Daily Morning Report

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

Asian and European stock markets were mostly up overnight. U.S. stock indexes are also pointed toward mixed openings when the New York day session begins. Generally, there remains low risk aversion in the world marketplace at mid-week. China has made a positive overture to the U.S. regarding trade when it said it will exempt certain U.S. products from tariffs for one year. This week the U.S.-China trade tensions have appeared to ratchet down a notch.

Focus is turning to the monetary policy meeting of the European Central Bank on Thursday, at which time the ECB is expected to only very slightly cut interest rates, pushing them further into negative territory. The Federal Reserve meets next week and is expected to cut U.S. interest rates by 0.25%.

The key “outside markets” today see Nymex crude oil prices higher and trading around $58.00 a barrel. Thursday sees a meeting of the OPEC oil cartel. Oil prices have rallied recently on ideas OPEC nations will continue to constrict their spigots. OPEC today cut its world oil demand growth forecast to 1.02 million barrels per day for 2019. The U.S. dollar index is higher in early U.S. trading today.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the producer price index, monthly wholesale trade and the weekly DOE liquid energy stocks report.

–Jim

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

Asian and European stock markets were narrowly mixed overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins.

In overnight news, China’s consumer price index rose 2.8% in August, year-on-year, which was the same rate as July. The rise was more than expected and was led by surging pork prices. China’s producer prices were down 0.8% in August, year-on-year, due in part to the negative effects of China’s trade war with the U.S. China’s central bank eased its monetary policy last week and is likely to do it again in the near term.

Focus is turning to the monetary policy meeting of the European Central Bank on Thursday, at which time the ECB is expected to cut interest rates, pushing them further into negative territory. The FOMC meets next week.

The key “outside markets” today see Nymex crude oil prices slightly firmer and trading around $58.00 a barrel. Thursday sees a meeting of the OPEC oil cartel. Oil prices have rallied recently on ideas OPEC nations will continue to constrict their spigots. The U.S. dollar index is firmer in early U.S. trading today.

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

–Jim

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The December U.S. Treasury note and bond futures have seen sideways trading at higher levels for the past few weeks. The bulls have faded a bit but still have the firm overall near-term technical advantage. This week, the Treasury market bulls do need to step up and show some power to avoid what could be near-term chart damage if they do not. Stay tuned!–Jim

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

Asian and European stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trader and investor risk appetite remains elevated to start the trading week. News Friday that China’s central bank eased its monetary policy and reports over the weekend that the U.K. appears to be avoiding, for now, a “hard Brexit,” have most of the world marketplace in an upbeat mood.

There was a Dow Jones Newswires report over the weekend that said China’s official economic numbers are probably not accurate and likely are overly hyped by the government. The report said China’s overall economic growth (gross domestic product) is probably about half of what the official numbers say, or actually around 3%, annual growth. This news is not surprising to many market watchers.

There were protesters demonstrating in Hong Kong again over the weekend. However, the markets are not now deeming the protests as an escalation in the overall situation.

The key “outside markets” today see Nymex crude oil prices firmer and trading around $57.00 a barrel. The U.S. dollar index is slightly weaker in early U.S. trading today.

U.S. economic data due for release Monday includes the employment trends index and consumer credit.

–Jim

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Friday, September 6–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trader and investor risk appetite has markedly improved this week, which has pushed the U.S. stock indexes back toward their summertime highs.

The August U.S. employment situation report from the Labor Department is on deck Friday morning. The key “non-farm” payrolls component of the report is expected to show a gain of 150,000 in August. A miss on the consensus forecast is likely to move many markets.

Protesters are set to demonstrate in Hong Kong again this weekend, reports said. This week Hong Kong’s leader withdrew from consideration a proposed law that would have allowed the extradition of Hong Kong citizens to mainland China for criminal trials. Right now it appears doubtful the reversal of Hong Kong’s leader on the extradition matter will be enough to stop the civil unrest. Now, protesters are calling for more change, including Hong Kong’s leader stepping down. Importantly, the Fitch credit rating agency has just downgraded its main rating on Hong Kong.

The Brexit saga continues as the October deadline for a U.K. deal with the European Union approaches. Prime Minister Boris Johnson wants out with no extension of time to reach a “soft” Brexit. He said Thursday he’d “rather be dead in a ditch” than extend Brexit negotiations. However, votes this week from Parliament appear to have defeated his “hard” Brexit stance. The matter continues to unsettle European markets.

China’s central bank moved to again ease its monetary policy Friday by lowering the reserve requirement ratio for banks.

The Euro zone second-quarter GDP on Friday came in unrevised at up 0.2% from the first quarter, and was up 1.2%, year-on-year.

The key “outside markets” today see Nymex crude oil prices weaker and trading around $55.75 a barrel. The U.S. dollar index is firmer today.

There is no other U.S. economic data due for release Friday. Federal Reserve Chairman Jerome Powell does deliver a speech in Zurich, Switzerland later Friday.

–Jim

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The December e-mini S&P futures on Thursday pushed to a five-week high and produced a bullish upside “breakout” from the choppy trading range seen on the daily bar chart. The breakout suggests more gains are likely in the near term, including a challenge of the contract high scored in late July. Still, traders know we are now into the historically turbulent months of September and October, which could mean more daily price volatility. Stay tuned!–Jim