Futures vs FV: SP 11.64; DJ +127.98; NASDA +24.25
Futures started the session flat then rallied at 5:30ET and have held the gains since.
Trade: Still the front burner issue. Administration basically black lists Huawei and its affiliates as threats to the US national security. About time. Huawei's warnings the US will fall behind in 5G and that the US actions could be 'violations of law' are laughable. Violations of law as opposed to Huawei hardwiring spy infrastructure in products supplied to US companies? An alcoholic has to admit it is an alcoholic before recovery is possible. It is easy to see relations with China (and Chinese companies ARE China) have a long way to go. Trade deal? That is a good one!
Chinese yuan: down for a twelfth straight session, a record in recent times. China is at it again, i.e. being an upstanding member of the WTO, not manipulating its currency as it promised . . .
World trade: Maersk sees a "significant slowdown" in Mediterranean shipping.
Housing Starts, April: +5.7% vs 5.4% expected
Permits: 0.6% vs 1.7% expected
Philly Fed, May: 16.6 vs 10.0 expected vs 8.5 April
Upgrades: M; KBH; PFE
Earnings beats: CSCO; DDS (BL)
Misses: WMT (TL -- but online revenues continued to grow)
M&A: KSS approaching AtHome Group
Bonds: 2.394% vs 2.371%. 3 mo/10 year still inverted and 3 mo is over 2 year that is over the 5 year yield.
EUR/USD: 1.1202, +0.03
USD/JPY: 109.67, +0.11
Oil: 62.85, +0.83
Gold: 1293.40, -3.50
Futures have backed off from the post-US economic data bump higher, but still holding solid gains. As of the open, the 2-day bounce is not dead. The stock indices will further test the support broken on Monday and we will see if the support turns resistance or if the indices can beat the odds and the distribution sessions and continue higher. If they do, hopefully they will show better internals, e.g. volume, breadth. That said, we are not expecting it to hold, but our expectations of course are subjugated to what the market does.
Jon Johnson, Chief Market Strategist
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