Daily Morning Report

Friday, November 15–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were mostly higher overnight. U.S. stock indexes are pointed toward modestly higher openings and at new record highs when the New York day session begins. Trader and investor risk appetite is a bit more robust to end the trading week. It’s been another up-and-down week regarding progress, or lack thereof, in U.S.-China trade negotiations. A Barron’s headline Friday warned that investors should be less worried about U.S.-China trade talks and more concerned about recent data pointing to a significant slowdown in China’s economic growth.

Hong Kong reported its gross domestic product down 2.9% in the third quarter, from the same period last year. The city expects its GDP to decline by 1.3% in 2019—the first annual decline in 10 years. Civil unrest in the city much of this year has hurt Hong Kong’s economic growth, as well as rattled Asian stock markets.

In other overnight news Friday, the Eurozone October consumer price index rose 0.1% from September and was up 0.7%, year-on-year.

The key “outside markets” today see the U.S. dollar index slightly lower. Nymex crude oil prices are weaker and trading around $56.50 a barrel.

It’s a very busy Friday for U.S. economic data released, including the Empire State manufacturing survey, retail sales, import and export prices, industrial production and capacity utilization, and manufacturing and trade inventories.

–Jim

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It’s important for traders of all trading timeframes to examine longer-term weekly and monthly charts for the markets in which they are interested. Chart price history shows that trending moves tend to see prices gravitate toward recent historical highs or lows. See on the weekly continuation chart for nearby cocoa futures that prices are in a longer-term uptrend and have just this week hit a 1.5-year high. The bulls are in firm command to suggest more price gains in the near term, and even longer term. By the way, if you would like some further education on trading markets to become more successful, I have an e-book called “Sharpening Your Trading Skills” that you can have, for free. Send me an email at jim@jimwyckoff.com and I’ll email the book to you straight away. Nothing to fill out and no strings attached. That’s the way I roll in this industry. Stay tuned!–Jim

Asian and European stock indexes were mixed but mostly lower overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.

Risk aversion has up-ticked as the trading week progresses. A U.S.-China trade partial agreement now appears farther off after both sides have made comments this week to support that notion. China is reportedly balking at specific amounts of U.S. agricultural products it would be required to purchase in a trade deal. Meantime, President Trump said the U.S. is not going to roll back all of its tariffs on Chinese imports, which is what China is apparently requesting.

There was more downbeat economic data coming out of China Thursday, to support President Trump’s assertions the trade war is hurting China way more than the U.S. China’s industrial output in October was up 4.7% year-on-year—down from a rise of 5.8% in September. Retail sales were up 7.2% in October, also missing on the downside trade forecasts. Other economic data released from China Thursday was a mixed bag.

In other overnight news, the Euro zone third-quarter gross domestic product rose 0.2% from the second quarter and was up 1.2%, year-on-year. Those numbers were very close to market expectations.

Global risk appetite is also dented this week by an escalation of civil unrest in Hong Kong, including police shooting at least one protestor.
The key “outside markets” today see the U.S. dollar index slightly higher. Nymex crude oil prices are higher and trading around $57.70 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the producer price index, and the weekly DOE liquid energy stocks report. Several Federal Reserve officials are also slated to speak today.

–Jim

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Wednesday, November 13–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were mostly down overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins.

Risk aversion is keener at mid-week following remarks made by President Trump in a speech in New York Tuesday. The mercurial Trump appeared to suggest the U.S. is not so keen on removing its tariffs on Chinese imports. While he said trade talks are going well and a “Phase 1” deal could be reached soon, reports have said the Chinese are adamant that the U.S. tariffs must be removed to get a Phase 1 trade deal signed. It should be not at all surprising that the marketplace’s perception of progress on the trade talks between the world’s two largest economies has down-ticked in recent days. The trade talks’ progress or lack thereof has been a rollercoaster affair for the markets for many months.

Gold prices are getting a good safe-haven bid on Trump’s comments Tuesday. Trump also bashed the Federal Reserve again in his remarks to economists in New York. Fed Chairman Jerome Powell testifies on the U.S. economy in front of Congress today and will surely be asked what he thinks about Trump’s latest bashing of the Fed. Trump’s browbeating of the Fed may or may not be a market factor or an influence on the Fed’s policy actions. However, many feel Powell has and will continue to lean easy on U.S. monetary policy due in part to Trump’s berating of him and the Fed for not lowering interest rates more.

Gold and other safe-haven assets are also benefitting from an escalation in protesting and violence this week in Hong Kong. The civil unrest is spreading in the city and appears likely to get worse before it gets better.

The key “outside markets” today see the U.S. dollar index slightly higher. Nymex crude oil prices are weaker and trading around $56.35 a barrel.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, real earnings and the monthly Treasury budget statement. Besides Powell’s speech to Congress today, several other Fed officials are slated to give speeches.

–Jim

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The Nymex crude oil futures market sees December prices trending higher from the October low. Bulls have the near-term technical advantage. However, it’s my bias that barring a major geopolitical shock in the Middle East the market will trend sideways and choppy in the coming weeks, or longer–and that the upside is limited. Reason: A U.S. energy official said this week U.S. shale oil production will reach 13 million barrels a day. That’s a huge (and bearish!) number. U.S. shale oil production the past several years has been a game-change on the world crude oil front. Stay tuned!–Jim

Tuesday, November 12–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were mostly up overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Risk aversion in the world marketplace remains low.

There have been no new developments on the U.S.-China trade war front the past few days. However, President Trump on Tuesday will give a speech to the New York Economic Club that is likely to provide some fresh insight on Trump’s intentions on the matter. Trump last Friday sounded a bit less upbeat on the U.S.-China trade front, saying talks were going “very nicely” but adding the U.S. is not rolling back all of the import tariffs on Chinese products. Over the weekend Trump said China needs a trade deal completed way more than the U.S. needs it.

The civil unrest in Hong Kong has escalated in recent days. Some reports are saying the city is now on the verge of shutting down. One protester was shot by police over the weekend and another man was set on fire by protesters. This situation could flare up into a major geopolitical event very quickly if mainland China gets more involved in the matter.

In other overnight news, Federal Reserve Vice Chairman Richard Clarida said very low global inflation levels are presenting problems for the world’s major central banks, including their ability to stimulate economic growth.

The key “outside markets” today see the U.S. dollar index higher. Nymex crude oil prices are firmer and trading around $57.25 a barrel. A U.S. Energy Department official said U.S. shale oil production will reach 13 million barrels per day in December.

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

–Jim

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