Daily Morning Report

Thursday, December 12–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were mixed mostly firmer overnight. The U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. The marketplace is still digesting Wednesday’s conclusion of the FOMC meeting of the Federal Reserve, which saw no change in U.S. interest rates and a mostly upbeat assessment of the U.S. economy. The FOMC did tip its hand and say there were no rate-cut plans on the table for 2020 and implied that interest rates could remain stable for a prolonged period of time. The FOMC statement and comments from Fed Chairman Powell were deemed mostly neutral, but the gold and U.S. Treasury markets rallied, while the U.S. dollar index sold off in the aftermath of the FOMC statement Wednesday afternoon.

The European Central Bank is meeting today, headed up by new ECB President Christine Lagarde. No changes in ECB monetary policy are expected.

A general election in the U.K. today will help determine the course of Brexit and Prime Minister Boris Johnson’s conservative policies.

In other overnight news, China’s official Xinhua news agency said China will lower “funding costs” for the overall economy.

Euro zone industrial production in October was reported down 0.5% from September and down 2.2%, year-on-year. Those figures were a bit worse than expected.

The Sunday, Dec. 15 U.S. trade tariffs deadline on China’s imports is looming over the marketplace. While recent rhetoric from both sides has been mostly upbeat recently, traders know that the situation is still very fluid. Many markets are likely to be more tentative the rest of this week, knowing that a surprise could come this weekend.

The key “outside markets” today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are higher and trading around $59.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report and the producer price index.

–Jim

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Wednesday, December 11–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were mixed weaker overnight. The U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. This Sunday (Dec. 15) is the deadline for new U.S. trade tariffs going into effect against Chinese goods imported into the U.S. While the rhetoric this week has been mostly upbeat on the matter, the history of the U.S.-China trade war is one of distinct highs and lows regarding progress toward a deal. And the marketplace knows President Trump’s mercurial personality. Thus, markets and traders are likely to remain tentative the rest of this week, and slightly leaning toward risk aversion.

Traders and investors are also awaiting the U.S. economic highlight of the week: the Federal Reserve’s Open Market Committee meeting (FOMC) that began Tuesday morning and ends Wednesday afternoon with a statement. The Fed is expected to make no changes in its monetary policy. However, the FOMC statement and Fed Chairman Powell’s press conference will be closely scrutinized for clue on futures monetary policy moves. The European Central Bank also meets on monetary policy Thursday.

The key “outside markets” today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are weaker and trading around $59.00 a barrel.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, real earnings, the monthly Treasury budget statement and the weekly DOE liquid energy stocks report.

–Jim

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The March e-mini S&P stock index futures bulls powered prices higher late last week to negate a potentially bearish “key reversal” down that had occurred earlier. However, now a bearish diamond pattern has formed on the daily bar chart, which is another technical clue of a topping process in the market. But if history repeats itself, the bulls will again dodge this bullet–or maybe not. Price action this week will determine. Stay tuned!–Jim

Tuesday, December 10–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were mostly weaker overnight. The U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk aversion has crept up early this week. Next Sunday (Dec. 15) is the deadline for the imposition of new tariffs on Chinese imports into the U.S. If those new tariffs are allowed by President Trump to go into effect, then the U.S.-China trade war would likely escalate and no partial trade deal would be in sight, most believe. The keener uncertainty as the deadline approaches is likely to keep market participants leery the rest of this week. There is no real consensus on what will happen before Sunday, which makes the marketplace even more cautious.

The U.S. economic highlight of the week is the Federal Reserve’s Open Market Committee meeting (FOMC) that begins Tuesday morning and ends Wednesday afternoon with a statement. The Fed is expected to make no changes in its monetary policy. The European Central Bank also meets on monetary policy Thursday.

The closely watched German ZEW current conditions index came in at -19.9 in December versus -24.7 in November. The expectations index was 10.7 in December compared to -2.1 in November. The expectations index was well above market expectations and was the best reading of the year.

The key “outside markets” today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are slightly lower and trading around $59.00 a barrel.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index, revised productivity and costs, and the Manpower employment outlook survey.

–Jim

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Monday, December 9–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were mixed overnight. The U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The world marketplace is seeing just a bit of risk aversion to start the trading week, following downbeat economic data coming out of China, the world’s second-largest economy. China’s exports fell 1.1% in November, year-on-year, including shipments to the U.S. declining 23% in the period. China’s exports were seen up 1.0% in November. Imports were up 0.3% in the same period, and were expected to be unchanged.

The U.S. economic highlight of the week is the Federal Reserve’s Open Market Committee meeting (FOMC) that begins Tuesday morning and ends Wednesday afternoon with a statement. The Fed is expected to make no changes in its monetary policy. The European Central Bank also meets on monetary policy Thursday.

Goldman Sachs is recommending investors buy some more gold in the coming months, due to stubbornly low global bond yields, the higher potential for stock market turbulence and the keener uncertainty of the 2020 U.S. presidential election.

The key “outside markets” today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are lower and trading around $58.75 a barrel.

U.S. economic data due for release Monday is light and includes the employment trends index. The pace report picks up rapidly Tuesday and through the rest of the week.

–Jim

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The Nymex crude oil market remains in a nearly 2.5-month-old uptrend on the daily bar chart, to give the bulls the near-term technical advantage and to suggest the path of least resistance for prices will remain sideways to higher in the near term. However, it’s my bias that the oil market bulls will find tough sledding as prices push toward or just above $60.00 a barrel. Stay tuned!–Jim