Daily Morning Report

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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Thursday, February 6–Jim Wyckoff’s Morning Markets Report

Asian and European shares were higher overnight as traders and investors at least for now have pushed aside the coronavirus outbreak in China. U.S. stock indexes are pointed toward higher openings when the New York day session begins and are at or near their record highs.

History proves traders and markets are fickle. The coronavirus outbreak continues to spread, with over 500 reported dead in China and around 30,000 afflicted in the country. China’s domestic commerce is being impacted, as is global commerce. The big drop in Tesla’s stock price Wednesday is blamed at least in part on the coronavirus outbreak impacting Tesla’s business in China. Many global companies doing business with China (Remember that China is the world’s second-largest economy.) have been negatively impacted. It will not be surprising to this longtime market watcher to see the coronavirus outbreak back on the front burner of the marketplace next week, or sooner. Such a scenario would be bullish for gold, U.S. Treasuries and the U.S. dollar, and bearish for global equities.

Reports overnight said China has moved to lower tariffs on $75 billion in U.S. imports, as part of its recent partial trade agreement with the U.S. Chinese officials also said the plan to cut domestic value-added taxes. The Chinese Finance Ministry said it hopes to eventually eliminate all of the increased trade tariffs on U.S. goods that were implemented during the trade war of the past two years.

The global marketplace showed little reaction to the acquittal of President Trump in his impeachment trial in the Senate. The outcome was not surprising at all.

The key outside markets today see crude oil prices higher and trading around $51.00 a barrel. Meantime, the U.S. dollar index is near steady after hitting a nearly four-month high overnight.

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

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, and the monthly chain store sales index.

–Jim

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Global stock markets are in full rally mode at mid-week as traders and investors have pushed aside earlier concerns about the coronavirus outbreak in China significantly denting world economic growth. U.S. stock indexes are at or near their record highs. As is many times the case, an unexpected shock to the marketplace is initially deemed by traders as being close to a worst-case scenario and market prices react accordingly. Then, such turns out not to be the case, as is apparently so with the coronavirus outbreak. The U.S. stock index bulls are right back in business and the e-mini S&P bulls are looking for a fresh leg up in prices in the near term—if they can push prices above chart resistance at the present contract high. On a side note, U.S. stock market traders this week are buzzing about the stock price of Tesla, which has soared around 50% since the beginning of January. Some pessimistic stock market watchers are calling Tesla’s move a euphoria that can signal the top in a stock market rally. Stay tuned!–Jim

Wednesday, February 5–Jim Wyckoff’s Morning Markets Report

Global stock markets are in full rally mode at mid-week, as Asian and European shares pushed higher as traders and investors have pushed aside earlier concerns about the coronavirus outbreak in China significantly denting world economic growth. The marketplace is reacting to the rate of spread of the illnesses slowing down, even though total numbers of those afflicted is rising. U.S. stock indexes are pointed toward sharply higher openings when the New York day session begins and are at or near their record highs. As is many times the case, an unexpected shock to the marketplace is initially deemed by traders as being close to a worst-case scenario and market prices react accordingly. Then, such turns out not to be the case, as is apparently so with the coronavirus outbreak.

The marketplace this week sees it as especially encouraging that China’s central bank stepped in an provided significant liquidity to China’s financial system, specifically by reducing short-term lending rates with the influx of funding. The effort was in response to the coronavirus outbreak’s negative impact on China’s businesses.

U.S. stock market traders this week are buzzing about the stock price of Tesla, which has soared around 50% since the beginning of January. Some pessimistic stock market watchers are calling Tesla’s move a euphoria that can signal the top in a stock market rally.

The key outside markets today see crude oil prices higher and trading around $50.75 a barrel. Meantime, the U.S. dollar index is firmer.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the international trade report, the U.S. services PMI, the global services PMI, the weekly DOE liquid energy stocks report, and the ISM non-manufacturing report on business.

–Jim

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