Daily Morning Report

Tuesday, April 7–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. So far this week the global marketplace is more upbeat, as it appears the coronavirus outbreak that has crippled the global economy is de-escalating in Europe and the U.S. Some models are predicting infections in the U.S. and U.K. will peak in a week. The situation is by no means a good one at present but may be considered by traders and investors to not be as bad as some had been expecting. Also, health officials are stressing the Covid-19 outbreak could again escalate. British Prime Minister Boris Johnson has the illness and has been moved to an intensive care unit.

Japan has just announced an economic stimulus package totaling $1 trillion, to combat the economic damage inflicted by the coronavirus.

The well-known big hedge fund manager Bill Ackman, who three weeks ago gave an emotional TV interview and said “hell was coming” regarding Covid-19, has now tweeted the situation appears to be getting better.

If the Covid-19 outbreak continues to de-escalate, debate will intensify on when to restart the global economies. One respected Washington, D.C.-based analyst/economist is predicting President Trump will restart the U.S. economy on May 1. Trump has been saying for some time that “the cure cannot be worse than the disease.”

The important outside markets today see Nymex crude oil prices higher and trading around $27.15 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. The U.S. dollar index is lower this morning on a corrective pullback from recent good gains. The 10-year U.S. Treasury note yield is trading around 0.74% Tuesday morning, well up from recent levels and also suggesting less anxiety in the marketplace. Gold prices are higher and hit a 7.5-year high of $1,724.40 overnight. It could be that gold bugs 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.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the IDB/TIPP economic optimism index, and consumer credit.

–Jim
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Monday, April 6–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. The coronavirus outbreak that has crippled the global economy appears to be de-escalating a bit, according to some models that forecast the peak number of cases and deaths. However, the coming week is going to be “our Pearl Harbor moment, our 9/11 moment,” said U.S. Surgeon General Jerome Adams, regarding an expected wave of coronavirus deaths across the U.S. New York City, the U.S. Covid-19 epicenter, New Orleans and Detroit face especially tough days ahead.

The debate in the coming days, especially if the Covid-19 outbreak starts to de-escalate, will be when to restart the global economies. Traders and investors are also handicapping then the world economies will get back to full speed when they do start back up in earnest. There are complicated supply chains that have been severely disrupted the past few weeks.

Reports say the U.S. Treasury market and short-term securities market are operating more smoothly than a couple weeks ago, following the Federal Reserve’s massive injection of liquidity into those markets.

The important outside markets today see Nymex crude oil prices weaker and trading around $27.50 a barrel. There are reports that Russia and Saudi Arabia are close to a deal to cut their crude oil production levels, following pressure by President Trump to do so. OPEC officials are meeting today via a conference call to discuss production cuts. The U.S. dollar index is slightly higher this morning as the bulls have regained power. The 10-year U.S. Treasury note yield is trading around 0.65% Monday morning, up from Friday’s levels. Gold prices are solidly higher.

U.S. economic data due for release Monday includes the employment trends index.

–Jim
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The gold market has seen very choppy and volatile trading the past few weeks, but the bulls are maintaining the overall technical advantage. I look for gold prices to push to new for-the-move highs in the coming weeks, on more safe-haven demand during highly uncertain times we are experiencing. Stay tuned! Jim

Friday, April 3–Jim Wyckoff’s Morning Markets Report

Global stock markets were flat to weaker in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. In a stark show of how much damage the coronavirus outbreak has done to the Euro zone economy in such a short period of time, the bloc’s March composite purchasing managers’ index (PMI)—which includes both the manufacturing and services sector—came in at a record low of 29.7 versus a reading of 51.6 in February. A reading below 50.0 suggests contraction.

The big U.S. data point this week will not be Friday’s monthly employment report–usually the most important data point of the month. That was Thursday’s weekly jobless claims report. The 6.6 million rise was about double the expected gain of just over 3 million, after rising 3.2 million last week. Today’s monthly unemployment report for March is expected to show an unemployment rate of 3.7% (3.5% in February) and a non-farm payrolls decline of 10,000 (up 273,000 in February). This would be the first decline in monthly non-farm payrolls in nine years. The monthly employment report for April is very likely to be much more grim than the March jobs data.

China’s central bank again eased its monetary policy Friday by lowering its reserve requirement ratio. The world’s second-largest economy has seen its central bank make several monetary policy stimulus moves over the past month.

The important outside markets today see Nymex crude oil prices higher and trading around $26.50 a barrel, on short covering and perceived bargain hunting after hitting an 18-year low of $19.27 a barrel Monday. Reports Friday said OPEC officials will meet next Monday via a conference call to discuss production cuts of at least 6 million barrels. OPEC members also said they may invite U.S. oil companies to join the call, and want them to commit to reducing their production, too. President Trump said Thursday there would be an agreement between the two major oil producers. Trump reportedly said a figure of 10-15 million barrels, while the Saudi Kingdom said that any cuts would not be that large. Trump is to meet with U.S. oil company executives Friday, and OPEC officials will be watching the results of that meeting very closely. Percentage-wise, Thursday’s rally in crude oil prices was the largest gain ever.

The U.S. dollar index is higher this morning as the bulls are having a very good week. The 10-year U.S. Treasury note yield is trading around 0.6% Friday morning.

Other U.S. economic data due for release Friday includes the U.S. services PMI, the ISM non-manufacturing report on business, and the global services PMI.
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Thursday, April 2–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins, following Wednesday’s sharp losses.

The big U.S. data point this week will not be Friday’s monthly employment report (usually the most important data point of the month) but instead Thursday morning’s weekly jobless claims report. It is expected the weekly U.S. jobless claims will rise by over 3 million, after rising 3.2 million last week, as the U.S. economy has been severely crippled by the coronavirus outbreak.

The important outside markets today see Nymex crude oil prices sharply higher and trading around $22.25 a barrel, on short covering and perceived bargain hunting after hitting an 18-year low of $19.27 a barrel Monday. The rally in oil prices today is helping to lift the U.S. stock indexes early on. There are ideas the U.S., Russia and Saudi Arabia may be close to agreement on a deal to halt the Saudi-Russia oil-price war. President Trump said he is hopeful an agreement between Saudi Arabia and Russia will be reached soon. There are more than a few oil market watchers that are skeptical the Russians and Saudis will come to any significant agreement to reduce their oil output levels. Both major oil-producing countries hate the U.S. shale oil industry and are very likely enjoying watching U.S. oil companies suffer. Reports also said China will be buying crude oil for its strategic petroleum reserve. China reportedly at present has over 1 billion barrels of empty oil storage capacity, at the same time the U.S. has very little to none.

The U.S. dollar index is slightly down early this morning but the bulls are having a good week, overall. When the going gets really, really tough it appears global traders and investors still seek out the greenback. The 10-year U.S. Treasury note yield is trading around 0.59% Thursday morning, after trading above 1.0% last week. Declining U.S. Treasury yields recently are a sign that U.S. bond traders (arguably the smartest traders in the world) expect more serious markets/economic turmoil on the horizon, including suggesting that most markets have not yet fully priced in the eventual global economic toll the coronavirus sickness will exact.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the ISM New York report on business, and manufacturers’ shipments and inventories.

–Jim
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The U.S. stock indexes saw a strong rebound from the contract lows scored in late March. However, at mid-week this week the bulls were fading. See on the daily bar chart for the June e-mini S&P futures that the bears are keeping a downtrend line in place. The next upside price objective for the bulls is to push prices above solid chart resistance at this week’s high. A drop in prices below chart support at this week’s low would be a bearish development to suggest a retest of the contract low, or below. Stay tuned! Jim