Daily Morning Report

The Nymex crude oil futures market Friday hit a fresh 18.5-year low just above $18.00 a barrel. In early January prices traded above $64.00. Prices are in a steep downtrend and there are no solid, early chart clues that prices are close to bottoming out. Importantly, raw commodity sector leader crude oil’s price plunge is also a heavy, bearish anchor on most of the commodity futures markets.–Stay tuned! Jim

Friday, April 17–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed to mostly firmer in overnight trading. U.S. stock indexes are pointed toward sharply higher openings and five-week highs when the New York day session begins. Traders and investors are more upbeat to end the trading week. President Trump Thursday afternoon laid out plans to reopen the U.S. economy in stages that could begin as early as today, as there are early signs the Covid-19 pandemic in North America and Europe has hit a peak for new infections. Also, there is new hope that a drug being tested by Gilead can greatly reduce the severity of the respiratory illness, based on early clinical trials. As one market analyst put it, the marketplace is presently viewing the Covid-19 situation as “the glass being half-full.”

In overnight news, there was more dour economic data coming out of China Friday, as the world’s second-largest economy in March saw its industrial production down 8.4% versus down 13.5% in February, year-on-year. Retail Sales in the same period were off 19.0% compared to down 20.5% in February. Gross domestic product growth in the first quarter was minus 6.8% versus a year ago. The GDP figure was China’s first negative number ever recorded.

In a sign of the still-very-turbulent economic times, luxury retailer Neiman Marcus could not make a bond payment this week as the pandemic keeps its stores shuttered. The company is now in default, suggesting bankruptcy is next.

The important outside markets today see crude oil prices solidly lower and trading around $18.50 a barrel–an 18.5-year low. The U.S. dollar index is higher again this morning as the greenback bulls are having a good week. The 10-year U.S. Treasury note yield is trading around 0.65% this morning. Safe-haven gold prices are solidly lower amid the better risk appetite in the marketplace late this week.

U.S. economic reports due for release Friday are light and include the leading economic indicators report.

–Jim
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Thursday, April 16–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed in overnight trading. Asian stocks were mostly down and European stock indexes were mostly up. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Amid the Covid-19-induced gloom that is pervasive worldwide, there are some positives this week. There are early signs the U.S. and Europe have seen the curve flatten on the rate of new infections. U.S. government and health officials are saying hospitals are keeping up with the influx of coronavirus patients.

The key U.S. data point today will be the weekly jobless claims report, which is expected to show around 5 million new claims in the latest week. The Covid-19 pandemic that has mostly shuttered the U.S. economy has seen around 20 million American workers lose their jobs up to this point. Just recently, U.S. economic data covering the past few weeks is showing just how much damage has been inflicted on U.S. businesses. U.S. retail sales in March were down over
8 percent, it was reported Wednesday.

In another potentially ominous development for North America, reports say Chinese consumers coming out of the coronavirus lockdown that lasted several weeks are not in a spending mood. This contradicts notions that once the lockdowns are lifted, holed-up North American consumers will coming out swinging regarding spending at retail outlets.

The important outside markets today see crude oil prices modestly up and trading around $20.25 a barrel after hitting an 18.5-year low on Wednesday. The U.S. dollar index is higher again this morning on a corrective rebound from recent selling pressure. The 10-year U.S. Treasury note yield is trading around 0.64% this morning, down from recent higher levels. The falling U.S. Treasury yields are a worrisome sign of the major headwinds that have and will likely continue to buffet the U.S. economy in the coming months.

Other U.S. economic reports due for release Thursday include the Philadelphia Fed business survey and new residential construction.

–Jim
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The U.S. Treasury bond and note futures markets have seen some sideways trading recently but the bulls still have the overall near-term technical advantage. Remember, too, that U.S. Treasuries are a safe-haven asset. My bias is that in the coming weeks T-Bond and T-Note futures prices will continue to appreciate amid still-crippled global economies that are not likely to heal soon.–Stay tuned! Jim

Wednesday, April 15–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed to lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S. stock indexes are seeing downside corrections following recent good gains that have pulled them out of bear market territory (retracing over 50% of their recent declines). Lower crude oil prices that today see Nymex crude oil prices around $19.50 a barrel and hitting an 18.5-year low overnight are helping to pressure the stock markets today. The International Energy Agency (IEA) said in a report today that no “feasible” amount of crude oil production cuts can offset the demand destruction caused by Covid-19.

It can be argued that the recent gains in stock indexes are due in part to a battered raw commodity sector, led by crude oil’s descent, that has seen investor money flow out of hard assets and back into paper assets—equities and bonds. Gold is the outlier in the beleaguered raw commodity sector, as the yellow metal’s price this week rose to a 7.5-year high on safe-haven demand.

The International Monetary Fund on Tuesday warned the Covid-19 pandemic will slow global economic growth to the slowest since the Great Depression of the 1930s. The IMF forecast -6.6% economic contraction for advanced economies. The IMF forecast GDP growth returning to 5.8% in 2021. The agency estimates global the Covid-19 pandemic will peak in the second quarter and fade away in the second half of 2020. However, if the pandemic continues through the third quarter then such could knock another 3% off global economic growth. A second coronavirus outbreak in 2021 could lop another 5% off the global GDP growth for 2021.

The U.S. dollar index is higher this morning on a corrective rebound from recent selling pressure. The 10-year U.S. Treasury note yield is trading around 0.73% this morning.

U.S. economic reports due for release Wednesday includes the weekly MBA mortgage applications survey, the Empire State manufacturing survey, retail sales, industrial production and capacity utilization, the NAHB housing index, manufacturing and trade inventories, the weekly DOE liquid energy stocks report, Treasury international capital data and the Federal Reserve’s beige book.

–Jim
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Tuesday, April 14–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. More and more it appears North America and Europe have “turned the corner” on the Covid-19 pandemic. New York Governor Cuomo said Monday his state has seen the worst of the pandemic. Other hotspots in the U.S. have also showed signs of simmering down. Leading U.S. health officials are now saying the world’s largest economy can very likely begin to reopen in stages beginning in May.

Major corporate earnings reports are now starting to be released, which will show the early impact of the Covid-19 pandemic, and be a sobering reminder of the tough economic times at present.

In overnight news, China, the world’s second-largest economy, saw its March exports down 6.6%, year-on-year, which was less than expected. Imports were down 0.9% in the period, also way less than expected. China watchers deemed this data as upbeat, showing the Chinese economy is recovering from the pandemic.

The important markets today see Nymex crude oil prices trading lower, around $22.00 a barrel. Oil market bulls are sorely disappointed the weekend OPEC and other major oil producers agreement to restrict oil output did not boost crude oil futures prices. However, there is no consensus on how much oil production will be reduced. Some market watchers think 10 million barrels a day and the more optimistic bulls think 20 million. There is more agreement among analysts that worldwide oil demand has dropped by at least 20 million barrels a day.

Meantime, the U.S. dollar index is weaker again this morning. The 10-year U.S. Treasury note yield is trading around 0.75% this morning. Gold prices overnight hit a 7.5-year high of $1,785.00 an ounce.

U.S. economic reports due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and import and export prices. A few Federal Reserve officials are slated to give speeches today.

–Jim
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