Daily Morning Report

Monday, September 23–Jim Wyckoff’s Morning Markets Report

Purchasing managers’ index (PMI) reports coming out of the European Union Monday showed the Euro zone composite PMI for September come in at a lower-than-expected 50.4. A reading below 50.0 suggests contraction. More worrisome, Germany’s manufacturing PMI in September came in at 41.4, which was also worse than expected and suggests the German economy is teetering on recession.

Nymex crude oil prices are weaker and trading around $57.75 a barrel. The Wall Street Journal reported over the weekend that it could take months, not weeks, to fully restore production at the oil installations attacked in Saudi Arabia in mid-September.

The other key outside market today sees the U.S. dollar index trading up.

U.S. economic data due for release Monday includes the Chicago Fed national activity index, and the U.S. flash manufacturing and service purchasing managers’ indexes. Several Federal Reserve officials also are scheduled to speak today.

–Jim

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Friday, September 20–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly up in trading overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. It looks to be a quieter end to the trading week as the world marketplace has calmed down significantly after traders came to work Monday dealing with a major geopolitical shock after last weekend’s attack on Saudi Arabian oil installations.

However, many futures traders in many markets will not want to go home for the weekend with big positions, as it still appears the U.S. and Iran are on a collision course at some point down the road.

Nymex crude oil prices are higher and trading around $58.75 a barrel. The other key outside market today sees the U.S. dollar index trading slightly up.

There is no major U.S. economic data due for release Friday.

–Jim

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The wheat, corn and soybean futures markets have all rebounded from their recent summertime lows as autumn officially arrives in a few days. This is the time of year that the grain prices can put in their “harvest lows.” It is my bias that grain futures prices will trend at least sideways, if not sideways to higher, into the end of the year. Stay tuned!–Jim

Thursday, September 19–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly up in trading overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. The marketplace is presently not as anxious as earlier this week, in the wake of the weekend terrorist attack on Saudi oil installations.

Traders and investors are still digesting the Federal Reserve’s Open Market Committee (FOMC) meeting that ended Wednesday afternoon and raised U.S. interest rates (the “Fed funds” rate) by 0.25%, to 1.75% to 2%. The move was expected by the marketplace. However, the FOMC members were split on the move, voting 7 to 3 in favor of the cut. Seven of 17 FOMC members expect just one more interest rate cut this year. The marketplace deemed the FOMC statement as not so easy on U.S. monetary policy as many had expected, despite the rate cut. “A divided Fed” is the term many are now using to describe the U.S. central bank’s monetary posture.

Overnight the Bank of Japan and held its monetary policy steady, while the Swiss National Bank did the same. The Bank of England is also meeting and its results are due out this morning.

The Paris-based OECD think tank has forecast global economic growth in 2019 at 2.9%, which is the slowest pace in 10 years. The OECD cited the U.S.-China trade war and Brexit fears as culprits for the slowing world economic growth pace.

Nymex crude oil prices are higher and trading around $59.00 a barrel. Reports this week said the damaged Saudi oil installations would be back on line by the end of this month, which is much sooner than initially expected.

The other key outside market today sees the U.S. dollar index trading lower.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, existing home sales, and leading economic indicators.

–Jim

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Wednesday, September 18–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed in quieter trading overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. At mid-week the marketplace is not as anxious as earlier this week, in the wake of the weekend terrorist attack on Saudi oil installations. Still, traders and investors are wondering when “the next shoe will drop” on this matter.

The big U.S. economic event this week is the meeting of the Federal Reserve’s Open Market Committee (FOMC) that began Tuesday morning and ends Wednesday afternoon with a statement. It’s widely believed the FOMC will lower U.S. interest rates by 0.25% today. Traders also hope they will get some forward guidance on U.S. monetary policy from Fed Chairman Powell’s press conference today. President Trump has been berating the Fed to more aggressively lower interest rates to make the U.S. more competitive with other nations on trade.

After a spike up in very short term lending rates on Tuesday, the overnight rates returned to normal levels Wednesday, after the Federal Reserve injected liquidity into the financial system. While some traders and institutions were rattled by the matter, the overall marketplace was not impacted.

Nymex crude oil prices are weaker and trading around $59.00 a barrel. Reports surfaced Tuesday that the damaged Saudi oil installations could be back on line sooner than expected.

The other key outside market today sees the U.S. dollar index trading up.

In overnight news, the Euro zone August consumer price index was reported up 0.1% from July and up 1.0%, year-on-year.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction and the weekly DOE liquid energy stocks report.

–Jim

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The Nymex crude oil futures market has spiked higher this week as 6% of the world’s oil production was knocked off line by the weekend drone attack on Saudi oil installations. This is a game-changer, regarding the “war premium” added to the price of a barrel of oil. Up to last weekend it can be argued there was little to no war premium at all in the price of crude. In years past the war premium for oil was significant, arguably above $20 a barrel at times of heightened tensions in the Middle East. But then booming U.S. shale oil production reduced U.S. dependence on Persian Gulf oil. Now, traders and investors worldwide see how vulnerable the Persian Gulf oil producers are to terrorist attacks disrupting oil production. While the Middle East is not the 800-pound gorilla it once was in the global oil market, it’s still a heavyweight provider of oil for major countries in Europe and China. Going forward, look for crude oil prices to carry a significant war premium of probably at least $5.00 a barrel. That suggests the days of Nymex crude oil prices below $50.00 a barrel may be over. Stay tuned!–Jim