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Afternoon Note

Market Focuses on News

By Charles Payne, CEO & Principal Analyst
4/12/2018 2:01 PM
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Earnings got the market going along with another decline for initial jobless claims and the major indices have been building since the opening bell. 

Initial claims were down 9,000 to 233,000 from the unrevised 242,000 in the prior week.  The more important reading, the 4-week moving average was up 1, 750 to 230,000 from an unrevised 228,250.

The advance number for the week ending March 31 was 1,871,000, an increase of 53,000 from the previous week's revised level of 1,818,000. The 4-week moving average was 1,850,250, a decrease of 1,500 from the previous week's revised average. This is the lowest level for this average since January 5, 1974 when it was 1,838,500.

The intra-day bump in the market came from news that President Trump is ready to reconsider the Trans Pacific Partnership (TPP), and the White House sees a new NAFTA deal coming very soon.  However, the president is no rush on NAFTA and said, “there is no timeline” to signing a deal and “We can negotiate forever.”  Trump believes that no company will invest a billion to build a plant in Mexico while NAFTA is in flux, making his negotiating that much stronger.

On the economic front, Export prices rose 0.3% in March, led by strong agriculture pricing.  Agricultural prices were up 3.4%.   Higher prices for soybeans and wheat were the main contributors, increasing 7.8% and 8.0%, respectively.  Excluding agriculture, export prices were down 0.1%.  Year over year, export prices rose 3.4% matching the previous year twelve-month basis.  Excluding agriculture, export prices were up 3.2 on a yearly comparison. 

Import prices in March were unchanged from February after rising 0.3% in February and 0.8% in January.  Excluding fuel, import prices were up 0.2% from February, down from 0.5% in January. Year over year, imports were up 3.6% compared to 4.1% the previous year.   

Although prices appear to be on the soft side month-over-month; on a year-over-year, prices hint at a steady inflation trend. 

The last hour of trading has and continues to be a critical time.  The Dow Jones Industrial Average needs to close above 24,505 to set into place a major technical reversal.  It’s the kind of reversal that attracts big sideline money.

Investors should be stoked by all this news, which really is news and not noise from the rumor mill and political sidelines.

Of course, I have been saying and writing that this period of volatility and uncertainty has been part of an attempt to shake out weaker hands.  It’s worked, but less each session, which actually creates a sense of urgency for those that have always planned to buy the dip.


 

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