Monday, April 29, 2019

Market Alert - Pre-Market

Futures vs FV: SP -0.08; DJ -10.33; NASD -4.43

Flattish open after a strong end to last week, somewhat normal but in no way suggesting selling. A soft open after a strong finish remains bullish.

The data helps. Even with a stronger GDP read Friday (3.2%), today the spending and income numbers show prices remain subdued, at least according to the government indicators.

Consumer Income, March: 0.1 vs 0.4% exp vs 0.2% February

Spending, March: 0.9% vs 0.8 exp vs 0.1 Feb. That is the biggest jump since August 2009

PCE Core: 0.1 vs 0.1 prior. 1.6% year/year, lowest since 1/2018.

The pricing remains weaker in the light of stronger growth. The Fed is getting an easier ride and Powell looks quite sensible and smart, even if the President and all his men were hounding him about rates.

Big week of data, some already out as seen. FOMC, ISM, jobs, and lots and lots of earnings with GOOG out after the Monday close.

Upgrades: TGT; AAL; DIS; CL; AAPL

Downgrades: CVS; DB; OXY; AXP

M&A: APC reopening negotiations with OXY. GDI being sold to a unit of IR.

Trade: Mnuchin says the trade talks are in the "final laps." Talking in generalities, just as has been the case

BA: Revealed that BA did not tell LUV and other airlines the safety light that was on prior 737 was not turned on as it was an option. Okay, so there is this safety light that has been on all prior models. It is not that it had a place for it and the light was not there. No, it was there but no one told the pilots it was not activated, was dead. That is a problem. Was it BA, the airlines that bought the plane not telling the pilots, both, others? Not a good scenario. Hello, FAA? Where were you as well?

Bonds: 2.516% vs 2.50% 10 year

EUR/USD: 1.1151, +0.0003

USD/JPY: 111.73, +0.17

Oil: 63.17, -0.13

Gold: 1285.10, -3.70

Futures are mushy. A mushy Monday morning. Again, after a strong finish to last week, nothing nefarious at all. No news to initiate selling as indeed the market looks to GOOG earnings after the close and AAPL Tuesday after the close. The market is looking to those as further catalysts. Whether they are remains to be seen, but the sellers are not hitting the market in advance.

Still the same issues, e.g. SP500, NASDAQ at resistance, trying to break through, not doing so yet. That is the next 'proof' for the market rally. At some point this rally has to test a bit, and the prior highs are a logical point. We are watching to see what kind of entries we can get in this context. Would love to see that short test but outside of SOX, not occurring just yet.

Jon Johnson, Chief Market Strategist

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