of the chip sector. Overall tech is working well this morning despite flat to lower futures as a result of INTC and its coattails.
Impressive strength, but STILL have to get through the resistance and make it stick. NASDAQ has tried but just can't quite get there. It is really showing resilience, however, in the face of some negative -- but also positive -- earnings results. It needs more than just playing footsie with the old highs.
Jon Johnson, Chief Market Strategist
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