Daily Morning Report

Wednesday, February 12–Jim Wyckoff’s Morning Markets Report

Asian and European shares were mostly higher overnight. U.S. stock indexes are also pointed toward higher openings and near record highs when the New York day session begins. Trader and investor risk appetite is upbeat around the globe at midweek. While the coronavirus outbreak continues to spread, the rate of growth of new cases is slowing. There are now over 1,100 reported dead in China and over 45,000 afflicted. Still, there are reports in Asian countries of supply chains and local commerce being significantly interrupted by the outbreak.

In other overnight news, Euro zone industrial output for December was down 2.1% from November and down 4.1%, year-on-year. Those numbers were worse than expected.

The key outside markets today see crude oil prices higher and trading around $50.70 a barrel. Meantime, the U.S. dollar index is slightly up in early U.S. trading and not far below this week’s multi-month high.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the monthly Treasury budget statement. Federal Reserve Chairman Jerome Powell will testify to the Senate today after speaking to the House Tuesday.

–Jim

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The U.S. dollar index is a basket of six major world currencies weighted against the dollar. See on the daily bar chart that the USDX is in a solid uptrend and this week hit a nine-month high. The greenback is being boosted in part of safe-haven demand due to the uncertainty of the coronavirus outbreak, but also on the strength of the U.S. economy. Technicals are bullish for the USDX and there are no early chart clues that a market top is close at hand. Stay tuned!–Jim

Tuesday, February 11–Jim Wyckoff’s Morning Markets Report

Asian and European shares were mostly higher overnight. U.S. stock indexes are also pointed toward higher openings when the New York day session begins. While the coronavirus outbreak continues to spread, it is now spreading at a lower rate of growth of new cases, which has again somewhat assuaged the marketplace Tuesday. There are now over 1,000 reported dead in China and over 42,500 afflicted. On this day the marketplace reckons the spread of the illness is getting under control and that the Chinese government, working with the U.S. and other countries, will keep the outbreak from becoming a pandemic. Traders and investors have been calmed down before on this matter, only to become anxious again. Once again, traders are markets are fickle.

Focus of U.S. traders today will be on the testimony from Federal Reserve Chairman Jerome Powell to a House of Representatives financials services committee. Several other Federal Reserve officials are scheduled to give speeches Tuesday.

The key outside markets today see crude oil prices higher and trading around $50.30 a barrel. Meantime, the U.S. dollar index is slightly weaker overnight after hitting a nine-month high Monday.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index.

–Jim

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Monday, February 10–Jim Wyckoff’s Morning Markets Report

Asian and European shares were mostly weaker overnight as traders and investors have put the coronavirus outbreak back to the front burner of the marketplace. There is not a consensus on the ultimate impact of the virus on the global economy, but worries are not receding. U.S. stock indexes are pointed toward steady to weaker openings when the New York day session begins. Trader and investors attitudes are not panicky and wanting to sell their risk assets, but more a case of not wanting to step in to buy them.

The coronavirus outbreak continues to spread, with over 900 reported dead in China, which surpasses the SARS outbreak that occurred over 15 years ago. The World Health Organization said the coronavirus rate of spread could accelerate. Reports also said some manufacturers in China, especially auto makers, have had to stop their assembly lines due to lack of materials for production. Some analysts are saying the coronavirus outbreak in China will have a more negative impact on the domestic economy than the trade war with the U.S.

In other overnight news, China’s consumer price index was reported for January at up 5.4% year-on-year, which was higher than expected and hit an eight-year high. Food price inflation was reported up 20.6%, year-on-year.

The key outside markets today see crude oil prices weaker and trading around $50.00 a barrel. Meantime, the U.S. dollar index is slightly weaker overnight after hitting a four-month high earlier.

U.S. economic data due for release Monday includes the employment trends index. President Trump’s fiscal 2021 budget is also released today.

–Jim

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The gold market has wobbled a bit recently and bulls need to show more power soon to restart a price uptrend on the daily bar chart. However, the gold market bulls can correctly argue their metal has shown keen resilience in the face of their competing asset class, equities, performing very well, including the U.S. stock indexes hitting record highs this week. There are still elements in the global marketplace that will support safe-haven demand for gold, including the main one right now being the coronavirus outbreak that threatens to crimp global economic growth. Stay tuned!–Jim

Friday, February 7–Jim Wyckoff’s Morning Markets Report

Asian and European shares were weaker overnight as traders and investors have pushed the coronavirus outbreak in China back to near the front burner of the marketplace. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Traders can correctly argue many of the rallying stock indexes are on Friday just seeing some normal profit-taking pressure from recent gains that put some stock indexes at record highs earlier this week, including those in the U.S.

Still, the coronavirus outbreak continues to spread, with over 625 reported dead in China and over 31,000 afflicted in that country. President Trump and Chinese Premiere Xi Jing Ping discussed the matter in a telephone call late Thursday. China’s domestic economy is being impacted, as is the global economy, to a degree. There are also reports coming from China that the nation may invoke a disaster clause in its trade agreement with the U.S. that would allow China to purchase less than their January trade agreement stated. Look for safe-haven assets like gold, U.S. Treasuries, the Japanese yen and the U.S. dollar to perform better on Friday, heading into an uncertain weekend regarding the coronavirus situation.

Traders are awaiting the U.S. employment situation report from the Labor Department that is out Friday morning—arguably the most important U.S. economic report of the month. The key non-farm payrolls figure is forecast to come in at up around 160,000. However, a very strong ADP national employment report reading on Wednesday has some reckoning Friday’s jobs report will be stronger than forecast.

The key outside markets today see crude oil prices weaker and trading around $50.50 a barrel. Meantime, the U.S. dollar index is firmer and hit a four-month high overnight.

Other U.S. economic data due for release Friday includes the monthly wholesale trade report, and consumer credit.

–Jim

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