Daily Morning Report

Gold prices this week have hit an 8.5-year high, on technical buying based on very bullish charts that got even more bullish this week—suggesting still more (likely much more) upside price potential to come, including new record highs. Underlying bullish fundamentals in the gold and silver markets include safe-haven demand due to the Covid-19 pandemic that appears to be getting worse instead of better and also further damaging global economies. Also, it appears traders and investors are realizing the massive infusion of central banks’ easy money into the world financial markets the past few months will create serious problems down the road—namely problematic inflation. Metals are a historical hedge from inflation.–Stay tuned! Jim

Wednesday, July 1–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed to mostly up in overnight trading as the second half of 2020 gets under way. The U.S. stock indexes are pointed toward weaker openings when the New York day session begins after posting the best quarterly performance in 20 years in the second quarter. While the U.S. stock indexes are still in lofty positions there remain storm clouds on the horizon. The Covid-19 pandemic has hit the U.S. harder than most other countries and continues to spread at an alarming rate. The top Trump administration infectious disease expert said the pandemic progress in the U.S. is “going in the wrong direction” and said new cases could hit 100,000 a day if U.S. citizens don’t use better prevention methods. The U.S. is now reporting about 40,000 cases a day.

A highlight of the trading week has been a rally in gold prices to an 8.5-year high above $1,800 an ounce. August Comex gold hit a high of $1,807.70 overnight. Technical charts are very bullish for the yellow metal at present, suggesting more gains in the near term, including a challenge of the all-time record high of $1,920 in gold futures, scored in 2011.

In overnight news, the Euro zone June manufacturing purchasing managers index (PMI) came in at 47.4 versus 39.4 in May. A reading below 50.0 suggests contraction in the sector.

It’s a holiday-shortened U.S. trading week, as markets are closed Friday for the Independence Day holiday. However, the next two days will be very busy for U.S. economic data releases that are likely to move markets. Wednesday, sees the weekly MBA mortgage applications survey, the challenger job-cuts report, the ADP national employment report, the U.S. manufacturing PMI, the ISM manufacturing report on business, construction spending, the weekly DOE liquid energy stocks report, the global manufacturing PMI, domestic auto industry sales and the FOMC minutes from the last Fed meeting. The U.S. economic highlight of the week will be Thursday morning’s monthly jobs report from the Labor Department. In June, the key non-farm payrolls number is expected to be up 3.15 million, with the unemployment rate forecast at 12.4%. A slew of other important U.S. economic reports is also out on Thursday.

The important outside markets today see Nymex crude oil prices higher and trading around $40.35 a barrel. The U.S. dollar index is slightly up early today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.68% level.

–Jim
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Tuesday, June 30–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed in overnight trading, on this last day of the month and of the second quarter. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Risk appetite has receded a bit recently amid the Covid-19 resurgence in many countries, including the U.S., where several hotspot states are starting to shut down businesses again.

U.S. Federal Reserve Chairman Jerome Powell will testify to a congressional committee today. In prepared remarks, he said the U.S. economy has rebounded faster than expected from Covid-19 damage to businesses, but also said there are still challenges, most notably keeping the pandemic contained. U.S. Treasury Secretary Steven Mnuchin will also testify to the House committee today.

In overnight news, China’s government put into effect its so-called national security law to tighten its grip on Hong Kong. Meantime, there is a brewing geopolitical rift between the U.S. and Russia after reports surfaced that Russia offered the Taliban bounties to kill U.S. soldiers.

It’s a holiday-shortened U.S. trading week, as markets are closed Friday for the Independence Day holiday. The U.S. economic highlight of the week will be Thursday morning’s monthly jobs report from the Labor Department. In June, the key non-farm payrolls number is expected to be up 3.15 million, with the unemployment rate forecast at 12.4%.

The important outside markets today see Nymex crude oil prices weaker and trading around $39.00 a barrel. The U.S. dollar index is firmer early today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.63% level.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the S&P Core Logic Case Shiller home indexes, the ISM Chicago business survey, the consumer confidence index.

–Jim
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See on the daily bar chart for the September e-mini stock index futures that the recent price uptrend has stalled out and price action has turned sideways to lower. The bulls are fading as the price uptrend appears to be rolling over. See, too, at the bottom of the chart that the MACD indicator recently produced a sell signal when the blue MACD line crossed below the red trigger line.–Stay tuned! Jim

Monday, June 29–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed and choppy in overnight trading. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Trader and investor risk appetite continues to pull back as the Covid-19 pandemic continues to spread in many countries. News headlines to start the trading week highlight the pandemic’s worldwide death toll has passed 500,000 and the total number of reported cases is above 10 million. In a grim markets assessment, one research analyst this morning said in an email dispatch: “Hopes of a robust economic recovery following the pandemic are now shattered. The risks of re-imposing lockdowns are high and monetary policy stimulus which explains most of the recovery in asset prices from the March lows will become less effective going forward if it doesn’t translate into a rebound in economic activity and better prospects for corporate earnings. Risk asset valuations remain elevated and the next few weeks ahead will tell us whether they will continue to hold or get bumped.”

Gold prices continue to benefit from safe-haven demand amid the resurgence of Covid infections and the potential for further damage to global economies.

It’s a holiday-shortened U.S. trading, as markets are closed Friday for the Independence Day holiday. The U.S. economic highlight of the week will be Thursday morning’s monthly jobs report from the Labor Department. In June, the key non-farm payrolls number is expected to be up 3.15 million, with the unemployment rate forecast at 12.4%.

The important outside markets today see Nymex crude oil prices slightly weaker and trading around $38.50 a barrel. The U.S. dollar index is lower early today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.7% level.

U.S. economic data due for release Monday includes pending home sales and the Texas manufacturing outlook survey.

–Jim
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Friday, June 26–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward steady to mixed openings when the New York day session begins. Equities investors on Friday are being buffeted by the competing forces of easy central bank money that has been flowing into stock markets, countered by rising concerns this week about a “second wave” of Covid-19 infections again squelching major economies. The Texas governor has stopped the reopening of businesses in his state as the Covid infection rate spikes and hospitals are filling up. Other U.S. states are also seeing alarming rises in infections.

The important outside markets today see Nymex crude oil prices firmer and trading around $39.00 a barrel. The U.S. dollar index is slightly down early today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.68% level.

The important U.S. economic data release of the day Friday is personal income and outlays for May. Income is seen down 7.0% and outlays (spending) is seen up 8.7% in the month, compared to April. The marketplace wants to see if today’s numbers beat expectations on the upside. The other data point in the U.S. today is the University of Michigan consumer sentiment survey.

–Jim
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