Daily Morning Report

Tuesday, August 27–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward near-steady openings when the New York day session begins. While there is still a bit more trader and investor optimism regarding a U.S.-China trade agreement being reached down the road, it appears President Trump’s comments Monday at the G-7 meeting in France were probably too optimistic, following rhetoric coming out of China.

While traders and investors are may not quite as anxious so far this trading week, there are still elements lingering that could quickly induce a headache for the world marketplace, including civil unrest in Hong Kong, and instability in the Persian Gulf and in Venezuela. The months of September and October are right around the corner, which have been problematic for the stock market in the past. And this year the U.K. is scheduled to leave the European Union (Brexit) in October—so far without a planned departure.

In overnight news, another report showed weakening world economic growth, as Germany’s second-quarter gross domestic product was down 0.1%. Germany auctioned is two-year note for a yield of minus 0.89% today, which is a record low.

The key “outside markets” today see Nymex crude oil prices up and trading around $54.25 a barrel. The U.S. dollar index is weaker.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the quarterly and monthly house price indexes, the S&P-Core-Logic house price index, the Richmond Fed business survey, and the consumer confidence index.

–Jim

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Monday, August 26–Jim Wyckoff’s Morning Markets Report

The unexpected twists and turns in the U.S.-China trade war continue, as President Trump early Monday morning said Chinese trade officials called U.S. trade officials Sunday evening to restart discussions. Trump said China “wants to make a deal” and “that’s a great thing.” Markets in Asia and European were under selling pressure early on, until the Trump news hit the news wires and turned the stock markets that were still open around. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Chinese officials appeared a bit murky on the matter of the phone call, however. The surprise news Monday comes after Trump on Friday unleashed a barrage of negative tweets on China, including “demanding” that U.S. businesses leave there.

The weekend G-7 summit in Paris produced nothing major that the marketplace deemed as price-sensitive. Trump had a chance to meet with Iran’s foreign minister who showed up unexpectedly, but declined to do so.

Civil unrest in Hong Kong escalated over the weekend, including clashes between police and protestors. The world marketplace continues to closely monitor the situation.

In other overnight news, the closely watched German Ifo business conditions index in August fell to 94.3 versus expectations of a reading of 95.1.

The key “outside markets” today see Nymex crude oil prices firmer and trading around $54.50 a barrel. The U.S. dollar index is solidly higher.

U.S. economic data due for release Monday includes the Chicago Fed national activity index, durable goods orders and the Texas manufacturing outlook survey.

–Jim

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The U.S. dollar index is a basket of six major world currencies rolled into on composite price index. It’s a gauge of the overall health of the U.S. currency. See on the daily bar chart that the USDX is in an uptrend and is close to reaching a new high for the year. The greenback bulls are in firm technical command as summertime is winding down, heading into what can be more turbulent trading months of September and October. Stay tuned!–Jim

Friday, August 23–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

The economic highlight of the week occurs Friday morning at 10:00 a.m. EDT when Federal Reserve Chairman Jerome Powell is scheduled to give a speech at the Kansas City Fed’s symposium in Jackson Hole, Wyoming. The Fed was deemed by the marketplace to be leaning significantly easy on their monetary policy, until late this week. Comments from Fed officials at the Jackson Hole confab appear to be walking back notions the Fed will embark on a series of interest rate cuts in the coming months. Traders hope Powell will provide more clarity on the Fed’s monetary policy intentions.

Traders and investors are wondering how the weekend will turn out, regarding civil unrest in Hong Kong. An escalation in the situation would significantly impact markets and prompt risk aversion early next week. So far this week, risk aversion has receded from levels seen the past couple weeks.

There is also a Group of Seven meeting in France over the weekend.

The key “outside markets” today see Nymex crude oil prices slightly lower and trading around $55.25 a barrel. The U.S. dollar index is higher and at a new high for the week.

U.S. economic data due for release Friday includes new residential sales.

–Jim

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Thursday, August 22–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Some risk aversion has returned to the marketplace amid new tensions between China and the U.S. China said it would sanction U.S. firms involved in a sale of U.S. fighter jets to Taiwan.

The Chinese yuan further depreciated against the U.S. dollar Thursday, trading around 7.085 and at the weakest level in 11 years.

Purchasing managers’ surveys from Australia and the Euro zone were downbeat today. The Eurozone manufacturing purchasing managers index (PMI) came in at 47.0 in August. A reading below 50.0 suggests contraction in the sector. Importantly, Germany, the workhorse for the Euro zone, saw its manufacturing PMI at only 43.6 in August.

Traders today are awaiting the minutes of the July meeting of the European Central Bank. The annual Federal Reserve Jackson Hole symposium gets under way today, too. Fed Chairman Jerome Powell is set to give a speech at the confab on Friday. The Fed and the ECB are leaning easy on their monetary policies.

The key “outside markets” today see Nymex crude oil prices firmer and trading around $56.00 a barrel. The U.S. dollar index is slightly higher.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the U.S. flash manufacturing and services PMIs, leading economic indicators and the Kansas City Fed manufacturing survey.

–Jim

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The Nymex crude oil market has rebounded from the August low, but is still in a price downtrend on the daily bar chart. If the bulls can push prices above chart resistance at the $58.00 level the price uptrend would be broken and the bulls would then set their sights on price levels in the $60s. If the downtrend remains in place and holds, prices would likely drift back down into the low $50s. Stay tuned!–Jim