Daily Morning Report

With summertime in full swing in the Northern Hemisphere, many traders and investors are less concerned about markets are more concerned about outdoor activities and family vacations. However, after the unofficial end of summer—the U.S. Labor Day holiday—look for focus of the markets to be on the U.S. presidential election, in which the Democratic candidate who wants to raise personal and corporate taxes is presently enjoying a comfortable lead in the polls, and how the public school systems will reopen. Those matters could be a sobering wake-up call for stock market bulls who are riding high at present.

Monday, July 6–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly higher in overnight trading, led by sharp gains in Chinese shares. The U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins, with the Nasdaq index hitting another record high overnight. Once again, the surprisingly rapid recoveries in global economies from their Covid-19 beatdowns is trumping the rise in pandemic infections in many industrialized countries.

Last Friday’s solid U.S. jobs report was bolstered by a 10.4% rise in factory orders in Germany in May. Also reported Monday was the Euro zone’s retail sales for May, which rose 17.8% from April.

With summertime in full swing in the Northern Hemisphere, many traders and investors are less concerned about markets are more concerned about outdoor activities and family vacations. However, after the unofficial end of summer—the U.S. Labor Day holiday—look for focus of the markets to be on the U.S. presidential election, in which the Democratic candidate who wants to raise personal and corporate taxes is presently enjoying a comfortable lead in the polls, and how the public school systems will reopen. Those matters could be a sobering wake-up call for stock market bulls who are riding high at present.

The important outside markets today see Nymex crude oil prices slightly higher and trading around $40.75 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 0.69% level.

U.S. economic data due for release Monday includes the U.S. services purchasing managers’ index (PMI), the ISM non-manufacturing report on business, the employment trends index, and the global services PMI.

–Jim
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Thursday, July 2–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly up in overnight trading. The U.S. stock indexes are pointed toward higher openings when the New York day session begins, with the Nasdaq index hitting a record high overnight. Recent U.S. and global economic data suggests businesses’ recoveries from the Covid-19 pandemic damage to them is more rapid than initially expected. Also, the Federal Reserve’s FOMC minutes released Wednesday afternoon reiterated the Fed will likely continue to work to stimulate the U.S. economy through monetary policy measures. These bullish elements are for now outweighing the bearish specter of a Covid-19 resurgence in many U.S. states that is forcing some of those states to again shut down some of their businesses. However, there are fresh reports that a vaccine for the infection is showing promise.

It’s a holiday-shortened U.S. trading week, as markets are closed Friday for the Independence Day holiday. Some U.S. markets will close early today. However, today will be another very busy for U.S. economic data releases that are likely to move markets. 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%. Other important U.S. economic reports out on Thursday include weekly jobless claims, the international trade report, the ISM New York report on business, and manufacturers’ shipments and inventories.

In overnight news, the Euro zone’s unemployment rate up-ticked a bit in May, to 7.4% from 7.3% in April. The region’s producer price index was also released and came in down 0.6% in May and down 5% year-on-year.

The important outside markets today see Nymex crude oil prices higher and trading around $40.00 a barrel. The U.S. dollar index is weaker 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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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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