Thursday, May 09, 2019

Market Alert - Pre-Market

Futures vs FV: SP -33.53; DJ -169.33; NASDAQ -78.80

Futures continue to bombed lower, hitting new pre-market lows in an hour-long drop after rising from the early pre-market highs. They are trying to find a bottom the past 15 minutes. The selling is starting to crescendo as the trade negotiations/increased tariffs draw closer. That is the issue trumping all others -- yes, a weak pun.

The renewed worries renewed last night when Trump at a rally stated China 'broke the deal.' Regardless that being a true statement, it shows how improbable a deal ahead of the tariffs is. You know what? Did not Trump state he wanted the tariffs to be in place as an enforcement back up REGARDLESS of whether a deal was struck? Look back a few months; that was his position, and lo, he is playing it out.

Trade Deficit, April: -50.0B vs -51.2B expected vs -49.30B March.
While the overall deficit rose, the CHINA deficit was the lowest in 5 years.

PPI, April: 0.2 vs 0.2 exp vs 0.6 March
Core: 0.1 vs 0.2 vs 0.3 March. 2.4% year/year the slowest in 11 mos.
Final Core Demand: 2.4% year/year vs 2.4% prior

Smartphone sales: Q1 2019 -6+%, continuing the slide in demand the prior two years. This mirrors the SIA's call for a 13% decline in semiconductor demand in 2019. The global slowdown is a real thing, and you knew it was coming when just six months ago they were talking of 'global synchronized expansion' -- even as China was rolling over.

Earnings beasts: CAH; TTD; DIS; FOX; ROKU; FOSL; STMP(but very weak guidance); Tapestry (formerly COH)

Misses: WWW (TL, BL); ETSY (TL)

Upgrades: Hostess (Twinkies); RACE; MTCH

Downgrades: INTC, AEOS; JWN; ANF; W; ODP. Very retail-oriented outside of the INTC way late downgrade.

Bonds: 2.441% vs 2.485%

EUR/USD: 1.1194, +0.0003

USD/JPY: 109.76, -0.34

Oil: 61.73, -0.39

Gold: 1283.30, +1.90

Stocks are going to sell once again on the open, now looking at a fourth day down, the prior two and the start of this one pretty salty drops. The unknown of a 'new' trade war (when one has been ongoing for years) has investors running. It is tough trying to fix what a series of administrations and congresses screwed up. Unfortunately, the market pays for it.

The question is whether you chase the downside here or wait for a rebound. It will be tough entering downside on this gap, particularly DXD. We will see. Could be the day we get the rebound given the selloff leading into the Friday trade announcements and it might try to bounce some into it. THAT may be the entry point for some downside.

Jon Johnson, Chief Market Strategist

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