The Euro currency bears remain in solid near-term technical control as prices are not far above the recent lows and are starting to trend lower again. The path of least resistance for the Euro currency futures prices remains sideways to lower. Stay tuned!
Daily Morning Report
U.S.-China trade deal hopes keep investor attitudes upbeat
Tuesday, November 26–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly flat overnight and the U.S. stock indexes are also pointed toward near steady openings when the New York day session begins, after setting new record and contract highs overnight. Trading in the U.S. Tuesday will begin to taper off ahead of the U.S. Thanksgiving holiday on Thursday.
Global trader/investor risk appetite remains upbeat Tuesday, following reports that the top trade negotiators from the U.S. and China held a telephone conversation Monday, with the Chinese press reporting the two sides had “reached a consensus on properly resolving latest issues.”
Federal Reserve Chairman Jerome Powell gave a speech Monday evening, in which he said the Fed lowered interest rates this year because the U.S. economy was not performing as strongly as expected, but implied there will be no further rate cuts unless the economy showed unexpected weakness.
A report Tuesday said consumer demand for gold from its two largest consuming nations—China and India—is declining. The report said weaker local currencies have made gold more expensive for consumers to purchase, including increased duties from India’s government.
The key “outside markets” today see the U.S. dollar index near steady. Nymex crude oil prices are near steady and trading around $58.00 a barrel.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, advance economic indicators, the monthly house price index, the S&P-Case-Shiller home price index, the Richmond Fed business survey, the consumer confidence index, and new residential sales.
–Jim
China overture on trade boosts global risk appetite
Monday, November 25–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly firmer overnight and the U.S. stock indexes are pointed toward higher openings when the New York day session begins.
Trader and investor risk appetite is more upbeat to start the trading week on news that China says it will step up its efforts to protect intellectual property rights. That is a key element the U.S. wants China to reform in order to reach a trade deal. It could be that the U.S.’s hard-line approach on the trade deal with China is putting pressure on China to get a deal completed soon.
In other overnight news, Goldman Sachs issued a report that said raw commodity prices will rise in 2020 and for the next decade due to a worldwide move to “decarbonize” the planet, including less investment in carbon-based industries. That scenario would lead to supply shortages of some key commodities, the report said.
Reuters has reported gold worth billions of dollars is being smuggled out of Africa via the United Arab Emirates. The report said the UAE imported just over $15 billion in gold from Africa in 2016. Reuters compared total imports from the UAE with the exports declared by African states which showed that gold was entering the UAE through unknown sources. Furthermore, industrial mining firms in Africa told Reuters they did not send their gold to the UAE. From 2006 to 2016, African gold in UAE’s gold imports increased from 18% to 50%, despite no big industrial firm saying they send their gold there.
The key “outside markets” today see the U.S. dollar index slightly higher. Nymex crude oil prices are near steady and trading around $57.75 a barrel.
U.S. economic data due for release Monday includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.
–Jim
Quiet Geopolitical Front Keeps Focus on U.S.-China Trade War
Friday, November 22–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed overnight and the U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins.
Amid a quieter geopolitical front recently, trader and investor focus remains on the U.S.-China trade war and ongoing negotiations between the world’s two largest economies. Late this week the tenor is mixed, highlighted by Chinese Premiere Xi saying China will “fight back” on trade if the U.S. imposes more tariffs on China’s products. Yet, reports from China also say trade officials, including Xi, want to get a deal done, with Xi saying he does not want a trade war. Reports Thursday said Chinese trade officials invited U.S. trade officials to China for more talks in the near term. This pattern of optimism and then pessimism on trade-talks progress continues.
In other overnight news, the German October manufacturing purchasing managers index (PMI) came in at 43.8, which was a bit better than expected but still well below the 50.0 level, indicating contraction in the sector.
The key “outside markets” today see the U.S. dollar index slightly higher. Nymex crude oil prices are weaker and trading around $58.25 a barrel. Oil prices hit a two-month high on Thursday.
U.S. economic data due for release Friday includes the U.S. flash manufacturing and services purchasing managers indexes, the Federal Reserve Kansas City manufacturing survey, and the University of Michigan consumer sentiment survey.
–Jim
U.S. Stock Market Likely to Remain “Only Game in Town”
The U.S. stock indexes this week hit more record highs. The charts remain fully bullish, both near-term and long-term, to suggest still more gains and no early clues of market tops being close at hand. Importantly, the fundamental picture for the U.S. stock market has been and is likely to continue to favor the bullish camp. One major reason for the big gains in the stock market is that equities have been “the only game in town” for investors the past several years. With inflation being at historically very low levels, such has put a damper on other markets’ returns. Low inflation keeps commodity market prices tamped down and also presses U.S. Treasury yields down (prices up). As long as global inflationary pressures remain very low—including the potential for the very serious problem of price deflation—owning shares will likely continue to be the main investment asset for most of the investing public. Stay tuned!–Jim
Global Stock Markets Waver on Downbeat U.S.-China Trade Tone
Thursday, November 21–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly weaker overnight and the U.S. stock indexes are pointed toward lower openings when the New York day session begins.
Once again, the marketplace is focusing on the up-and-down U.S.-China trade talks, and now with a downbeat bias. Reports overnight say China trade officials have contacted U.S. trade officials regarding a meeting in China soon. The reports said the U.S. has yet to respond. This news follows comments from President Trump this week that dented optimism for a partial trade deal being signed anytime soon. Trump late Wednesday said China is not “stepping up” on a trade deal and that the U.S. could slap more tariffs on Chinese imports. A report Wednesday also said China is standing firm on wanting the U.S. to rollback all of its tariffs on Chinese products. Most traders and investors have become numb to the matter.
Hong Kong civil unrest remains high and the protestors got a psychological boost this week when the U.S. Congress proposed official U.S. backing of them. That has also angered mainland China. This situation is likely to get worse before it gets better.
In other overnight news, the Paris-based OECD think tank has forecast global economic growth in 2020 at 2.9% and at 3.0% in 2021. Those numbers are steady to slightly lower than the previous forecasts for the time periods. The OECD also forecast China’s economic growth in 2021 slowing to 5.5%.
The key “outside markets” today see the U.S. dollar index modestly higher. Nymex crude oil prices are weaker and trading around $56.75 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, leading economic indicators and existing home sales.
–Jim