Monday, May 06, 2019

Market Alert - Pre-Market

Futures vs FV: SP -48.94; DJ -490.95; NASDAQ -155.23

Futures are near the session lows, but they have been near the session lows all morning after gapping lower.

Trade: Right back on the front burner as the President tweets call into question a deal this Friday. Trump states the US is "not going to lose to Beijing anymore" as he says the tariffs will move from 10% to 25%.

The China initial response was that the meetings this week would possibly not be attended by China and of course Xi. Subsequently, however, China says it will attend.

Senator Schumer responded favorably to the President's stance, saying the US has to stay strong on these negotiations.

3.2% GDP, unemployment headline the lowest since 1969 -- if the US is not going to push hard against China on trade then when? Indeed, the President's 'demand' for a 1% rate cut appears to have been with this very step in mind.

Chinese markets: -7%. The irony: any mention of Trump's comments was scrubbed from the Chinese internet so no one there really knows why their markets are down so sharply.

Upgrades: DISH; DIS; FSLR; Fortune Brands

Downgrades: FOXA; EXPE; FIVE

Buffett: Berkshire annual shareholder meeting so of course CNBC is wall to wall Buffett. Buffett says stocks are "ridiculously low" if interest rates remain at these levels.

Bonds: 2.493% vs 2.530%

EUR/USD: 1.1181, -0.0019

USD/JPY: 110.92, -0.17

Oil: 61.47, -0.47

Gold: 1280.10, -1.20

Obviously stocks are set to 'struggle' at the open, just as breakouts were made or attempted to end last week. Of course, this was not the reason for a rejection of the breakouts we thought would happen, but regardless of the reason stocks will be repriced lower to start. If after the smoke clears (read the back and forth US/China jabs) a deal is still on the table, then stocks of course have an obvious ramp to recovery. We will see how good groups hold up such as software. We also said we were looking at AMZN on a test and it is doing that; still want to see the implied volatility die down a bit as well.

Jon Johnson, Chief Market Strategist

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