Daily Morning Report

Tuesday, May 28–Jim Wyckoff’s Morning Markets Report

World stock markets were mostly down overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins.

There are several matters on the minds of traders and investors following the long U.S. holiday weekend. The U.S.-China trade war continues with no agreement in sight and both countries appearing to dig in their heels as a trade agreement anytime soon appears unlikely.

European elections last weekend produced gains in the populist parties in the U.K., while Greece’s prime minister said he will call for a general election in an effort to lower taxes. It seems that every couple of years, during the summertime, that political turmoil in the European Union moves closer to the front burner of the world marketplace.

The key “outside markets” today see the U.S. dollar index trading higher, while Nymex crude oil prices are firmer and trading just above $59.00 a barrel. The greenback has been strong recently and the USDX is not far below its recent two-year high. Meantime, crude oil bulls are working to stabilize prices after last week’s steep downdraft that shaved about $6.00 off the price of a barrel of crude.

U.S. economic data due for release Tuesday includes the quarterly house price index, the S&P-Case-Shiller home price index, the consumer confidence index and the Texas manufacturing outlook survey.

–Jim

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A feature in the marketplace late this week is the dramatic sell off in crude oil prices. Nymex crude oil on Thursday dropped to a low of $57.33 Prices on Tuesday closed at $63.13. Prices recovered a bit Friday morning. Plentiful U.S. supplies and worries about slowing world economic growth are mostly to blame for the downdraft in crude prices. The spike down in oil prices is a warning signal to other raw commodity market bulls, as oil is arguably the leader of the raw commodity sector. With oil prices in a tailspin, other commodity markets will find price uptrends very hard to sustain.–Jim

Friday, May 24–Jim Wyckoff’s Morning Markets Report

World stock markets were mostly higher overnight. U.S. stock indexes are also pointed toward firmer openings when the New York day session begins. Markets were rattled Tuesday as the U.S.-China trade war was ratcheted up yet another notch, as both governments stepped up their rhetoric against each other. The U.S. is also now targeting China’s communications giant, Huawei, for sanctions. A New York Federal Reserve report said the trade war with China will cost Americans an average of $813 a year.

In overnight news, U.K. Prime Minister Theresa May said she will resign within two weeks, in order to allow another leader to try to clear up the Brexit mess. Meantime, India’s Prime Minister Modi was a solid victor in his country’s elections.

Parliamentary elections in the U.K. and The Netherlands got under way Thursday, with the populist parties (euroskeptics) possibly doing well. Other European countries’ election results will be announced Sunday.

A feature in the marketplace late this week is the dramatic sell off in crude oil prices. Nymex crude oil on Thursday dropped to a low of $57.33 Prices on Tuesday closed at $63.13. Prices have recovered a bit Friday and are trading around $58.50. Plentiful U.S. supplies and worries about slowing world economic growth are mostly to blame for the downdraft in crude prices.

Meantime, the U.S. dollar index has backed off after scoring a contract and two-year high on Thursday. Technical price action shows a bearish “key reversal” down has occurred in the USDX, which is a chart clue the index has put in a near-term top.
And, world government bond yields are falling this week, on some flight-to-safety buying in U.S. and German bonds, while other countries’ bond prices gained on worries about slowing economic growth keeping interest rates very low.

U.S. economic data due for release Friday includes the advance report on durable goods.

–Jim

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Thursday, May 23–Jim Wyckoff’s Morning Markets Report

World stock markets were mostly down overnight. U.S. stock indexes are also pointed toward solidly lower openings when the New York day session begins. Risk aversion has again surfaced late this week. Parliamentary elections in the U.K. and The Netherlands get under way Thursday, with the populist parties (euroskeptics) possibly doing well. Other European countries’ election results will be announced Sunday. The U.K. Brexit issue that remains unresolved amid Prime Minister Theresa May’s planned departure continues to weight on the British pound.

Simmering closer to the front burner of the world marketplace today is the U.S.-China trade war that may or may not come to resolution in the next few weeks.

The U.S.’s more aggressive stance against Iran in recent weeks is another matter that could quickly elevate trader and investor tensions. A U.S. naval task force is in the Persian Gulf region.

Gold prices are getting a bit of a safe-haven bid Thursday from the keener uncertainty in the marketplace.

The key “outside markets” today see the U.S. dollar index higher and not far below this year’s high, which is a two-year high. Meantime, Nymex crude oil prices are lower and trading around $60.50 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the U.S. flash services and manufacturing purchasing managers’ indexes, new residential sales and the Kansas City Fed manufacturing survey.

–Jim

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The corn futures market is on fire as prices have rallied over 50 cents a bushel in about two weeks’ time. Serious U.S. planting delays have boosted the corn market, with the delayed seeding likely causing some reduced overall yields. It’s late may and a serious weather market is already in play in the grain markets. It’s very likely going to be a very active and more volatile summer in the grain markets. Stay tuned right here and read my daily reports for the early clues on the expected big trending price moves in the grains (and other markets, too, of course).–Jim

Wednesday, May 22–Jim Wyckoff’s Morning Markets Report

World stock markets were mixed overnight. U.S. stock indexes are also pointed toward narrowly mixed openings when the New York day session begins. Risk appetite among traders and investors is a bit keener this week, as the U.S.-China trade war rhetoric from both sides has died down the past few days.

In overnight news, St. Louis Federal Reserve Bank President James Bullard said in a speech in Hong Kong late Wednesday that the U.S. central bank may need to lower interest rates if inflation levels continue at very low levels. The Federal Reserve would like to see annual U.S. inflation around the 2% level. Bullard is a voting member of the Federal Open Market Committee (FOMC).

In another sign of worldwide inflation that is very low, or even problematic, Germany’s government auctioned 10-year bonds (bunds) for an average yield of -0.07%. That’s the lowest yield in almost three years.

The key “outside markets” today see the U.S. dollar index slightly down but still not far below this year’s high, which is a two-year high. Meantime, Nymex crude oil prices are also weaker and trading around $62.50 a barrel.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the FOMC minutes and the weekly DOE liquid energy stocks report. U.S. Treasury Secretary Steven Mnuchin also speaks to a U.S. House committee today.

–Jim

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