Daily Morning Report

One feature in the marketplace recently has been the slumping greenback and the resurgence of the so-called “commodity currencies” like the Canadian and Australian dollars. It could be that many of the big speculative “fund” traders are moving into commodities (including the grains) and commodity currencies, reckoning many commodity markets are now longer-term value-buying opportunities and that inflation will flare up in the coming months. Economics 101 classes teach that pumping large sums of money into financial systems creates price inflation. See on the chart for July soybeans that prices have seen a bullish upside “breakout” from the recent trading range and that a gentle price uptrend is in place. The soybean market technicals look the most bullish they have looked in months.–Stay tuned! Jim

Friday, June 5–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward higher openings and at or near three-month highs when the New York day session begins. Continued central bank stimulus programs keep pushing the growing heaps of cash into the stock markets. The latest influx comes from the European Central Bank, which announced Thursday another 600 billion Euro infusion into the Euro zone economy. Also, there is the perception among global traders and investors that the Covid-19 pandemic has peaked, at least from an economic impact perspective if not also from a human toll perspective. That’s allowing risk appetite to uptick in the markets.

The U.S. economic data point of the week is Friday morning’s Labor Department employment situation report for May, expected to show non-farm payrolls down 8.3 million. In the April jobs report, there was a 20.5 million drop in non-farm payrolls.

The important outside markets see the U.S. dollar index modestly higher early today on a corrective bounce after hitting an 11-week low overnight. One feature in the marketplace this week has been the slumping greenback and the resurgence of the so-called “commodity currencies” like the Canadian and Australian dollars. Part of the reason has been civil unrest in the U.S. However, it could also be that many of the big speculative “fund” traders are moving into commodities and commodity currencies, reckoning many commodity markets are now longer-term value-buying opportunities and that inflation will flare up in the coming months. Economics 101 classes teach that pumping large sums of money into financial systems creates price inflation.

Meantime, Nymex crude oil prices are higher and trading around $38.30 a barrel. The OPEC cartel and its allies have reached a deal to extend the crude oil production cuts by one month, through July. Since late April the price of Nymex crude has doubled.

The yield on the benchmark U.S. Treasury 10-year note is currently around 0.75%. Bond yields have risen significantly this week, suggesting less risk aversion in the market place, but maybe also some creeping concerns about rising inflation.

Other U.S. economic data due for release Friday includes the consumer credit report.

–Jim
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Thursday, June 4–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed to weaker in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins, after hitting three-month highs on Wednesday.

In focus Thursday is the European Central Bank which is holding its regular monetary policy meeting, with the markets expecting the ECB to extend its 750 billion Euro bond-buying program until the end of the year. Euro zone retail sales for April were reported down 11.7% from March and down 19.5%, year-on-year, it was reported today.

In the U.S. today, weekly jobless claims data will be out and it’s expected that another 1.8 million American workers filed for claims in the latest reporting week. The marketplace got a pleasant surprise on Wednesday when the May ADP national employment report showed way less job-loss numbers than the marketplace expected. The U.S. Labor Department’s employment situation report for May is out Friday morning, expected to show non-farm payrolls down 8.3 million. In the April jobs report, there was a 20.5 million drop in non-farm payrolls.

The important outside markets see the U.S. dollar index higher early today on a corrective bounce after hitting an 11-week low Wednesday. Nymex crude oil prices are weaker and trading around $36.50 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.75%.

Other U.S. economic data due for release Thursday includes the Challenger job-cuts report, revised productivity and costs, the international trade report and monthly chain store sales data.

–Jim
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The U.S. dollar index is a basket of six major currencies weighted against the greenback. It’s a good gauge of the overall health of the U.S. economy. See on the daily bar chart that the USDX is now trending lower, amid the pandemic that has crippled the U.S. economy and the civil unrest that has America on edge. The greenback has traditionally been a safe-haven asset, but with the country in the vise of two major crises, capital is presently flowing out of the greenback.–Stay tuned! Jim

Wednesday, June 3–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward higher openings and three-month highs when the New York day session begins. The awkward rallies in world stock indexes continue, amid a pandemic that has severely damaged major economies, the two largest economies in the world (U.S. and China) on the verge of another trade war or worse, and civil unrest in the U.S. and Hong Kong. Many market watchers believe the stock market rallies are being fueled by “cheap money” served up by major central banks, and at some point down the road there will be a reckoning.

It was a calmer night in America Tuesday, following recent nights of violence in major cities. Still, it could be a long, hot and restless summer in the U.S., reminiscent of the infamous summer of 1968.

In the U.S. and Europe there continues to be hope the pandemic has seen its peak for infections and businesses continue to reopen. The next couple weeks will be critical to see if more public interaction recently will spike infections—but so far that’s not the case. Meanwhile, scientists are working feverishly on a vaccine and on drugs that will diminish the illness.

In other overnight news, there was better economic news coming out of China, as its Caixin purchasing managers services index (PMI) came in at 55.0 in May from 44.4 in April and reaching the highest level in 10 years. A reading above 50.0 suggests growth in the sector. In the Euro zone the PMI rose to 30.5 in May from 12.0 in April. India’s was 12.6 from 5.4 and Japan’s was 26.5 from 21.5 in the same period. The U.S. services PMI is out later today and is seen at 44.0 in May from 41.8 in April.

The data point of the day in the U.S. will be the ADP national employment report for May, expected to show job losses at just under 9 million.

The important outside markets see the U.S. dollar index lower early today and hitting an 11-week low overnight. Nymex crude oil prices are higher, at a nearly three-month high, and trading around $36.65 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the U.S. services PMI, the ISM non-manufacturing report on business, manufacturers’ shipments and inventories, and the weekly DOE liquid energy stocks report.

–Jim
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Tuesday, June 2–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly firmer in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Stock markets are at present seemingly ignoring major storm clouds churning, including the Covid-19 pandemic that has severely crippled world economies, a looming “cold war” between the two largest economies in the world—the U.S. and China, and civil unrest in the U.S. that has exploded into violence not seen in over 50 years. Many market watchers are reckoning the strength of world stock markets is mainly due to the enormous injection of monetary stimulus by central banks into economies that sees much of that money flowing into equities. The juxtaposition of a rallying Wall Street and a struggling Main Street could have significant political implications down the road.

In other news, the U.S. Congressional Budget Office said a full U.S. economic recovery from the damage caused by the pandemic could take 10 years.

The important outside markets see the U.S. dollar index lower early today and hitting another 2.5-month low overnight. The greenback is in a swoon due in part to the civil unrest in America. Currencies in countries that are more outside the present fray are benefitting, including the Australian and Canadian dollars and the British pound. Nymex crude oil prices are higher and trading around $36.50 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.68%.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the ISM New York report on business and domestic auto industry sales.

–Jim
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