Daily Morning Report

Over the weekend, the OPEC oil cartel, Russia, the U.S. and other oil-producing nations agreed to a collective oil production cut of around 13%, which amounts to 9.7 million barrels per day. The oil futures markets had pretty much already factored into their prices the cut. The crude oil bears remain in firm near-term technical control as prices languish at the lower levels. It will take a move in Nymex crude prices above $30 a barrel to revive the bulls and to suggest a near-term price uptrend can be sustained.

Monday, April 13–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. The U.S. stock indexes have seen near-term price uptrends develop, which suggest at least near-term lows are in place. While the Covid-19 pandemic continues to kill thousands worldwide, the rate of the spread of the illness is slowing in the U.S. and Europe. The major debate among North Americans and Europeans is, if the curve of infections continues to flatten when will governments begin to start up their heavily damaged economies. May 1 has been mentioned frequently as a “rolling start” date for the U.S. economy. Still, at present that timeframe seems to be a best-case scenario.

Reports said the U.S. Treasury on Saturday began distributing stimulus funds to American taxpayers.

Over the weekend, the OPEC oil cartel, Russia, the U.S. and other oil-producing nations agreed to a collective oil production cut of around 13%, which amounts to 9.7 million barrels per day. The oil futures markets had pretty much already factored into their prices the cut and were only modestly up Monday. Nymex crude oil prices were trading around $23.00 a barrel.

Other important markets see the U.S. dollar index weaker this morning. The 10-year U.S. Treasury note yield is trading around 0.73% Thursday morning.

There are no major U.S. economic reports out Monday.

–Jim
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The gold market this week hit a 7.5-year high and the bulls are in full technical command, suggesting still more upside in the near term. The safe-haven metal bulls appeared to have found their sweet spot this week, as the Covid-19 situation has moved from panic to stabilization, which is encouraging buyers to step back into many markets, including the metals. However, the matter is still dire and the eventual outcome still uncertain enough to prompt safe-haven demand for gold. It could also be that metals traders are looking over the horizon and anticipating problematic price inflation, what with all the money being pumped into the financial system by the major central banks of the world. Economics 101 professors have been teaching for decades that when central banks pump lots of money into the financial system, the specter of increasing inflation is very likely. Stay tuned! Jim

Thursday, April 9–Jim Wyckoff’s Morning Markets Report

Global stock markets were narrowly mixed in overnight trading. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins. This is the last trading day of the week for most markets, ahead of the Good Friday holiday and the Easter weekend. Stock market bulls have had a good week. The U.S. stock indexes have seen near-term price uptrends develop, which suggest at least near-term lows are in place. While the Covid-19 pandemic continues to kill thousands worldwide, the rate of the spread of the illness appears to be slowing. The question among traders and investors now is, if the curve of infections has indeed flattened when will governments restart their crippled economies. May 1 is probably the most optimistic date for a partial U.S. economy restart.

In focus today is an OPEC (plus Russia) teleconference meeting to discuss significant crude oil production cuts. Latest reports say Russia is planning a big cut. Many oil market watchers are looking for a collective cut of 10 to 15 million barrels a day. A Texas oil regulator said his state could also cut its oil production. Speculation that major cuts in global oil production will be agreed upon by the major producers has rallied the crude oil futures markets the past week. Nymex crude oil prices are higher and trading around $26.50 a barrel. Prices last week dropped below $20.00.

Other important markets see the U.S. dollar index weaker this morning. The 10-year U.S. Treasury note yield is trading around 0.73% Thursday morning. Gold prices are solidly higher and trading above $1,700.00 an ounce.

Said one email dispatch from a metals analyst Thursday morning: “ Metals supply/demand balances are a moving target right now, with daily news on mines closing in Mexico, Chile, Peru, South African and Zambia as well as other locations. Metals supply has also been disrupted through boarder closures, port and shipping issues. Many containers remain stranded, making shipments yet more complicated. Hedge funds and CTAs have reduced positions ahead of the Easter break and as the supply/demand picture becomes less clear. Lower demand in China and the West was a major driver on the downside for metals traders. China is now restocking and Germany is coming out of lockdown, showing the way to recovery. Nations with shorter lockdowns will likely gain economic advantage over their trading competitors.”

U.S. economic data due for release Thursday includes the weekly jobless claims report, which has become the most important U.S. data point. Today’s weekly jobless number is expected to show a rise of around 5 million. Other reports out today include the producer price index, monthly wholesale trade, monthly chain store sales and the University of Michigan consumer sentiment survey. Federal Reserve Chairman Jerome Powell will also conduct a webinar today on the impact of the coronavirus on the U.S. economy.

–Jim
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Wednesday, April 8–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed to weaker in overnight trading. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. This week, as global stock markets have rebounded, it’s becoming more apparent to more than a few veteran traders/analysts that many markets are close to, or already have, factored into their prices the general economic impact of the coronavirus pandemic. Of course, nobody ever knows for sure on calling market bottoms or tops, or knowing the ultimate economic impact of major shock events. Still, there are emerging technical signals in several major markets that do suggest they have put in near-term bottoms, if not major bottoms. The U.S. stock indexes are in this category.

At mid-week on this holiday-shortened week (Markets are closed for Good Friday.) traders and investors are seeing their risk appetite wane as the Covid-19 continues its destructive human toll. The U.S. saw 50% more citizens die from the coronavirus Tuesday than any other day. The U.S. and Europe are hoping the models suggesting the next week will be the worst, regarding new virus infections, are correct, and that the curve will have then peaked for them.

In overnight news, European stocks were pressured by a survey that suggested Germany’s gross domestic product would decline by nearly 10% in the second quarter.

The important outside markets today see Nymex crude oil prices higher and trading around $24.35 a barrel. There are reports Russia and Saudi Arabia are close to a deal to cut their crude oil production levels. OPEC officials will meet via a conference call on Thursday to discuss production cuts. An agreement is not a certainty and now the amount of production cuts is in question. The U.S. dollar index is higher this morning. The 10-year U.S. Treasury note yield is trading around 0.72% Wednesday morning.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report and the FOMC minutes from the last Fed meeting.

–Jim
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The June Euro currency futures market is presently in a price downtrend and the bears have the overall near-term technical advantage. The path of least resistance for prices remains sideways to lower. See the support and resistance lines on the chart. Stay tuned! Jim