Daily Morning Report

Friday, August 9–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. After a couple days of respite, trader and investor anxiety has returned to the global marketplace, heading into the weekend.

There is once again protesting in Hong Kong, this time at its main airport. Market watchers wonder how long mainland China will allow the civil unrest.

Slowing world economic growth prospects are in greater focus today after the U.K. economy contracted in the second quarter by 0.2% from the first quarter and was down 0.8%, year-on-year. Worries about the U.K. Brexit are hurting consumer confidence in the country.

The International Energy Agency on Friday lowered world crude oil demand growth by 100,000 barrels per day, citing concerns about world economic growth, including world trade relations.

Meantime, China reported its July producer price index down 0.3%, year-on-year, but consumer prices rose 2.8% in the same period. That’s a negative signal for China’s consumers and producers.

Japan did get some good economic news Friday, as its GDP was reported up 0.4% in the second quarter from the first quarter, and up 1.7%, year-on-year.

The yield on the benchmark U.S. Treasury note fell overnight to around 1.6%, on safe-haven demand. Gold prices are also higher.

China’s central bank on Friday again set its currency, the yuan, exchange rate with the U.S. dollar at just above the 7 level, which is the level at which the U.S. has deemed problematic. This exchange rate will continue to be closely monitored.

The key “outside markets” today see Nymex crude oil prices modestly higher and trading around $52.75 a barrel. The U.S. dollar index is trading slightly lower in early U.S. action.

U.S. economic data due for release Friday includes the producer price index.

–Jim

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Thursday, August 8–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly up overnight, on some upbeat economic data coming out of China. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. The world marketplace has calmed down Thursday, after some keener anxiety early Wednesday. Price action the past two days hints the U.S. stock index bears may now be exhausted, which begins to suggest near-term market bottoms are in place. Still, price action today and Friday will be extra important.

China’s exports rebounded in July, rising 3.3%, year-on-year, and compares to a 1.3% decline reported for June. China’s exports in July were expected down 2.0%. Meantime, China’s July imports were down 5.6%, year-on-year.

The yield on the benchmark U.S. Treasury note rose to 1.729% this morning, after dropping to around 1.61% earlier this week.

China’s central bank on Thursday set its currency, the yuan, exchange rate with the U.S. dollar at 7.0039. That’s the weakest yuan fixing set by the central bank in 11 years, and is above the 7 level that the U.S. has ostensibly deemed problematic. This exchange rate will continue to be closely monitored. The U.S. designated China as a currency manipulator earlier this week.

The key “outside markets” today see Nymex crude oil prices higher and trading around $52.25 a barrel. The U.S. dollar index is trading slightly higher in early U.S. action.

U.S. economic data due for release Thursday includes the weekly jobless claims report, monthly wholesale trade and the monthly retail chain stores sales index.

–Jim

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The safe-haven gold market has scored a six-year high above $1,500.00 an ounce amid safe-haven demand from investors who are spooked on several fronts: the U.S.-China trade war, slowing global economies, unrest in Hong Kong and a hard U.K. Brexit. The technicals in gold are fully bullish, suggesting still more upside in the near term. There are no early clues of a market top being close at hand for the yellow metal. You will find any early clues on a market’s pending price trend reversal, or acceleration, in my daily reports. Stay tuned!–Jim

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