Daily Morning Report

Wednesday, August 7–Jim Wyckoff’s Morning Markets Report

Asian stock markets were down overnight and European stock indexes were firmer. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Serious near-term technical damage has been inflicted on the U.S. stock indexes recently, to suggest they have put in at least near-term tops.

The U.S.-China trade war continues to be on the front burner of the marketplace. China’s central bank on Wednesday set its currency, the yuan, exchange rate with the U.S. dollar at 6.9996. That’s the lowest fixing set by the central bank in 11 years, but still just below the 7 level that the U.S. has ostensibly deemed problematic. This exchange rate will continue to be closely monitored by the world marketplace, as China is already being accused of using its currency as a trade weapon. The U.S. designated China as a currency manipulator earlier this week.

In other overnight news, New Zealand’s central bank cut its interest rate more than expected Wednesday, by 0.5%. This sparked a sell off in the Australian dollar.

Gold prices hit a new six-year high above $1,500 overnight. The global marketplace is seeking safe-haven assets amid the recent stock market sell off and heightened geopolitical tensions.

The key “outside markets” today see Nymex crude oil prices slightly weaker and trading around $53.50 a barrel. The U.S. dollar index is trading modestly higher early today.

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

–Jim

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Tuesday, August 6–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed overnight. Asian stock markets were down and European stock indexes were higher. U.S. stock indexes recovered from follow-through early overnight losses and are set to open higher when the New York day session begins. Serious near-term technical damage has been inflicted on the U.S. stock indexes, to suggest they have put in at least near-term tops. Remember that the historically turbulent stock market months of September and October are right around the corner.

News late Monday that the U.S. labeled China a currency maninpulator initially pushed world stock markets still lower, following Monday’s steep losses. However, China’s central bank then set its currency, the yuan, exchange rate with the U.S. dollar at 6.9683, which was 0.7% down from Monday’s fixing. The yuan depreciated to an 11-year low against the U.S. dollar Monday, at 7.1087 to the dollar. The move on Monday led to ideas China has thrown in the towel on any trade agreement with the U.S. coming anytime soon. However, Tuesday’s yuan fixing below 7 gave pause to those thinking the Chinese government will let the yuan continue to depreciate against the U.S. dollar. Also, China’s central bank knows the downside of letting the yuan fall in value–one being flight of capital out of China, which has very likely already been occurring.

President Trump announced last week that on September 1 the U.S. will impose another 10% tariff on Chinese imports into the U.S. China, in turn, announced it will suspend its purchases of U.S. agricultural products.

Many market watchers now reckon the U.S.-China trade war being ratcheted up another notch will prompt the Federal Reserve to again lower U.S. interest rates soon. Speeches by Federal Reserve officials in the coming days will garner extra scrutiny from the marketplace. St. Louis Fed President James Bullard speaks to the National Economics Club later today.

The key “outside markets” today see Nymex crude oil prices firmer and trading just below $55.00 a barrel. The U.S. dollar index is trading near steady today.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the IBD/TIPP economic optimism index.

–Jim

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The U.S. stock indexes have been hit hard just recently amid an escalating trade war between the world’s two largest economies–the U.S. and China. Last Friday’s technically bearish weekly low closes and prices this week slumping to multi-week lows have seen major technical damage inflicted and also suggest the U.S. stock indexes have topped out. Remember, too, that we are heading into the months of September and October, which history shows can be very turbulent months for the stock market. Stay tuned!–Jim

Monday, August 5–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets tumbled overnight, amid heightened worries about an escalating trade war between the world’s two largest economies—the U.S. and China. U.S. stocks are set to open solidly lower when the New York day session begins.

The Chinese currency, the yuan, depreciated to a new record low against the U.S. dollar Monday, at 7.1087 to the dollar. This is leading to ideas China has thrown in the towel on any trade agreement with the U.S. coming anytime soon. China’s central bank appeared to condone the decline in its currency, saying the yuan’s fall is the result of U.S. protectionism and that the yuan remains stable. In the past, China’s central bank had stepped in to boost the yuan when it reached 7 to the dollar.

President Trump announced late last week that on September 1 he will slap another 10% tariff on Chinese imports into the U.S. The U.S. stock market has dropped, U.S. Treasury futures prices have hit new contract highs, the yield on the 10-year U.S. Treasury note has dropped well below 2.00%, the U.S. dollar has dropped, and grains and crude oil prices have also fallen. The gold market has rallied sharply and hit a six-year high overnight, on safe-haven demand.

The escalation of the U.S.-China trade war has other implications, too, including significantly increasing the likelihood the Federal Reserve will again lower U.S. interest rates in the coming months.

Major protesting in the streets of Hong Kong also has the world marketplace uneasy to start the trading week.

The key “outside markets” today see Nymex crude oil prices weaker and trading just above $55.00 a barrel. The U.S. dollar index is also weaker.

U.S. economic data due for release Monday includes the U.S. services PMI, the ISM non-manufacturing report on business, the global services PMI, and the employment trends index.

–Jim

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Friday, August 2–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were lower overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. A busy trading week got unexpectedly much busier at midday Thursday when President Trump announced he is going to slap another 10% tariff on Chinese imports into the U.S. The U.S. stock market dropped, U.S. Treasury futures prices soared to new contract highs, the yield on the 10-year U.S. Treasury note dropped to 1.84%, the U.S. dollar dropped, grains and crude oil prices tanked, while the gold market rallied sharply on safe-haven demand.

The escalation of the U.S.-China trade war has other implications, too, including significantly increasing the likelihood the Federal Reserve will again lower interest rates in the coming months.

The Chinese yuan on Friday dropped to its lowest level against the U.S. dollar since last November. Trump has called out China for devaluing its currency to gain trade advantages.

Traders are now awaiting Friday morning’s U.S. employment situation report for July, arguably the most important monthly report for the U.S. economy. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.

In other overnight news, the Euro zone producer price index for June came in at down 0.6% from May and up 0.7%, year-on-year.

The key “outside markets” today see Nymex crude oil prices higher and trading just above $55.00 a barrel. The U.S. dollar index is weaker.

Other U.S. economic data due for release Friday includes the international trade report, the ISM New York report on business, manufacturers’ shipments and inventories and the University of Michigan consumer sentiment survey.

–Jim

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The gold market has set back late this week after the Federal Reserve on Wednesday did not lean as easy on U.S. monetary policy as most traders reckoned they would. The surge in the U.S. dollar index this week is another negative for the precious metals. Gold prices are still in a near-term uptrend, but the bulls need to stabilize the market yet this week, to avoid serious near-term technical damage being inflicted. Stay tuned!–Jim