Daily Morning Report

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

Wednesday, April 1–Jim Wyckoff’s Morning Markets Report

On this first day of April and of the second quarter, global stock markets were mostly down in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The first quarter saw the U.S. stock market see its biggest losses in 12 years.

Traders and investors are gloomier Tuesday following President Trump’s daily Covid-19 update late Tuesday afternoon, in which he delivered a more somber assessment of the situation. Trump said from 140,000 to 240,000 Americans will die from the illness, and that’s if citizens continue their distancing and home isolation. He said it’s going to be a “very rough” next couple weeks as the coronavirus is likely to peak in mid- to late-April. A best-case scenario appears to be the U.S. economy starting back up in May.

In overnight news, China got some more positive economic data Wednesday, as the Caixin manufacturing purchasing managers index (PMI) in March rose to 50.1 compared to 40.3 in February. A reading above 50.0 suggests growth in the sector. This news is a positive for those economies hit so hard by the coronavirus, as China’s economy has been able to stage a very swift recovery. However, more and more market watchers and media outlets are questioning the reliability of statistics coming out of China, especially those suggesting how fast its economy recovered from the coronavirus outbreak.

The Euro zone manufacturing PMI for March came in at 44.5, which was in line with market expectations and compares with February’s reading of 49.2.

The important outside markets today see Nymex crude oil prices lower and trading around $20.25 a barrel after hitting an 18-year low of $19.27 a barrel Monday. There are respected energy analysts saying there is still significantly more near-term downside potential in Nymex crude oil, amid a supply glut and a demand shock. The U.S. dollar index is solidly higher early this morning as the bulls are having a strong week. The 10-year U.S. Treasury note yield is trading around 0.61% Tuesday morning—down from Tuesday.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. manufacturing PMI, the global manufacturing PMI, domestic auto industry sales, the ISM manufacturing report on business, construction spending and the weekly DOE liquid energy stocks report.

–Jim
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Tuesday, March 31–Jim Wyckoff’s Morning Markets Report

On this technically important last trading day of the month and of the quarter, global stock markets were mostly firmer in overnight trading. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Traders and investors are a bit more upbeat early this week following news Monday morning that a vaccine for Covid-19 is on a fast track and could be ready for the public by early 2021. Still, most global stock indexes will experience their worst quarter since 2008.

In overnight news, China got some positive economic data Tuesday, as the manufacturing purchasing managers index (PMI) for March was 52.0 from 35.7 in February, while the services PMI was 52.3 in March versus 29.6 in February. A reading above 50.0 suggests growth in the sector. This news was uplifting to those economies hit hard by the coronavirus, as China’s economy has been able to stage a very swift recovery.

The important outside markets today see Nymex crude oil prices higher and trading around $21.25 a barrel after hitting an 18-year low of $19.27 a barrel Monday. There are anecdotal reports that U.S. crude oil trading on some local cash markets is selling for as little as $5.00 a barrel due to a supply glut and no place to store oil in the U.S. The U.S. dollar index is rebounding early this week after last week’s strong losses. The 10-year U.S. Treasury note yield is trading around 0.68% Tuesday morning—up a bit from Monday. Gold prices are sharply lower so far this week, amid the uptick in trader/investor risk appetite and the stronger U.S. dollar.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the S&P Case-Shiller home price index, the consumer confidence index, and the ISM-Chicago business survey.

–Jim
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The Nymex crude oil futures market on Monday plumbed an 18-year low of $19.92 a barrel, amid the global coronavirus outbreak that has severely reduced demand for energy. Throw in an oil-price war between major producers Saudi Arabia and Russia and you get oil prices in the teens. Oil prices are not likely at all to stay in the teens for an extended period of time. History shows that steep oil price downdrafts see fairly fast rebounds, as in weeks and not months. Stay tuned! Jim