Daily Morning Report

Friday, June 7–Jim Wyckoff’s Morning Markets Report

European and Asian stock indexes were mostly firmer overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The U.S. indexes have posted solid gains this week and have regained bullish technical momentum after hitting three-month lows on Monday.

Traders are anxiously awaiting Friday morning’s employment situation report for May from the Labor Department—arguably the most important U.S. data point of the month. The non-farm jobs component of that report is forecast at up 180,000. Wednesday’s ADP national employment report for May showed only 27,000 jobs added in the month. That anemic number has many looking for a weaker number in Friday’s jobs report. A downbeat jobs report today would probably significantly raise the odds of the Federal Reserve cutting U.S. interest rates sooner rather than later—and possibly this month. Look for more active trading in many markets in the immediate aftermath of the jobs report today.

In overnight news, the German central bank said German economic growth this year will only be 0.6% compared to 1.5% seen in 2018. Germany is the workhorse of the Euro zone economy. The European Central Bank on Thursday leaned more dovish and suggested it could further ease its monetary policy soon.

The key “outside markets” today see the U.S. dollar index trading slightly up in early U.S. action. The greenback bulls have faded recently and the near-term price uptrend for the USDX has been negated to suggest a market top is in place. Meantime, Nymex crude oil prices are firmer and trading around $53.00 a barrel after dropping to a nearly five-month low on Wednesday.

Other U.S. economic data due for release Friday includes monthly wholesale trade and consumer credit.

–Jim

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Thursday, June 6–Jim Wyckoff’s Morning Markets Report

European stock indexes were mostly firmer overnight, while Asian shares were mostly weaker. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The U.S. indexes are posting solid gains this week after hitting three-month lows on Monday.

There are hopes in the marketplace that the U.S. trade tariff threats against Mexico, set to go into effect soon, can be withdrawn as Mexican and U.S. officials are presently meeting to discuss more Mexican participation in curbing illegal immigrants from crossing the Mexican border into the U.S. Also, some Republican members of Congress are pushing back on President Trump’s use of trade tariffs to achieve his non-trade goals.

World government bond markets continue to see their yields drop amid very low inflation and worries about slowing global economic growth and the resulting easier monetary policies from the major central banks. The German 10-year bond yield dropped to minus 0.232% today.

In overnight news, the Euro zone reported its first-quarter GDP at up 0.4% from the fourth quarter and up 1.3%, year-on-year. Those numbers were right in line with market expectations but still very tepid.

The key “outside markets” today see the U.S. dollar index trading lower in early U.S. action. The greenback bulls have faded recently and the near-term price uptrend for the USDX has been negated to suggest a market top is in place. Meantime, Nymex crude oil prices are near steady and trading around $51.50 a barrel after dropping to a nearly five-month low on Wednesday.

Traders are awaiting Friday morning’s employment situation report for May from the Labor Department—arguably the most important U.S. data point of the month. The non-farm jobs component of that report is forecast at up 180,000. Wednesday’s ADP national employment report for May showed only 27,000 jobs added in the month. That anemic number has many looking for a weaker number in Friday’s jobs report.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the international trade report, revised productivity and costs, and the monthly chain store sales index.

–Jim

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The gold market has surged over $40 an ounce from levels seen late last week, mostly on ideas of easier monetary policies from the world’s central banks and notions of slowing global economic growth. Technically, the bulls have the near-term technical advantage and have momentum to suggest more upside in the near term. Stay tuned!–Jim

Wednesday, June 5–Jim Wyckoff’s Morning Markets Report

European and Asian stock indexes were mostly firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The U.S. indexes posted solid gains Tuesday after hitting three-month lows Monday.

The world marketplace has been assuaged by notions the U.S. Federal Reserve could lower interest rates as soon as this summer, in an effort to keep U.S. economic expansion alive and to counter the negative effects of the U.S. trade disputes with its major trading partners. This week Fed officials, including Chairman Powell on Tuesday, have hinted the U.S. central bank is leaning toward an easier money policy even though it says it is being “patient” on monetary policy moves. Australia’s central bank may have started the ball rolling on easier money policies by announcing an interest rate cut on Tuesday.

Gold is responding to ideas of lower interest rates and slowing economic growth as prices hit a nearly 3.5-month high overnight. Since late last week gold prices have rallied over $40 an ounce.

In overnight news, the Euro zone producer price index for April was reported at down 0.3% from May and up 2.6%, year-on-year. Retail sales in the trading bloc were also reported today and came in down 0.4% in April and up 1.5%, year-on-year. That downbeat news was somewhat offset by a composite purchasing managers index (PMI) for the Euro zone that came in at 51.8 in May from 51.5 in April. A reading above 50.0 suggests growth in the sector.

The U.S. economic data point of the day comes with the ADP national employment report for May, which is expected to come in at up 173,000 jobs. That report is a precursor to Friday morning’s more important employment situation report for May from the Labor Department. The non-farm jobs component of that report is forecast at up 180,000.

The key “outside markets” today see the U.S. dollar index trading weaker and hitting a three-week low overnight. The greenback bulls have faded recently and the near-term price uptrend for the USDX has been at least temporarily negatged. Meantime, Nymex crude oil prices are slightly lower and trading around $53.50 a barrel after dropping to a nearly five-month low on Monday.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. services PMI, the ISM non-manufacturing report on business, the global services PMI, the Federal Reserve’s beige book, and the weekly DOE liquid energy stocks report.

–Jim

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Tuesday, June 4–Jim Wyckoff’s Morning Markets Report

European equities were mostly firmer overnight and Asian stock markets were mostly down. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The U.S. indexes hit three-month lows Monday and are trending down on the daily charts.

Australia’s central bank cut its main interest rate overnight to a record low of 1.25% from 1.50%. It was the first rate cut in nearly three years. The central bank said it made the move due to worries about global trade wars reducing world economic activity. In recent weeks the marketplace is placing much higher odds on the U.S. Federal Reserve lowering interest rates, possibly as soon as this summer. The European Central Bank is also seen as likely easing its monetary policy as soon as this summer.

The notions of easier money coming from the world’s major central banks has boosted gold prices and dropped government bond yields. Notions of lower interest rates are a mixed bag for the global stock markets—a positive due to more financial market liquidity but a negative because the rates would be coming down due to slowing economic growth prospects.

In other overnight news, the Euro zone reported its May consumer price index at up 1.2%, year-on-year, versus up 1.7% in April. The April reading was the lowest in over a year.

The key “outside markets” today see the U.S. dollar index trading slightly up after absorbing solid losses Monday. The greenback bulls have faded recently and the near-term price uptrend for the USDX is in jeopardy. Meantime, Nymex crude oil prices are lower and trading just below $53.00 a barrel after dropping to a nearly five-month low on Monday.

U.S. economic data due for release Tuesday includes the weekly Johnson Rebook and Goldman Sachs retail sales reports, the ISM New York report on business, manufacturers’ shipments and inventories, and a World Bank global economic report. Several Federal Reserve officials also speak today.

–Jim

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The Nymex crude oil futures market dropped to a nearly five-month low to start the month of June. Bears have the firm near-term technical advantage in oil and are now eyeing challenging major psychological support at $50.00 a barrel soon. The accelerating price downtrend suggests more price pressure in crude in the near term. Stay tuned!–Jim