Futures vs FV: SP -6.3; DJ -33.09; NASD -28.40
Volatility is here. Still. Futures were lower and heading lower then at 8:50 Trump tweeted China said it was sending the vice premiere to the US to 'make a deal.' Futures turned positive momentarily, but the wariness returned and futures faded. Negative again, but well off the morning lows.
Perhaps understandably cautious given the tweet comes as stocks were set to lose for a third session. Also understandable is the frustration with the Administration after the Chinese reneged on the major aspects of the deal they agreed to and made the US negotiators so positive. The administration did the right thing: they do not negotiate fairly, don't stick to the deals made, yet have to be able to 'save face.' The mood in the US on both sides of the aisle was 'forget them,' so to speak. Now we see if the President's tweet was for real or not. Companies have had a year to get out of China; hope they did it.
China: Exports are well, well below expectations, falling 2.7%, belying the growth in the economy supposedly occurring as a result of the massive credit stimulus.
New Zealand: Unexpectedly cuts interest rates.
Bitcoin: $41M stolen by hackers. I thought this was supposedly foolproof, that blockchain could not be broken. Yes, and the Titanic was unsinkable. Once again we marvel at our own technology and cleverness just to be shown we are still not so smart, not so clever.
Earnings beats: MCK; ODP (TL); WEN; EA; MTCH; QRVO; PZZA
Misses: TRIP (TL); S (BL)
Upgrades: MOS; LC
Downgrades: X; MYL
Bonds: 2.44% vs 2.457%
EUR/USD: 1.1199, +0.0009
USD/JPY: 110.12, -0.12
Oil: 61.67, +0.27
Gold: 1292,30, +6.70
Futures are bouncing around but after popping positive are again solidly negative. Well off the lows, but the market is adopting something of a Missouri 'show me' stance given the back and forth on the trade 'deal.' Basically, we are back to waiting and seeing if a deal comes in the 'new' paradigm of tariffs ready to go into action if no deal is made. Now tell me, how is that different from where we were before outside the huff, bluster, and puffery of those involved in the negotiations.
Perhaps the tweet will allow the stocks in good patterns to hold and ride out the volatility and then we see that Friday there is no deal, the tariffs go into effect, but . . . after all this, the sun will rise again and the US will be fine. So what if we buy less junk from China? So what if some big multinationals who should not have given away their IP and given our jobs to China are hurt? Perhaps some other very deserving smaller companies will FINALLY gain a bit of a competitive edge after having it all stripped away under the Bush and Obama administrations. After all, don't we want domestic companies that are focused on the US, US consumers and US workers to succeed?
But, I digress. There will be more volatility today. Just because the President tweeted doesn't make it so. Watching how stocks such as UCTT, AMZN, LRCX, FB, TWTR, COUP (WDAY, CRM etc -- all software) hold up.
Jon Johnson, Chief Market Strategist
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