Daily Morning Report

See on the daily bar chart for the September Euro currency futures that a price uptrend has at least temporarily stalled out. This could be a normal pause before the uptrend resumes, but the bulls need to step up and show some good power soon to suggest the recent price action is just a pause in the uptrend. More significant downside price action in the near term would kill the uptrend.–Stay tuned! Jim

Wednesday, June 17–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly up a bit in overnight trading. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Traders and investors are weighing the bullish aspects of generally faster rebounds in world economies than many had expected versus the bearish element of a resurgence in Covid-19 reported cases in some regions of the globe, including some U.S. states. At present, it appears the global economic growth factor is winning out. Skeptics can argue the rally in world stock markets is mainly due to the floods of central-bank infused cash that have hit the global financial system.

In overnight news, the Euro zone May consumer price index came out at -0.1% from April and up 0.1%, year-on-year. Deflationary concerns are still at the forefront for central bankers. However, a Wall Street Journal article at mid-week is headlined “Few Are Prepared for the Risk of Inflation Era After Recession.” The story says the 2008 financial crisis and the big influx of central bank liquidity into the financial systems then produced no problematic inflation. However, the article says things are different now and at present “the markets may have it completely wrong” on the inflation matter.

There are a couple of geopolitical developments that bear watching. North Korea has ramped up its provocation of South Korea in recent days. Also, a clash between Indian and Chinese soldiers in their border region is the first military conflict between the two nations in decades.

Fed Chairman Jerome Powell on Wednesday offers up his second and final day of testimony to the U.S. Congress on the health of the U.S. economy and its recovery prospects—today to a House of Representatives panel. His comments to a Senate committee on Tuesday produced no significant surprises.

The important outside markets early today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are lower and trading around $38.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.75% level.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction and the weekly DOE liquid energy stocks report.

–Jim
Continue Reading

Tuesday, June 16–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. The U.S. stock indexes on Monday made a strong recovery from sharp early-day losses, due in part to the Federal Reserve announcing it has started buying corporate bonds, in an extension of an existing program that had only purchased corporate bond exchange traded funds. Reports also said the Trump administration is planning to spend $1 trillion on U.S. infrastructure improvements.

There is growing agreement the Federal Reserve will continue to deploy more firepower to support the U.S. economy. Such is ultimately bearish for the U.S. dollar as the U.S. government’s debt obligations continue to bulge. The U.S. dollar index is presently in a steep downtrend on the daily bar chart.

The U.S. economic highlight of the week will be Fed Chairman Jerome Powell’s two days of congressional testimony on Tuesday and Wednesday for his semi-annual economic report to Congress. He may provide more clarity and perspective on the Fed’s bond buying and other monetary policy moves. Traders will monitor to see if his comments expand on his sober assessment of the U.S. economy last week.

In other news, North Korea is ramping up its bellicose activities, as it blew up a meeting facility with South Korea that was just inside the North Korean border. Many look for North Korea to become more provocative with the U.S. as the U.S. presidential election approaches in November.

The important outside markets early today see the U.S. dollar index a bit weaker. Meantime, Nymex crude oil prices are higher and trading around $37.75 a barrel. The International Energy Agency said Tuesday global oil demand in 2020 will decline by 8.1 million barrels per day. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.75% level.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, retail sales, industrial production and capacity utilization, the NAHB housing market index, and manufacturing and trade inventories.

–Jim
Continue Reading

See on the daily bar chart for the September e-mini S&P futures that a price uptrend line has been negated with recent strong selling pressure. The bulls need to step up early this week and show power, to restart the price uptrend. More price pressure this week would strongly suggest a market top is in place.–Stay tuned! Jim

Monday, June 15–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly down in overnight trading. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Traders and investors are risk averse to start the work week, as there are growing signs that the Covid-19 pandemic is making a resurgence. Reports said parts of Beijing are on lockdown again, with cases in some U.S. states also on the rise as businesses reopen and American citizens become more lax on social distancing. Reported cases in the U.S. have now risen above 2 million.

There are also growing notions that the global stock market rebounds have come too far, too fast, given the actual economic conditions in the major industrialized countries at present. The general and even many in the investing public are asking, “How could the Nasdaq stock index hit a record high last week when U.S. unemployment has surged to around 15% and much of the economy remains crippled?”

The U.S. economic highlight of the week will be Fed Chairman Jerome Powell’s two days of congressional testimony on Tuesday and Wednesday for his semi-annual economic report to Congress. He may provide more clarity on the Fed’s bond buying and other monetary policy moves. Traders will monitor to see if his comments expand on his sober assessment of the U.S. economy last week.

In other overnight news, Euro zone April exports were reported down 24.5% and imports were down 13%.

The important outside markets early today see the U.S. dollar index weaker. The greenback remains in a steep downtrend. Meantime, Nymex crude oil prices are lower and trading around $35.75 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.68% level.

U.S. economic data due for release Monday includes the Empire State manufacturing survey and Treasury international capital data.

–Jim
Continue Reading

Friday, June 12–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed in overnight trading, with Asian stocks mostly down and European stocks mostly up. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins, but the overnight gains are only about one-third of Thursday’s very sharp losses. Risk aversion has returned to the marketplace late this week, on a surge in Covid-19 cases in some major global economies after they started to reopen businesses, which in turn increased human interaction. It could be that the rise is due to more testing that is prompting more cases to be reported. Traders and investors also got a reminder from the Federal Reserve this week of just how bad is the U.S. and global economic situation at present, and the tough road ahead. President Trump on Thursday criticized the Fed for being too dour in its predictions.

U.S. Treasury Secretary Mnuchin on Thursday said the government is mulling a second round of cash payments to American taxpayers who qualify.

In overnight news, the U.K. reported its economy contracted by 20.4% in April. Meantime, Euro zone industrial output for April was reported down 17.1% from March and down 28% year-on-year—for the largest drop ever recorded.

The important outside markets early today see the U.S. dollar index slightly weaker. The greenback is in a steep downtrend and the USDX hit a three-month low this week. Meantime, Nymex crude oil prices are slightly up and trading around $36.50 a barrel. 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 Friday includes import and export prices and the University of Michigan consumer sentiment survey.

–Jim
Continue Reading