Daily Morning Report

Friday, May 29–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly lower in overnight trading. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. There is increased risk aversion in the marketplace late this week, as the U.S. and China appear on a collision course that could set off the next “cold war” between the two largest economies in the world. President Trump sometime Friday is expected to hold a press conference to address China’s actions to tighten its grip on Hong Kong. Trump will also likely comment on China’s involvement in suppressing early Covid-19 infection rates in China. Still, at present traders and investors have no idea what Trump will say or do.

In overnight news, the Euro zone consumer price index for May rose 0.1% compared to up 0.3% in April. The May reading was in line with market expectations.

The important outside markets see the U.S. dollar index lower early today and hitting a 2.5-month low. Nymex crude oil prices are lower and trading around $32.75 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.

U.S. economic data due for release Friday includes personal income and outlays, the advance economic indicators report, the ISM Chicago business survey, and the University of Michigan consumer sentiment report. Fed Chairman Jerome Powell also speaks at an event today.

–Jim
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The Euro currency futures market has been trading in a choppy and sideways fashion for weeks, but this week did push to a two-month high. Bulls are working to push prices above the trading range and would accomplish such if prices late this week continue to post gains. A bullish upside “breakout” from the trading range would suggest a near-term price uptrend in the Euro could be sustained.–Stay tuned! Jim

Thursday, May 28–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed in overnight trading, with European shares mostly higher and Asian shares mostly lower. U.S. stock indexes are also pointed toward mixed openings when the New York day session begins. There is a bit more risk aversion in the marketplace Thursday, as China’s government has ratified what is calls a national security law that ostensibly tightens mainland China’s grip on Hong Kong. The move has further angered the U.S. as relations between the two largest economies in the world continue to deteriorate. The U.S. Secretary of State on Wednesday said Hong Kong was no longer autonomous from China, implying the U.S. may revoke Hong Kong’s favorable trade status. Such would have big implications for the many major U.S. companies doing business in Hong Kong. The U.S. House of Representatives Wednesday passed a bill that would sanction China for its oppression of minority groups.

The important outside markets see the U.S. dollar index weaker early today. Nymex crude oil prices are lower and trading around $32.15 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.

U.S. economic data due for release Thursday includes the weekly jobless claims report, expected to show a new claims of around 2 million; the second estimate of first-quarter GDP, durable goods orders, the weekly DOE liquid energy stocks report, the Kansas City Fed manufacturing survey, and pending home sales.

–Jim
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Wednesday, May 27–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Traders and investors remain upbeat at mid-week. After two months or more of being mostly quarantined the citizens of major industrialized countries are eager to get back to their pre-Covid-19 ways of life and are seeing light at the end of the tunnel. The global stock markets are trading like they expect the world’s consumers to get back to old spending habits sooner rather than later. Still, tens of millions of workers in the major global economies have been idled by the pandemic-induced closure of businesses. A significant number of lost jobs are gone for good.

Many in the general public still can’t rationalize world stock markets that have recovered so strongly in the face of many businesses that are still closed and up to 30% of countries’ workers are unemployed. One explanation is that the mammoth monetary stimulus programs from the major central banks that have pumped so much money into global financial systems is seeing a lot of that money flowing back into stock markets.

The important outside markets see the U.S. dollar index weaker early today. The greenback bulls are fading this week. Nymex crude oil prices are lower and trading around $34.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly Goldman Sachs and Johnson Redbook retail sales reports, the Richmond Fed business survey, and the Federal Reserve’s beige book.

–Jim
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Tuesday, May 26–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Traders and investors are upbeat early this week, following a long U.S. holiday weekend that saw more social interaction amid the unofficial start of summer. Such suggests quarantined people are gearing up to do more spending as businesses continue to reopen. Also, there is more hope following news of another Covid-19 vaccine that looks promising. Several drug companies are working at a fever pitch to develop a successful vaccine.

Still overshadowing the global marketplace is eroding U.S.-China relations. Barbs by both sides appear to have inflicted wounds too deep to just mask over. Some market watchers are predicting the U.S. and China will be the next major “cold war”—comparing the situation to the U.S.-Soviet Union stare-down that lasted decades.

China’s central bank this week has fixed its currency (the yuan) at a rate of 7.1293 to the U.S. dollar—the weakest in 12 years. Such is another move by Chinese officials that will not likely make the Trump administration happy.

The important outside markets see the U.S. dollar index solidly down early today. Nymex crude oil prices are higher and trading around $34.00 a barrel. The big rebound in crude oil prices has surprised many oil analysts and is a big positive for stock, commodity and financial markets. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.

U.S. economic data due for release Tuesday includes the Chicago Fed national activity index, the quarterly and monthly U.S. house price indexes, the S&P/Case-Shiller home price index, the consumer confidence index, new residential sales and the Texas manufacturing survey.

–Jim
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The U.S. stock market is powering higher on notions the worst of the Covid-19 is over and that U.S. businesses will continue to reopen amid robust consumer spending. The September e-mini S&P stock index futures are trending solidly higher, to suggest more upside in the near term. Bulls are in command.–Stay tuned! Jim