Daily Morning Report

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

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