Daily Morning Report

Friday, July 12–Jim Wyckoff’s Morning Markets Report

U.S. stock indexes are firmer and at or near record and contract highs in early U.S. trading. Asian and European stock indexes were also mostly up overnight. Easy monetary policies from the major central banks of the world continue to push world stock markets higher.

In overnight news, China’s exports in June were reported down 1.3%, year-on-year, according to official data Friday. Forecasters expected a 2.0% decline. China’s imports dropped by 7.3% in June, following an 8.5% decline in May. A drop of 3.8% was expected in June. This downbeat data underscores the damage China’s trade war with the U.S. has caused to the world’s second-largest economy.

A Wall Street Journal survey of economists showed those polled see a 30% chance of a U.S. recession within the next year. Sixty-eight percent of the economists see a U.S. interest rate cut at the end of July.

The U.S. economic highlight of the day will be the release of the producer price index for June, which is expected to be steady from May and up 0.2% in the “core” index, which excludes food and energy. On Thursday a slightly higher than expected reading on the U.S. consumer price index did get the attention of the marketplace.

The key “outside markets” today see Nymex crude oil prices higher and trading just around $60.50 a barrel. The U.S. dollar index is lower again early today.

U.S. economic data due for release Friday includes the PPI.

–Jim

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Thursday, July 11–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly higher overnight. U.S. stock indexes are at record highs and are pointed toward firmer openings when the New York day session begins.

The marketplace is still basking in the easy-money limelight cast by Federal Reserve Chairman Jerome Powell on Wednesday. In is his speech to House lawmakers he said since the June FOMC meeting uncertainties, including world trade tensions, global growth and very low inflation, continue to cloud the outlook for the U.S. economy and these matters are not improving. He said the U.S. economic outlook is solid, but the prospects for other major world economies are worrisome. The marketplace read his remarks as fully dovish on U.S. monetary policy, which in turn strongly suggests the Fed will cut U.S. interest rates as soon as this month. That’s a bullish scenario for U.S. Treasuries, the U.S. stock market, and commodities markets, including the precious metals. However, it was a bearish development for the U.S. dollar on the foreign exchange market. Powell speaks to a U.S. Senate panel today.

Gold prices are solidly higher today on the easy-money Fed and also on fresh safe-haven demand. Reports said a British warship had to step in and rescue a U.K. oil tanker that was being harassed by three Iranian vessels in the Strait of Hormuz.

In overnight news, the Bank of England said the risk of a “no deal” on Brexit has hurt the U.K. economy.
The key “outside markets” today see Nymex crude oil prices higher and trading just below $61.00 a barrel. The U.S. dollar index is lower early today.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the monthly USDA supply and demand report, real earnings, the consumer price index, the monthly Treasury budget statement, and the monthly chain store sales index. Several Federal Reserve officials are also scheduled to make speeches today.

–Jim

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The Euro currency futures market is one of the most popularly traded markets in the world. See on the daily bar chart for the September Euro currency futures that prices have backed well down from the June high and the bears have regained the solid overall near-term technical advantage. That means a very likely challenge of the June low and probably even below that in the near term. Stay tuned!–Jim

Wednesday, July 10–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly weaker in more subdued trading overnight. U.S. stock indexes are pointed toward moderately lower openings when the New York day session begins.

The U.S. economic highlight of this week will be Fed Chairman Jerome Powell speaking to the U.S. House of Representatives on U.S. monetary policy on Wednesday morning. He follows that up with testimony to a Senate panel on Thursday. Powell is expected to lean slightly toward the dovish side of money policy, and he will surely be asked by lawmakers what he thinks about President Trump bashing him recently, including pondering firing him. Powell may also shed some light on when the next U.S. interest rate increase is coming.

In overnight news, China’s June consumer price index was reported up 2.7%, year-on-year, which was in line with market expectations. However, the food prices component of the report rose by 8.3% annually.

The key “outside markets” today see Nymex crude oil prices higher and trading around $59.00 a barrel. The U.S. dollar index is slightly lower.

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

–Jim

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Tuesday, July 9–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly weaker in quieter overnight trading. U.S. stock indexes are pointed toward moderately lower openings when the New York day session begins.

The U.S. economic highlight of this week will be Fed Chairman Jerome Powell speaking to the U.S. House of Representatives on U.S. monetary policy on Wednesday morning. He follows that up with testimony to a Senate panel on Thursday. Powell will surely be asked by lawmakers what he thinks about President Trump bashing him recently, including pondering firing him. Powell may also shed some light on when the next U.S. interest rate increase is coming, or not.

In a geopolitical matter that is presently on the back burner of the marketplace, Iran continues its sabre rattling against the U.S. The regime said Monday it intends to further breach its nuclear agreement with the United Nations unless the U.S. eases economic sanctions against Iran.

The key “outside markets” today see Nymex crude oil prices higher and trading around $58.00 a barrel. Meantime, the U.S. dollar index is firmer and hit a three-week high in early U.S. trading.

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

–Jim

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Corn has been the upside leader in grain prices for several weeks. Corn has begun to rebound but soybeans and wheat have lagged. It’s likely that more gains in corn this week would pull soybean and wheat prices higher, too. Historically, the early-July timeframe is critical for the grain markets, as weather patterns in the U.S. Midwest can change as mid-summer approaches. With the corn and soybeans behind in growth development this year, weather forecasts for the next two to three weeks will produce extra-sensitive reactions from grain traders. Stay tuned!–Jim