Daily Morning Report

Friday, July 26–Jim Wyckoff’s Morning Markets Report

Asian and European stocks mixed to firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session beings.

The U.S. economic highlight of the week is the Friday morning report on second-quarter gross domestic product—the first estimate. The GDP growth rate is seen at up 2.0%, year-on-year. That compares to 3.1% GDP growth in the first quarter of this year. A significant miss on the forecast number would likely move the stock and financial markets.

In other overnight news, an ominous report on very low inflation in the European Union was released Friday, showing the Euro zone inflation will be 1.3% in 2019, 1.4% in 2020 and 1.5% in 2021. That’s according to 52 experts surveyed by the European Central Bank. The ECB wants to see annual inflation of around 2%. The report strongly suggests the ECB will ease its monetary policy soon.

Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting beginning Tuesday, and is expected on Wednesday to ease monetary policy with an interest rate cut at the conclusion of the meeting.

A Commerzbank report today said Chinese demand for gold coming out of Hong Kong is down 83% the past year. Historically Hong Kong has been a major supplier of gold to Chinese consumers. The report mostly blamed the weaker Chinese currency, the yuan, on making gold more expensive to purchase by Chinese consumers.

The key “outside markets” today see Nymex crude oil prices higher and trading around $56.35 a barrel. Meantime, the U.S. dollar index is firmer and is near this year’s high.

U.S. economic data due for release Friday includes the GDP report for the second quarter.

–Jim

Continue Reading

Asian and European stocks were mostly up overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session beings. Global equity markets have been boosted recently by notions of easier monetary policies coming soon from the major central banks of the world. Some progress on the U.S.-China trade front this week is also bullish for world stocks.

The European Central Bank is holding its regular monetary policy meeting on Thursday, with results due out soon. Some expect the ECB to lower interest rates today. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting, and is expected to ease monetary policies at the meeting.

Slowing global economic growth has the central bankers worried. There was another downbeat report coming out of Germany today, as the Ifo business climate index fell in July.

The key “outside markets” today see Nymex crude oil prices higher and trading around $56.50 a barrel. Meantime, the U.S. dollar index is slightly weaker after hitting a five-week high Wednesday.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the advance economic indicators report, durable goods orders, and the Kansas City Federal Reserve manufacturing survey.

–Jim

Continue Reading

The grain markets have seen a significant weather market play out this summer, but recent price action has seen prices fizzle. The weather market may or may not be done for this year. August will be an extra important growing month for the U.S. corn and soybean crops, given their generally late planting start in the spring. The corn and soybean market bulls have lines drawn in the sand that they must defend: the July lows. Drops below the July lows in corn and soybean futures would be a strong technical signal that the price uptrends are dead in the water.–Jim

Wednesday, July 24–Jim Wyckoff’s Morning Markets Report

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

European shares were pressured by a weak economic report. The Euro zone purchasing managers index (PMI) composite reading came in at 51.5 in July versus expectations for a figure of 52.1. The manufacturing PMI was worse, coming in at 46.4 in July versus expectations for a number of 47.6. Any reading below 50.0 suggests contraction in the sector.
German government bond yields dropped to a record low following the weak report. The German manufacturing PMI came in at 43.1 in July. Germany’s economy is the workhorse of the Euro zone.

U.S. trader and investor attitudes are still generally upbeat at mid-week on news the U.S. and China have restarted their heretofore stalled trade talks, with U.S. officials traveling to China soon for fresh negotiations.

The European Central Bank holds its regular monetary policy meeting on Thursday. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting. Both central banks are expected to ease their monetary policies at the meetings.

The mainstream business media is starting to pick up on the recent rallies in gold and silver markets. The Wall Street Journal ran a feature story entitled, “Gold’s Luster is Spreading to Other Precious Metals.” At first blush a metals trader could view this as bullish, as it gives the metals more exposure to potential traders/investors. That may well be true. However, long-time market watchers remember the old trading adage that says when the general public starts to pick up on a market’s significant price move, that move is then probably near an end.

The key “outside markets” today see Nymex crude oil prices firmer and trading around $57.00 a barrel. Meantime, the U.S. dollar index is near steady after hitting a five-week high Tuesday.

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

–Jim

Continue Reading

Tuesday, July 23–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session beings. This is a big week for U.S. corporate earnings reports.

Traders and investors are in upbeat moods on Tuesday. Reports say President Trump met with U.S. technology companies Monday at the White House, regarding easing U.S. sanctions on China’s big communications firm, Huawei. This is being deemed a big positive on the U.S.-China trade front, suggesting the U.S. wants to move the negotiations forward.

Also, the U.S. Congress and the Trump administration have agreed on a government spending deal, to avoid a government shutdown anytime soon.

The marketplace is not seeing much lingering reaction to weekend news Iran’s military seized a British oil tanker near the Strait of Hormuz, apparently in response to the U.K. capturing an Iranian vessel a couple weeks ago. Still, Iran’s confrontation with the U.S. and the U.K. sees a high probability of escalating in the coming weeks.

Just over the horizon: the European Central Bank holds its regular monetary policy meeting on Thursday. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting. Both central banks are expected to ease their monetary policies at the meetings.

The key “outside markets” today see Nymex crude oil prices higher and trading around $56.25 a barrel. Meantime, the U.S. dollar index is solidly higher today.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the monthly house price index, the Richmond Fed business survey, and existing home sales.

–Jim

Continue Reading

The U.S. stock indexes last week hit contract and record highs, as the long bull run in equities rolls on, with no solid chart clues that market tops are close at hand. The path of least resistance for the stock indexes will remain sideways to higher until a significant bearish chart clue occurs. What might those bearish clues be? A couple: two big down days in a row, a bearish weekly low close on a Friday, and the near-term price uptrend being negated, as seen on the daily charts. Stay tuned and keep monitoring my daily reports for any clues on near-term price trend changes in the markets.–Jim